COVID-19 is Laying Bare How Big Ag is Taking America's Small Farmers to
Slaughter
As the door for greater consolidation across industries opens wider,
entrenched transnational food interests are feeling the heat from American
farmers and ranchers to curb their monopolistic dreams.
by Raul Diego
May 27th, 2020
By Raul Diego
There is a bottleneck in the nation's food supply chain. Specifically in the
meatpacking operations of the country's "big four": Tyson Foods, National
Beef, Cargill, and Brazilian giant JBS - the world's largest processor of
beef and pork products. The logjam has been exacerbated by a slew of
coronavirus outbreaks in Iowa meatpacking plants and several other plants
across the United States, but the real problem seems to lie with big ag's
penchant for unfair antitrust practices and monopolistic designs.
In a protracted battle against the powerful industry that dates back a
hundred years, the latest salvo emerged out of Kentucky last week when that
state's Commissioner of Agriculture, Ryan Quarles and Attorney General
Daniel Cameron called for the Justice Department to "undertake and
investigation into the potentially illegal anticompetitive practices by some
meatpackers in the cattle industry." Their jointly issued letter to the DOJ
was motivated by grievances from Kentucky cattle farmers who claim the price
they are being paid for their animals has dropped between 30 and 40 percent
as the pandemic-induced shortfalls in production send beef prices sky-high.
Some economists, like Kansas State University's Ted Schroeder, believe the
current problem is the logical result of supply and demand forces, saying
that there is "plenty of cattle" to go around and that challenges lie in
getting them "through the system." This position is, of course, shared by
the companies that are under fire, like Tyson Foods, which published an open
letter in the Washington Post and the New York Times back in April, warning
that the shuttering of production facilities due to COVID-19 would severely
impair the ability of farmers to sell their livestock.
The reality though is that these economic causalities are inextricably tied
to the stranglehold of these enormous corporations, which control over 85
percent of U.S. beef production, resulting in a growing chorus calling for
the break-up of these massive corporations.
Election-year lip service
In early May, a bipartisan group of eleven state's attorney generals (AGs)
authored a letter addressed to the Department of Justice warning of the
threat of "increasing consolidation" in the beef industry and warned that
the main players like Tyson, Cargill, and JBS are able to "artificially"
lower the prices they pay suppliers, while simultaneously gouging consumers.
The AGs stopped short of actually calling for a formal investigation ut did
recommend reviewing "regulatory strategies" that would "promote
competition." It is unclear, nevertheless, how committed legislators really
are to changing the status quo and despite an executive order issued by
President Trump the day after John Tyson's open letter to keep beef
processing plants open via the Defense Protection Act, the virtual monopoly
currently enjoyed by the big four continues to be largely unchallenged.
Only in states like Iowa, Wisconsin, and Missouri, where a significant
portion of the voter base works in farms, does there seem to be any kind of
political will to address the issue. Following Trump's order, Senators Josh
Hawley (R-Mo.) and Tammy Baldwin (D-Wis.) asked the Federal Trade Commission
to open an antitrust investigation "into the meatpacking industry and its
potential to cause significant disruptions in the food supply chain." But,
just how consequential such actions will be in the end remain to be seen.
Considering the long-drawn-out history of the problem, the sudden concern by
politicians might just be election-year lip service.
Out to the slaughterhouse
A lawsuit filed by the Ranchers Cattlemen Action Legal Fund United
Stockgrowers of America (R-CALF) and others in April of 2019 accused Tyson,
Cargill, National Beef Packing Co., and JBS of conspiring to fix beef prices
and manipulate the futures market since 2015. The class-action suit accused
the beef processors of "collectively reducing their slaughter volumes and
purchases of cattle. manipulating the cash cattle trade" among other
egregious forms of market manipulation and sabotage."
The plaintiffs claim that the big four colluded to make selling cattle "an
unmanageable nightmare" thereby increasing their "collective leverage over
producers." In addition, the claimants accused the large companies of
purposely blocking market access to domestic ranchers by flooding the U.S.
with foreign cattle from Mexico and Canada and using loopholes in the law to
label foreign beef a "Product of the USA," a move which has seriously
affected the grass-fed cattle industry in the country.
American ranchers and farmers have lost patience with the legislative and
executive branches of government, who they see as not heeding their requests
to curtail the big corporations' monopolistic practices, which also extend
to other sectors, such as the packaged seafood industry. They hope to take
their fight to the third branch of government in hopes that the judiciary
will help shift the balance of power. But, as the COVID-19-driven shutdowns
continue to open the door for greater consolidation across industries, it is
a battle that may have already been led to the slaughterhouse by
well-entrenched transnational interests.
