Ranchers struggle against giant meatpackers and economic troubles
Photo: Rob CrowA sea of cream-colored cowboy hats, the kind ranchers wear on their days off, fills a sterile conference room at the Fort Collins Marriott. Banners from groups like the Ranchers-Cattlemen Legal Action Fund and the Western Organization of Resource Councils add bright slashes of color, and warn that JBS, the world’s largest meatpacker, now controls 24 percent of all cattle produced in the United States. It’s August 2010, the night before a national workshop on competition in the livestock industry, and well over 500 ranchers, feedlot owners, and their allies are packed into this room to talk about change.
Word spreads that I want to hear their stories. We all know they’re harassed by many demons: Land, feed, and fuel costs have all soared. Newly health-conscious consumers disdain red meat; environmentalists regularly sue over grazing practices. Retail giants like Walmart grab an increasing share of any profits. The price a rancher gets for beef, adjusted for inflation, dropped from $1.97 to 93 cents per pound between 1980 and 2009.
Today, though, the ranchers are focused on a different villain, and one after another, they pull me aside to tell different versions of the same tale. They talk about the meatpackers’ power — how it’s become nearly impossible to make a living as a small operator, because the meatpackers no longer buy much from small operators. It’s harder and harder to get a fair price for cattle, they say, and the meatpackers that slaughter and process the beef conspire to make it so.
Bill Bullard, president of the Montana-based Ranchers-Cattlemen Action Legal Fund (R-CALF), mounts the podium like a preacher and rallies the crowd. “Our cattle industry is shrinking,” Bullard booms. “Folks, these are signs of an unhealthy industry. An industry in severe crisis.” He’s one of many who raise the specter of the nation’s chicken and hog industries, in which once-independent farmers are now treated more like meatpackers’ employees.
Close to 2,000 people show up at the next day’s workshop, held at nearby Colorado State University and sponsored by the U.S. departments of Agriculture and Justice. Agriculture Secretary Tom Vilsack fields questions about the meatpackers and cites a grim statistic: The number of U.S. cattle producers has plummeted from 1.6 million in 1980 to 950,000 today. Vilsack doesn’t directly blame the meatpackers, but says, “We can’t continue these trends, because if we do, we’re going to end up with a handful of farmers, a handful of packers, a handful of processors, a handful of grocery stores, and at that point, the consumers will suffer as well.”
It’s a chord that twangs mournfully throughout U.S. agriculture, as a traditional rural way of life appears to take its last, sad, shuddery breaths. But the ranchers haven’t given up hope. In fact, many speakers thank the Obama administration for showing more guts than previous administrations — Democrat or Republican — and finally standing up to the meatpacking industry.
The rise of the meatpackers began in the 1880s — an era, in the words of the Federal Trade Commission, “when the modern American meat industry was in its infancy.” Back then, John Rockefeller was building the Standard Oil empire as other powerful men became railroad and steel barons. The “Big Five” meatpacking companies controlled 45 percent of the domestic cattle market by the early 1890s. Every Tuesday at 2 p.m., their representatives met in downtown Chicago to decide how many cattle each would bring to the marketplace. This illegal act of collusion — which kept meat prices high by limiting supply — was known as the Veeder Pool, because the meatpackers’ attorney, Henry Veeder, kept records for the meetings and later testified about them in Congress. The Veeder Pool and similar dodgy arrangements put the squeeze on ranchers, whose cattle decreased in quality and value as the packers held them back from the market.
The big meatpackers were mostly able to evade enforcement of the 1890 federal Sherman Antitrust Act. Whenever the pressure got too strong, the companies would play legal hide-and-seek, merging or dissolving to avoid prosecution. Even when trust-busting President Teddy Roosevelt took office, the companies retained their power. Upton Sinclair, a leading muckraker, described the power of the “Beef Trust” in his classic 1906 novel, The Jungle:
It was the incarnation of blind and insensate Greed. It was a monster devouring with a thousand mouths, trampling with a thousand hoofs … it was the spirit of Capitalism made flesh … it wiped out thousands of businesses every year, it drove men to madness and suicide. It had forced the price of cattle so low as to destroy the stock-raising industry … it had ruined butchers who refused to carry its products. It divided the country into districts, and fixed the price of meat in all of them …
Spurred by that book and cattlemen’s complaints, in 1918 the FTC found “evidence of two generations of combined effort on the part of the American meat packers, particularly the Armour, Swift, and Morris families, to control an ever increasing part of the food of the American people.” The meatpackers were “skilled in concealing” their collusion and maintained “the appearance of competition,” the FTC said.
Congress tried to crack down with the 1921 Packers and Stockyards Act, which forbade packers from engaging in “unjust, unfair, or discriminatory practices” against livestock sellers. At the time the law was passed, “it was viewed as providing the most complete oversight of any sector of the economy,” says Neil Harl, an Iowa State University economist and lawyer who has studied it extensively. Yet the meatpackers’ grip simply tightened, as they used “intense political pressure” to ward off the Agriculture Department regulators, says Harl. “Whether it was a Republican administration or a Democratic administration, there was not a lot of effort … to implement the full measure.”
While there have been fluctuations — meatpacker concentration hit a low point in 1977 — mergers in the ’80s began a tidal wave of consolidation that leaves meatpackers with nearly double the power they wielded 120 years ago. Four giant companies — Tyson, Cargill, Brazil-based JBS, and National Beef — now control about 80 percent of the U.S. beef market.
More than 200 ag groups and a bipartisan bunch of senators from cattle and hog states — Jon Tester (D-Mont.), Tim Johnson (D-S.D.), Tom Harkin (D-Iowa), and Chuck Grassley (R-Iowa) — persuaded Congress to crack down again in 2008. Language inserted in the Farm Bill directed the Department of Agriculture to devise new rules that establish more clearly when the Packers and Stockyards Act is being violated. The USDA’s Grain Inspection, Packers, and Stockyard Administration (GIPSA, pronounced “jipsa”) proposed rules last June, and the feds are evaluating more than 60,000 public comments. Prominent Obama administration officials focused on the issue include Secretary Vilsack, Attorney General Eric Holder, and the head of GIPSA, J. Dudley Butler. He’s a farmer and lawyer from Mississippi, who was a founding member of the reform-minded nonprofit Organization for Competitive Markets and an R-CALF member. Butler keeps a low profile, but when he was appointed in May 2009, he said he was coming to Washington, D.C., “to enforce the Packers and Stockyards Act.”