Step onto almost any ranch in the West
nowadays and you’re likely to hear someone cussin’ the meatpackers.
The next thing you might hear is a phone call from that
same rancher to his or her congressman asking support for a ban on
packer ownership of cattle. Packers are the people at the end of
the line of raising a calf; they turn cattle into steaks and
hamburgers.
Since 1980, the four largest beef processors
in the country have increased their share of the steer and heifer
slaughter from 36 to 82 percent. During those same years they’ve
wrangled such a tight grip on cattle markets that their profit
margins have soared 233 percent, while the price for cattle on the
hoof steadily weakened.
According to the US Department of
Agriculture, since 1975, ranchers get about $400less per head at
the scales while the cost of almost everything else they need to
survive “- fodder, machinery, labor, insurance and medicine “- has
either doubled or tripled.
Of course the same thing has
been happening to one degree or another throughout the entire
agricultural economy, as giant corporations like Archer Daniels
Midland gobble up midsized firms and use their massive buying power
to depress the price of harvested food crops. But the meatpacking
situation appears to be worsening. In fact, it’s far worse now than
it was at the turn of the century when ranchers were at virtual war
with the packing houses, a situation that required White House
intervention to settle.
Economic studies of monopolized
industries indicate that when any market becomes dominated by fewer
than six firms, fair pricing become compromised. So when over 80
percent of cattle are slaughtered and processed by four large firms
“- Cargill, ConAgra, Farmland National and Tyson Foods “- we are
inviting monopoly. Here’s how it works.
The four large
slaughtering and packing houses also own anywhere from 20
percent-to-35 percent of all cattle in the country. By holding a
few million steers or hogs over the market every day, packers can
keep wholesale prices down. By joining forces with larger retailers
like WalMart, as Tyson recently did, they also exert a strong
influence on retail prices. Who pockets the difference between low
wholesale and high retail? Not the rancher.
“Packers have
in fact gained an economic stranglehold on the independent cattle
producer,” says Jay Miller, chair of the market committee for the
Ranchers-Cattleman Action Legal Fund (R-CALF). The group is
headquartered in Billings, Mont., and represents 6,700 ranchers.
Miller and his members have been asking Congress to ban packer
ownership of cattle for more than 14 days before slaughter. Of
course, the packers aren’t sitting still for that kind of
legislation and have recruited the American Meat Institute and a
host of Washington lobbyists to represent their cause on the Hill.
Ranchers have struck back by filing class action lawsuits
against three of the largest packers. Picket vs. IBP, Murdock vs.
Excel (Cargill) and Leuking vs. ConAgra all claim that the packers
in question use forward contracts and captive supplies in violation
of the Packers and Stockyard Act, a trust-busting statute passed in
1921. No one is claiming that the big four are conspiring to fix
prices: They don’t have to conspire, it being easy enough to watch
each other’s supplies and bid less aggressively on the remaining
cattle needed to meet demand. And when supplies get low, there’s
always cheap imported cattle to leave American cattlemen with herds
at the ranch gates watching prices tumble.
“It was time
to draw a line in the sand,” says Jack Boehler of Orleans Nebraska,
a plaintiff in the case against ConAgra.
Meanwhile,
cattlemen’s organizations like R-CALF have been pushing Congress to
clean up the system. This spring, the Senate passed a farm bill
containing a hard-fought ban against packer ownership of cattle.
The House is considering the same provision. But the packers and
their lobbyists are turning up the heat. A few strategically
targeted campaign contributions could steer the ban right into a
subcommittee trashcan.
It’s interesting to note that all
this is taking place in the midst of a much larger spasm of
corporate CEO crime and depravity. The last American president who
was bold enough to attack economic corruption head-on was Teddy
Roosevelt, a pro-business Republican. Some people may recall his
most memorable target for reform: the meatpacking industry.
Mark Dowie is a contributor to Writers on the
Range, a service of High Country News in Paonia,
Colorado (hcn.org). A writer and the author of several books, he
also works as a cowhand on the Gale Ranch in Chileno,
California.
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