Farmers for Whom?
GOP politicians take a lot more money than Democrats from Big Ag monopolies while farmers get squeezed
Prices farmers get for their cattle have stayed absolutely flat since 2014,
While Big Ag meat processors have seen their income triple!
Why? Big Ag corporations have poured ever more money into political campaign donations – overwhelmingly to Republican politicians – to weaken or block anti-trust and price-fixing laws and regulations,
So that they can grow ever bigger by buying up their competitors. Now only four meat processors control 80% of the beef market.
They are using that monopoly to command higher and higher prices at the supermarket while keeping the prices they pay the cattle farmer as low as possible, as farmers have fewer and fewer choices on to whom to sell to and at what price.
The Biden Administration and Democrats in Congress want to crack down on price-fixing by the giant meat processors – but Republicans in Congress aren’t helping. Why?
First the facts: why farmers suffer while Big Ag prospers? In 2016, cattle prices to farmers averaged $2.60 per pound, nationally. They are now averaging $2.55.
One of the wackiest explanations offered by some is that meat consumption has declined since the “woke left” is eating less meat because of concerns about health or about reducing methane, a product of meat production that contributes to climate change. Actually, consumption of red meat and poultry per person has increased from 200 pounds to 224 pounds between 2014 and 2021.
Meanwhile wholesale prices paid to processors have jumped from $3.20 per pound to $4.10 in the same period. As a result, meat processors have seen their aggregate gross profits jump from $7.5 billion in 2012 to a projected $22 billion in 2021, as their profit margins (the difference between their total sales and their total costs) increase from 11% of their sales in 2012 to 17% in 2021.
And the politics: The real reason for this squeeze on farmers has been the huge increase in political contributions and lobbying of congress by the meat processors – heavily favoring Republicans.
In 2020 Republicans received $821,741 to Democrats’ $447,895 – almost twice as much. Nine of the top ten recipients in both Senate and House races were Republicans. GOP senators received well over twice as much money as Democrats, and Donald Trump got 47% more money from meat processors than Joe Biden.
And why do these Big Ag businesses prefer to donate to Republicans? Because, in spite of their railing against big corporations and the plight of small farmers, Republicans have failed to enforce existing anti-trust and price-fixing rules, and have blocked or weakened new measures.
How do Republicans justify promoting policies that hurt farmers?
It is not that Republicans don’t like farmers. They just like Big Ag more. In fact, since the 1970s, Republican thinkers have argued that attacking the monopoly practices of big business is in fact bad, because in the words of one, it is just implementing “socialism by stealth”. They argued that acquisitions promote efficiency which reduces costs, and that the benefits to consumers should take precedence over those of producers like farmers.
As a result, from the Reagan administration on, Republicans dramatically reduced anti-trust enforcement, standing by while just a few companies gobbled up the ag business sector. The effect on family farming was devastating: just in the last decade over 100,000 family farms have been lost.
And they continue to suppress anti-trust enforcement even though in 2015 a detailed analysis of 46 mergers concluding that in 38 of them consumer prices actually increased 10% following the mergers, proving their premise quite wrong.
Is the battle against Big Ag lost? No, but…
Following years of George W. Bush’s USDA blocking enforcement, only in the Obama administration, did the government finally try to again curb the anti-competitive behavior in agriculture -- but the meat lobby spent $10 million stalling progress until after the 2010 elections when Republicans gained control of Congress and stripped the agency of resources to act on behalf of farmers. That policy continued in spades under Trump.
Now the Biden Administration has made a monumental commitment to competition in the food and agriculture system — and directed the agencies under its purview to do the same. In July Biden signed an executive order directing that the USDA “address the unfair treatment of farmers and improve conditions of competition in the markets for their products.” In a policy document entitled “Addressing Concentration in the Meat-Processing Industry to Lower Food Prices for American Families” the Biden-Harris Administration and USDA are taking on these issues by:
“Taking strong actions to crack down on illegal price fixing, enforce antitrust laws, and bring more transparency to the meat-processing industry. USDA is conducting an ongoing joint investigation with the Department of Justice into price-fixing in the chicken-processing industry, which has already yielded a $107 million guilty plea by Pilgrim’s Pride and numerous other indictments. USDA has also announced a more robust Packers and Stockyards Act enforcement policy and new efforts to strengthen Packers and Stockyards Act rules, so that meat-processors can’t use their market dominance to abuse farmers and ranchers. And USDA is creating more transparency, with new market reports on what beef-processors pay, as well as new rules designed to ensure consumers get what they pay for when meat is labeled ‘Product of USA.’ “
And what are Virginia’s political candidates saying?
In the current Virginia political campaign websites, Glenn Youngkin and Michael Webert have not a word in their campaign sites about the economic plight of rural areas, or on this issue specifically. But they are advocating for reducing or eliminating government regulations – just the stance that has made Big Ag so rich and powerful! Terry McAuliffe’s campaign, on the other hand, has put forward a detailed plan for developing rural economies back up.
Of course, Big Ag’s monopolistic practices, don’t just hurt farmers; they hurt everyone in the rural communities that support those farmers. So, ask yourself whom should we vote for if we connect the dots regarding policies that will protect family farms from Big Ag exploitation? The folks on the side of Big Ag or the ones who are actually working to create a more level playing field?
Resources:
https://www.newyorker.com/news/dispatch/is-it-time-to-break-up-big-ag
https://www.npr.org/2021/09/14/1036678722/chicken-beef-pork-meat-prices-inflation-biden
https://www.reuters.com/business/how-four-big-companies-control-us-beef-industry-2021-06-17/