Cattle ranch Florida

Will these fellows be sold under contract or at market? That debate begins this week in the U.S. Senate. This is the North Caledonia Ranch near Melbourne, Florida.
Photo: Gatorhank

Metta Johnson, who ran the office in our little newspaper in Smithville, Texas, said you could measure the vitality of a town by underpants. If you could buy underwear from stores on Main Street, the town still had juice.

Twenty years ago, you could buy underwear at four different stores on our Main Street. Groceries, too, at Babe Shirocky’s shop, where he sold beef raised on his ranch. But then a Wal-Mart opened nearby, and then another and another. The small shops on Main Street were overwhelmed by the market power concentrated in Bentonville, Arkansas, and so they closed. Today, Babe is gone and you can’t buy underwear — although in the way of many small towns, you can purchase an antique at any of a half-dozen shops. By Metta’s calculation, the town is on life support.

Farmers and ranchers are asking the U.S. Senate this week to bar meat packers from owning cattle. It’s a technical argument that is part of the farm bill debate, but what’s at stake is whether rural communities will control their future — whether rural America will still be filled with owners and entrepreneurs or just contract workers who follow orders and feeding schedules from corporate headquarters for an ever-smaller share of the profits.

Cattle raisers want the Senate to ban meat packers from owning livestock. They want the federal government to have greater powers to require that beef be sold in competitive market.

hog ownership

Simply, they don’t want the beef market to go the way of chickens and hogs. (A good explanation of the issue can be found here.)

As the hog industry switched from independent producers selling in a market to farmers working under contract to meatpackers, big farms got bigger and smaller producers were crowded out.

Most hogs and nearly every chicken are raised under contract with just a handful of packers. The system has reduced the prices paid for this meat and forced most independent producers out of business. Big farms are in; smaller producers are crowded out. Under this system, meat packers benefit from lower prices. Farmers, however, see their profits wrenched away while they spend their days working under contract in a market that lacks meaningful competition.

Beef producers don’t want to see this happen in their markets. In 2002, Iowa senators Tom Harkin (a Democrat) and Chuck Grassley (a Republican) pushed for ban on packer ownership of cattle, but couldn’t raise enough votes from Republican senators or from members of the House to keep the provision in the final bill.

The farm bill passed by the House over the summer didn’t contain any of these pro-market provisions. Harkin and Grassley are again trying to have them included in the bill. A dozen U.S. Senators — including Democratic presidential candidates Hillary Clinton and Barack Obama — sent a letter in late September warning, “Consolidation and vertical integration in the livestock and poultry industry tilts the balance of power away from producers.” (Former senator John Edwards, also running for the Democratic nomination, has made a ban on packer ownership a major part of his campaign.)

cattle Oklahoma

Wintertime in eastern Oklahoma.
Photo: SFSteve

Late last week, R-Calf USA issued an “urgent message” warning that the “cash cattle market is rapidly disappearing”¦ We don’t want our cash cattle market usurped by large meatpackers, and we don’t want to be forced to enter grower contracts, but that’s where we’re headed unless Congress does for us what it did not do for” the hog and poultry industries.

Or, another way of looking at it, cattle raisers don’t want to have what happened on too many Main Streets, where today you can’t buy a pair of underwear, to happen in their industry.

Debate on the farm bill begins this week in the Senate.

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