Industrial agriculture has been defined, even by its proponents, as a system where the farm owner, the farm manager and the farm worker are different people. That's a dramatic change from the historic structure of agriculture, where the people who labor in farming also make the decisions and reap the profits of their work. Corporate farming leads to closed markets where prices are fixed not by open, competitive bidding, but by negotiated contracts, and where producers who don't produce in large volumes are discriminated against in price or other terms of trade. A healthy and stable community depends not on the number of livestock being produced, but on the number of livestock producers living and working there. The Center works to create genuine opportunity for family farms and ranches. We educate the public about the consequences of industrialization and corporate farming through our monthly newsletter. The last 12 months of Corporate Farming Notes are presented below.

 

August 2010

On June 22, 2010, USDA published a new draft rule regarding how meatpacking corporations must deal with farmers and ranchers in procurement of livestock and poultry. It's not perfect, but it is the most aggressive livestock market reform since the passage of the Packers and Stockyards Act itself. The rule will breathe some life and some competition back into our livestock markets.

The administrative rule covers a number of reforms to help restore competition and contract fairness to livestock and poultry markets, including establishing a definition for what constitutes an “undue or unreasonable preference.” The Packers and Stockyards Act specifically prohibits price discrimination by meatpackers against smaller volume, family farm and ranch livestock producers. Specifically, the Act makes it unlawful for packers to “make or give any undue or unreasonable preference or advantage to any particular person or locality in any respect whatsoever.”

The Center for Rural Affairs is working hard to improve USDA’s unreasonable preference rule, and we’ll fight – tooth and nail – to ensure that the packers and their commodity group allies cannot weaken it. Read more here.

The West Virginia Attorney General is investigating whether Monsanto’s promotion of Roundup Ready II soybeans involves deceptive claims, according to The State Journal of Charleston, West Virginia. Roundup Ready crops are resistant to the herbicide Roundup, which killed most plants, until the development of herbicide tolerant crops and the emergence of weed resistance.

Quoting from a June 29 article, “McGraw said his office is concerned West Virginia farmers are paying higher prices for the Generation 2 trait when the yields do not live up to Monsanto’s claims that the new trait will yield 7 to 11 percent more yield than Monsanto’s original Roundup Ready trait.”

McGraw cited research at Iowa State University, Pennsylvania State University and Farmer’s Independent Research of Seed Technologies, which conducts third party trials. Monsanto counters that Roundup Ready 2 yielded 7 percent more than Roundup Ready I soybeans sold by competitors, based on 40,000 comparisons from 2007 and 2009.

Roundup Ready II is critical to Monsanto’s dominant market position. Ninety percent of US soybeans include Monsanto’s patented Roundup Ready traits. But Roundup Ready I goes off patent in 2014, so the company is pursuing new patents to extend its dominance.

For more information, contact Chuck Hassebrook, chuckh@cfra. org or 402.687.2103 x 1018.

 

July 2010

USDA has released a new rule defining what constitutes an “unreasonable preference,” which is clearly prohibited by the Packers and Stockyards Act. Meatpackers have given huge volume-based premiums to the largest hog and cattle producers for decades, helping them drive smaller, family farm and ranch livestock producers out of business.

USDA has been lackluster in holding packers accountable for the discriminatory pricing and other “sweetheart deals” they provide to the largest livestock producers. And the rare cases they have pursued have not fared well in court.

That is precisely why the Center for Rural Affairs worked so diligently during the last farm bill debate to secure the provision in the Livestock Title compelling the Secretary of Agriculture to define an “unreasonable preference.” There wasn’t much attention to that provision back then, and many days you could fit the Center’s and the Sustainable Agriculture Coalition’s allies on the issue in a phone booth, but, at the end of the day, we prevailed.

USDA had been “poised” to release their new rule for over six months, and it finally came in mid-June. Thanks to the USDA-Justice Department antitrust workshops, a lot more people are paying attention now. And, as we expected, once USDA published their new rule, the packers began to complain. Stay tuned at www.cfra.org/competition to find out more about this and other livestock market reforms.

The Environmental Protection Agency recently named new members of its Farm, Ranch and Rural Communities Committee. The committee advises EPA on a range of environmental issues important to agriculture and rural communities, such as non-point source water pollution and agricultural air quality issues.

Tom McDonald, vice president for environmental affairs at Five Rivers Cattle Feeding – the nation’s largest cattle feeding operation, owned by JBS, the nation’s largest beef packer – was among the 29 committee members named. Not to worry, they didn’t leave out the pork industry, naming Dennis Treacy, senior vice president for corporate affairs at Smithfield Foods, the nation’s largest pork packer and producer.

I feel safer already.

Contact John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for information or to comment.

 

June 2010

On April 27, 2010, the U.S. Supreme Court heard oral arguments in their first genetically modified crop case in history. Three years ago, a federal court banned the planting of genetically modified alfalfa until further studies of potential negative impacts could be conducted.

Two outcomes appear to be under consideration by the Supreme Court Justices. First, they could give Monsanto the green light to resume sale of Roundup Ready alfalfa seed to farmers for planting before completion of the environmental impact study being performed by the U.S. Department of Agriculture. On the other hand, ruling in favor of the farmers who brought the original lawsuit could effectively force the government to increase scrutiny of genetically engineered crops. A ruling is expected by the end of June.

“If Monsanto was to succeed in the release of this perennial plant in this world, they would laugh their way into the history books,” Pat Trask, South Dakota seed farmer and plaintiff in the original lawsuit, told the Rapid City Journal after the hearing. According to Trask, Monsanto’s commercialization of Roundup Ready alfalfa will systematically eliminate other hay varieties via cross pollination, which will spell the doom of organic hay and seed producers.

Some of the most pointed questions from the Supreme Court Justices focused on the concept of “irreparable harm.” Justice Antonin Scalia said, “This is not the end of the world, it really isn’t. The most it does is affect the farmers who want to cater to European markets.”

After the hearing, Trask commented in response to Justice Scalia, “It’s not the end of the world, but it [loss of conventional alfalfa] makes a big hole in it.”

USDA and the Justice Department will host their second joint, public workshop to explore competition and agricultural antitrust issues. This workshop will be held at Alabama A&M University in Normal, Alabama, and will focus on poultry production contracts, vertical integration and buyer power.

Register to attend the workshop or provide comments at http://www.justice.gov/atr/public/workshops/ag2010/index.htm. Go to http://www.cfra.org/competition to follow this ongoing debate.

Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.

 

May 2010

A McCurtain County, Oklahoma, jury returned a $7.3 million verdict last month against Tyson Foods.The jury found that Tyson defrauded a group of 10 McCurtain County chicken growers through verbal and financial pressure to borrow hundreds of thousands of dollars to construct new chicken houses, along with other deceptive business practices.

“I heard several comments that it was a long time coming. Maybe this will make Tyson change the way they have been treating their growers,” Tony Benson, local attorney for the suing growers, told the Associated Press.

Tyson officials released a livid statement indicating their intent to appeal. In May 2008 more than 50 McCurtain County growers file suit against Tyson, but the case was later split into multiple smaller trials, and this decision came at the conclusion of the first trial.

With more McCurtain County lawsuits looming, Tyson’s public relations turned to some of the same deception and coercion that got the company in hot water, but this time their target was the residents of McCurtain County. Tyson’s statement sought to remind local residents of the company’s economic dominance in the county, and threatened that they might take their “investments” elsewhere.

The Justice Department stumbled through the opening phase of their dairy antitrust case against Dean Foods. Dean had previously filed a motion to dismiss the case, asserting that Justice did not provide sufficient evidence to support their antitrust claim. On April 7, J.P. Stadtmueller, U.S. District Court Judge for the Eastern District of Wisconsin, ruled against Dean’s motion to dismiss, but not without first offering some healthy criticism of the Justice Department.

“In today’s world, structural issues, together with a lack of specificity in content associated with the underlying complaint, simply do not measure up to that which any court would reasonably expect in draftsmanship from an experienced litigator. That said, the court finds these shortcomings not to be of sufficient magnitude to warrant either dismissal or a more definite statement,” wrote Judge Stadtmueller. Family farmers and ranchers need and deserve a better showing in this landmark case than Justice has provided so far.

Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.

 

April 2010

Did something historic happen in Ankeny, Iowa, on Friday, March 12, or was it much ado about nothing? Over 700 farmers, ranchers and concerned rural citizens from at least a dozen states gathered at the Des Moines Area Community College’s FFA Enrichment Center for the first in a series of agricultural antitrust and competition policy workshops hosted by the Justice Department and USDA.

It is difficult to believe that USDA and Justice cannot recognize that the seed industry, not to mention meatpacking and myriad other agricultural markets, is deeply and fundamentally dysfunctional and anticompetitive. Certainly the family farmers and ranchers in Ankeny that day knew it.

Attorney General Eric Holder called it a “milestone” event. “I do not use ‘milestone’ lightly. Not once has the Departments of Justice and Agriculture come together to discuss regulatory issues in this industry,” Holder said.

Whether the workshop in Ankeny was a dog-and-pony show or history in the making won’t be determined by what was said there, however, but by whether Secretary Vilsack and Attorney General Holder choose to stand with family farmers, ranchers and rural communities, or just maintain the status quo.

Missouri farmer and state Senator Wes Shoemyer summed up the day by saying, “We’ve waited a long time for justice in the heartland.” I couldn’t say it better myself.

Emanuel Miller, an Amish farmer from Loyal, Wisconsin, won his court battle against the state’s livestock premises registration program in March. According to Miller, livestock premises registration is the first step toward the individual tagging of all livestock, which would amount to the “mark of the beast,” as referenced in the Book of Revelations, and that compliance would violate his religious beliefs and lead to him being shunned by the Amish community.

Wisconsin’s first-in-the-nation mandatory registration law requires all owners of livestock premises within the state to register the location, number and type of livestock kept there.

Clark County Circuit Court Judge Jon Counsell found in favor of Miller, ruling that the state failed to show that mandatory registration furthers animal health and food safety any more effectively than alternatives that would not curtail Miller’s religious freedom. He remained mute on the “mark of the beast” question.

For a more detailed report on the DOJ workshop: contact John Crabtree, johnc@cfra.org, and visit www.cfra.org/competition for ways to get more involved with these issues.

 

February 2010

On January 15, Judge E. Richard Webber, U.S. District Court of Saint Louis, ruled that a 2002 licensing agreement prohibits DuPont from creating a new line of seeds in which its own glyphosate-tolerant genetic trait is stacked with Monsanto’s Roundup Ready trait.

Monsanto heralded the ruling as a vindication of their arguments in the case. DuPont vowed to continue pressing their antitrust and patent fraud litigation against Monsanto. In early January the U.S. Department of Justice announced they were also opening a formal investigation of Monsanto for potential antitrust violations related to their biotech soybean business.

Also on January 15, the U.S. Supreme Court granted Monsanto’s petition for review of a 2007 federal district court order preventing planting of Roundup Ready alfalfa until the completion of an environmental impact statement (EIS) by USDA. Monsanto previously lost their appeal on this issue to the 9th Circuit Court of Appeals.

USDA’s Animal and Plant Health Inspection Service completed a draft EIS in December, and public comments on the draft EIS will be accepted through February 16. Email johnc@cfra.org for information about submitting draft EIS comments.

On January 5, the American Meat Institute (AMI), lobbying arm of the meatpacking industry, sent a letter to the Department of Justice and USDA regarding the upcoming Agriculture and Antitrust Enforcement Workshops. AMI’s belief that antitrust laws and the Packers and Stockyards Act are irrelevant – in their eyes – is even less audacious than their recommended list of categories from which workshop panelists should be chosen.

They list packers (of course), antitrust attorneys, bankers and economists, and offer some of the industry’s favorite talking heads from each category. In case you missed it, farmers and ranchers are missing from their list. It would be almost comical absent USDA’s long history of giving too much credence to AMI and their ilk.

So here are my suggestions – farmers, ranchers, family farm and ranch organizations, bankers, antitrust attorneys and economists (but only one per panel, including good ones the packers don’t like). I leave it to you to figure out who I left off my list.

Agree or disagree? Send your comments to John Crabtree, johnc@cfra.org or call 402.687.2103 x 1010.

 

January 2010

Four North Carolina hog companies declared bankruptcy in 2009, thanks in part to higher grain prices and the emergence of H1N1. Coharie, largest of the four, was run by former U.S. Senator Lauch Faircloth’s daughter, employed 170, and contracted with more than 100 Sampson County farmers to finish hogs. Coastal Plains Pork and Perfect Pig, both in Sampson County, and Bunting Swine of Edgecombe County closed in 2009 as well.

Sampson County is at the heart of North Carolina hog production and comprises a major part of the state’s second-in-the-nation hog production numbers. Eastern North Carolina’s economy is hog-dependent – accounting for $2.2 billion or 22 percent of the state’s farm cash receipts in 2008.

The North Carolina model of industrial hog production has decimated hog markets, contributed to family farm hog producers’ economic woes, and fostered social and environmental degradation in major hog producing regions. But North Carolina’s “model” has been predicated on cheap grain and tight relationships with packers in anticompetitive markets. The companies are reaping as they have sown. However, closure of these companies will impact hundreds of contract growers that face economic devastation as a result of losing their contracts.

According to the Associated Press, Allen Unruh used to feed 4,000 hogs for Bunting Swine on his 40 acre farm outside Grifton. Since Bunting Swine declared bankruptcy, Unruh’s confinements have remained empty, and it is unlikely he will secure a contract with another integrator. The Unruhs recently applied for Medicaid after their 10-year-old son broke his arm at school, an injury that has cost $16,000 after the family cut medical insurance out of their budget. “We always thought it would be someone else that would need help from the government,” Unruh said.

The Department of Justice and U.S. Department of Agriculture have announced the dates and locations of public workshops that will explore competition and regulatory issues in the agriculture industry.

The first workshop, entitled “Issues of Concerns to Crop Farmers,” is scheduled for March 12, 2010, and will be held in Ankeny, Iowa. For more information about future workshops and how you can get involved, we encourage you to go to http://www.cfra.org/ag-competition-hearings or contact John Crabtree at johnc@cfra.org or 402.687.2103 ext. 1010.

 

December 2009

On Nov. 3, Ohio voters approved a constitutional amendment, known as Issue 2, with 63 percent voting in favor. Issue 2 creates a 13-member panel to define animal care standards for Ohio’s livestock sector. The board would include the Ohio Department of Agriculture director, two farmers appointed by the Speaker of the House and the President of the Senate, and 10 members appointed by the governor.

The vote demonstrates that Ohioans are concerned about proper animal husbandry and humane treatment of livestock. However, the amendment moves establishment of such standards into an appointed body that is largely unaccountable to the electorate. That’s where Ohio Farm Bureau and a coalition of commodity organizations want that authority, in a small, unelected governmental body that is more easily influenced than the Ohio General Assembly.

We agree with Ohio Farmers Union President Roger Wise; the amendment overreaches. Moreover, Issue 2 was closely watched by industrial livestock interests, with an eye towards duplication elsewhere.

Practicing real democracy may well be messier and more difficult than raising livestock as conscientiously as most Ohio farmers do. But it’s better than bartering our liberty or our responsibilities to each other for the convenience of a few industrial livestock operations.

Oklahoma’s lawsuit against Tyson and 10 poultry integrators continued to lurch through federal court throughout October. Oklahoma Attorney General Drew Edmondson brought suit against the poultry integrators for runoff of poultry waste spread on cropland – as much as 345,000 tons annually – that according to the state of Oklahoma “polluted the Illinois River with harmful bacteria that threatens the health of tens of thousands of people each year.”

In September, Edmondson revealed to the Associated Press his view of the state’s advantage in the case. “We’re right,” he said. “That’s always an advantage in litigation.”

The Oklahoma case has been mired in numerous delays, often from objections by the 30 attorneys involved. Other states concerned about poultry and livestock waste management practices are watching closely. “This case is more than a war of words. It is about the future of a 1 million-acre watershed,” concluded Edmondson.

Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.

 

November 2009

Is better agricultural antitrust enforcement on the horizon? Attorney General Eric Holder and Agriculture Secretary Tom Vilsack will hold public workshops on agricultural competition issues in early 2010 to examine opportunities for better enforcement of antitrust and competition policy relating to agriculture.

Christine Varney, Assistant Attorney General for Antitrust, recently said, “competition issues affecting agriculture are a priority for me.” Monsanto has publicly acknowledged that the Justice Department requested information regarding the biotechnology company’s potential violation of antitrust laws.

Monsanto dismissed the Justice inquiries as, “similar to other requests … received over the last few years.” OK, let me be plainspoken. Monsanto cannot even see the applicable antitrust laws and regulations in their rear-view mirror, and over the last 12 years should have gotten a lot more than inquiries from the Justice Department. But rather than be critical of Justice and USDA for being late to the dance, I’ll just say I’m happy they showed up at all.

Monsanto is also battling Pioneer, owned by DuPont, over antitrust and patent issues. Monsanto sued Pioneer over alleged infringement of Monsanto’s patents for “Roundup Ready” traits in Pioneer’s “Optimum” line of seeds scheduled for release in 2011. Pioneer and DuPont countersued, accusing Monsanto of using Roundup dominance in the herbicide market to force seed companies to license Monsanto biotechnology for their seed lines – in violation of antitrust law, according to Pioneer.

According to the Wall Street Journal, Secretary Vilsack warned Hugh Grant, Monsanto’s CEO, that there is a growing perception that the company unfairly controls the biotech corn and soybean seed sectors. Perhaps the secretary is being generous, but the farmers we know have had that perception for a long time.

With the Monsanto and Pioneer battles escalating, along with increased scrutiny of mergers and anticompetitive behaviors in the meatpacking industry and upcoming rulemaking to allow more aggressive enforcement of the Packers and Stockyards Act, Attorney General Holder and Secretary Vilsack have chosen an appropriate time to examine enforcement of antitrust and competition laws. Of course, if the workshops are to benefit family farmers, ranchers and rural communities, they will need to hear from all of us.

USDA and Justice are encouraging comments on antitrust and competition issues, including biotechnology, captive livestock supplies, packer ownership of livestock, price discrimination and unreasonable preferences. That’s why we’re tracking this process, and we invite you to learn more about making your voice heard at www.cfra.org/ag-competition-hearings.

Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.

 

October 2009

In August, Tyson Foods ended a dispute with the federal government over violations of a 2002 consent decree and federal pollution discharge permit by agreeing to pay a $2,026,500 fine. The Justice Department and the Environmental Protection Agency announced the agreement to resolve wastewater issues that occurred in 2003 and 2004 at Tyson's Dakota City, Nebraska, beef packing plant.

In April 2002, IBP - later acquired by Tyson - entered into a consent decree that required the construction of a $2.9 million nitrification system intended to reduce the ammonia content of wastewater discharges into the Missouri River. According to EPA, from July 2003 through March 2004, Tyson failed to operate the nitrification system properly, resulting in "numerous discharges of fecal coliform and nitrates and high levels of toxicity to aquatic life in the Missouri."

Increasing numbers of farmers have reported termination of hog production contracts. We've heard from a number of contract growers who have received notification from integrators that their contracts will no longer be fulfilled due to H1N1 flu or mandatory country-of-origin regulations.

Integrators have referenced "force majeure" contract provisions in termination notices. Force majeure is a contractual clause that excuses performance obligations under contracts due to extreme circumstances like war or natural disasters such as floods or tornadoes.

According to Erin Herbold, staff attorney at the Center for Agricultural Law and Taxation at Iowa State University, H1N1 flu and mandatory COOL do not constitute a force majeure event. The Iowa Supreme Court has ruled that a "force majeure clause is not intended to shield a party from normal risk associated with an agreement."

Using mandatory COOL or H1N1 as a rationale for contract termination is a thinly veiled attempt by integrators to renegotiate contracts and force contract growers to accept a lower price per pig space.

This behavior by packers and integrators is yet another reason why it is crucial that the Secretary of Agriculture write a strong rule regarding the Packers and Stockyards Act's prohibition of "unreasonable preferences" as required by the 2008 farm bill.

For more information about protections for contract growers, contact John Crabtree at johnc@cfra.org or 402.687.2103 x 1010.

 

September 2009

Scott Collin's great-grandfather homesteaded in Washington's Franklin County over 100 years ago. Collin fears, however, that his generation will be the last to farm his 1,500 acre dryland wheat farm.

Easterday Ranches, Inc. hopes to build a 30,000 head cattle feedlot near Collin that would consume nearly one million gallons of water daily. In a region that averages seven inches of rain annually, the threat to domestic and livestock wells means everything.

Collin and about 20 other local farmers formed Five Corners Family Farmers and filed a lawsuit in June asking the Thurston County Superior Court to compel the Department of Ecology to stop the feedlot's construction unless Easterday can legitimately obtain a groundwater permit.

A 1945 state law exempts farms and ranches from permitting water wells. A 2005 state Attorney General's opinion concluded that withdrawals for "stock watering purposes" are not subject to 5,000 gallon per day restrictions on non-permitted wells, opening the door for Easterday and the like.

"I don't know if we'll win. If we can protect others' future water rights, then we've done some good. But we'd never forgive ourselves if we just rolled over," said Collins.

Attorney General Eric Holder and Agriculture Secretary Tom Vilsack announced in August that Justice and USDA will hold joint public workshops on agricultural competition issues in early 2010 to "explore the appropriate role for antitrust and regulatory enforcement in agriculture and related industries."

"Maintaining a robust agricultural sector is crucial to the strength of the American economy," said Attorney General Holder. "We are committed to ensuring that competition and regulatory actions benefit all American consumers and businesses."

We'd prefer that he mention farmers and ranchers too, but, clearly this is an historic opportunity. The public is invited to attend (some workshops will be in DC, some will be regional), and we'll keep you updated on when and where.

USDA and Justice are encouraging comments on applicable issues, including forward contracting, captive supplies, and packer ownership of livestock. We'll be tracking this process and invite you to learn about making your concerns heard at www.cfra.org/ag-competition-hearings.

Contact: John Crabtree, johnc@cfra.org or 402.687.2103 x 1010 for more information.

 

August 2009

In a complex case dealing with nonprofit ownership of farm and ranch land for the purpose of wildlife and habitat conservation, Judge James Bekken of North Dakota’s Southeast Judicial District found in favor of the state in their efforts to force Crosslands, Inc. to divest ownership of farmland in Griggs and Cavalier Counties. Judge Bekken also held that North Dakota's corporate farming law does not violate the so-called "dormant" commerce clause.

Judge Bekken's analysis considered the 8th Circuit Court of Appeals cases that struck down South Dakota's Amendment E and Nebraska's Initiative 300, namely South Dakota Farm Bureau v. Hazeltine and Jone v. Gale, respectively. He rejected the idea that either precedent is conclusive in this case and sided with the state of North Dakota in finding that North Dakota's corporate farming law (N.D.C.C 10-06.1-10) "does not discriminate against interstate commerce because of any discriminatory affect on corporations such as Crosslands."

Attorney General Wayne Stenehejm presented the court with a report by Dr. Curtis Stofferahn (http://www.und.edu/org/ndrural/Lobao%20&%20Stofferahn.pdf) on the effectiveness of corporate farming laws in preserving the rural economy and family farming and ranching. Judge Bekken concurred with the state in their contention that the state has a "legitimate purpose" in preserving family farms and ranches and rural communities and that those interests are furthered by North Dakota's corporate farming laws.

We read the decision, Stofferahn's report and testimony and could not agree more with him, Judge Bekken and Attorney General Stenehejm.

After a federal district court jury found the meatpacking company Tyson to have violated the Packers and Stockyards Act by holding down cattle prices and awarding cattle producers $9.25 billion in damages, an appellate court overturned the award and verdict and allowed Tyson to go after plaintiff Herman Schumacher, a South Dakota cattleman, for court costs. As a result, U.S. Marshals seized Schumacher's home, requiring him to pay Tyson nearly $16,000.

In June, RCALF-USA urged Tyson to abandon the judgment against Schumacher. The company responded that, "Tyson intends to donate the proceeds extracted from Schumacher to local food banks in South Dakota." We could not say it better than RCALF CEO Bill Bullard, "Only in the ivory tower boardroom of a multibillion dollar company where corporate executives are completely disconnected from cattle producers and food consumers, could a strategy like this be concocted."

Contact: John Crabtree, johnc@cfra.org or call 402.687.2100 x 1010 for more information on Corporate Farming Notes.