Mega Mergers Focus for Organization for Competitive Markets

The Organization for Competitive Markets recently wrapped up their annual convention. One of their primary concerns is the increasing consolidation in U.S. agriculture. OCM President Mike Callicrate says they’re closely watching proposed mega-mergers between ChemChina and Syngenta, Dow and DuPont and Bayer and Monsanto.

He says while its good Senator Chuck Grassley is calling for a hearing next month to examine those mergers, he doubts if it will result in any action.

Callicrate says wealthy corporations are driving these mergers and trying to stop them is becoming almost impossible.

Callicrate says Dianna Moss of the American Anti-Trust Institute spoke at their convention outlining the various concerns with the mega agricultural mergers.

To listen, click here.

Area dairy farms shut down as milk prices slide

By Joe Mahoney CNHI State Reporter

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FileA cow is seen at Hemlock Valley Farm in Milford in this June 2014 photo

ALBANY — Tim Tucek, a Chenango County dairy farmer, said it was a decision he couldn’t avoid given his limited options — sell the farm or go broke.

Robin Fitch, whose family milks about 170 cows in West Winfield, said she is “99.9 percent” certain that she’ll shut down her operation, too.

Tucek and Fitch are among scores of New York dairy farmers hit hard by a steep, sustained decline in milk prices. The reduction amounts to a cut of about 40 percent of revenues since prices peaked in 2014.

“It’s a sad statement about agriculture in this country when many of the farmers who supply us with our food can financially qualify now for food stamps,” said Dave Rama, a Delaware County cattle dealer.

Cheap milk for consumers comes with a high cost for farmers, said Rama. The effects have spread to small businesses that supply local dairies, as well.

“It’s having a major ripple effect,” he said. “All of a sudden, the vendors have become lenders.”

Dairy farmers have ridden a wave of prices and production, agriculture experts say.

Two years ago, U.S. dairies ramped up production to take advantage of prices rising with international demand, particularly from China.

But exports — to China and Europe — have sharply fallen. The resulting glut and falling prices are bleeding the industry.

“Our farmers are trying to produce as much milk as they can, even though prices are low, to improve their cash flow,” said David Balbian, a dairy specialist with the Cornell Cooperative Extension Service.

“The extra milk is not helping the situation, but individual farmers have to do what’s best for them,” he said.

New York farmers are braced for the situation to worsen, when New York City’s last remaining milk processing plant, Elmhurst Dairy, closes for good this fall. Located in Queens, the 97-year-old plant will lay off 273 workers.

It will also force many upstate farmers to make other arrangements.

Elmhurst is where Tucek sends milk from about 100 cows on his Bainbridge farm. He hopes to sell his cows, he said, before the processor closes.

“Dairy farming is no longer profitable,” said Tucek, 48, who has been milking cows since he was 18. “Prices go up at times, but then they go down for too long.

“We’ve lost 200,000 dairy farms in this country, and no one wants to do anything about it,” he said. “If you can’t eke out a living from it, then you have to do something else.”

A married father of one, Tucek said he does not yet know what he’ll do for work.

Robin Fitch said she agonizes over selling her farm, since her 25-year-old son is committed to making dairy management a career.

Fitch bottle-fed her cows when they were newborn calves. Every one has been given a name, usually inspired by a television character.

Fitch said she keeps tabs on how long she’s had each cow based on the shows that produced their monikers.

“The little milk companies are being pushed out of business,” she said. “The small farms are seen as a thorn in the side of the corporate farms.”

Concerns about the plight of dairy farmers spurred 45 members of Congress to ask the U.S. Department of Agriculture last week for help.

Separately, Sen. Kirsten Gillibrand, D-N.Y., called on Agriculture Secretary Tom Vilsack to reimburse the premiums and fees that farmers paid through a federal insurance program created in 2014.

The department has collected $73 million in premiums but only paid $700,000 to farmers, according to Gillibrand.

Vilsack announced this week that his department will pay out $11.2 million to farmers enrolled in the program, due to the narrowing margin between milk prices and feed costs.

But Tucek said the problem Washington needs to address is a pricing system that causes such wild gyrations in what farmers get for their milk.

With national and international markets out of their control, farmers have limited choices, said Mariane Kiraly, an educator for Cornell Cooperative Extension.

Selling cows may not be the best option, she said, because the low price of milk has decreased the demand — and prices — for cattle, too.

Some farmers resort to selling timber and stone to stay ahead of their bills, said Kiraly, who helps farm families with financial planning.

Fitch said she doesn’t see the plight of farmers improving unless the federal government finds a “balance” to keep dairy producers from losing money by milking cows.

“Right now there is no light at the end of the tunnel,” she said. “The government encourages young people to get into farming. But what they are doing is setting them up for a disaster.”

Joe Mahoney covers the New York Statehouse for CNHI’s newspapers and websites. Reach him at jmahoney@cnhi.com

Ban On Meat Packer Ownership: Too Little, Too Late

By Mike Callicrate

Iowa Senator Chuck Grassley, a longtime advocate for fair markets, is once again reintroducing a bill that would make it unlawful for meat packers to own livestock more than seven days prior to slaughter. Similar legislation has been introduced before, but the powerful packer lobby has always succeeded in killing it.

Cowboy Aside from whether the bill actually has a chance this time, there’s another question to consider. If Congress bans meat packers from owing livestock, who will be left to buy the ranchers’ calves and the stockers’ and backgrounders’ feeder cattle?

When packer ownership first became an issue back in the spring of 1994 — a crisis during which the market fell $17 per hundredweight ($220 per head) in just six weeks — few people understood the negative impacts of packer-owned livestock, also known as captive supplies. Well, now we know. The lack of price discovery is on everybody’s radar screen, underscored by one of the most egregious market failures of all time: the 2015 cattle market meltdown, which saw billions of dollars of equity transferred from the independent cattle-feeding sector to the powerful meat packers and food retailers. With losses exceeding $600 a head, already crippled cattle feeders were essentially wiped out in 2015 – the largest capital drain ever experienced by the cattle industry.

Even by historic standards, the 2015 free-fall was a watershed. And history has been brutal. The year 1994 was particularly punishing. When market leader IBP (now Tyson) stepped out of the market for six weeks, the other big packers no longer had a “boss cow” to follow for price leadership. More than 1,500 enraged cattlemen gathered in Omaha to protest the destructive price decline. Prices recovered $12 per hundredweight in the following weeks, but what was obvious to many sellers of finished cattle was confirmed later in 1996 by a former IBP vice president: the biggest meat packers had indeed agreed to basically cooperate rather than compete.

So now we come to the late summer of 2015 and the wrenching 30% drop in cattle prices. Even when the cattle market was at record levels in 2014, producers were still short of their 1975 share of the consumer beef dollar by about $200 per head, though it was a much-needed improvement. Unfortunately, it proved to be short lived. While consumers continued to pay essentially the same amount for beef, cattle producers got shafted. Tragically, there weren’t enough independent-thinking cattlemen left to even organize a protest. At least the feisty R-CALF organization was willing to step up and call for a Congressional hearing.

Tyson While the plundering of cattle producers ensued, Agriculture Secretary Tom Vilsack was asleep at the wheel by failing to enforce the 1921 Packers and Stockyards Act, intended to prevent
another meatpacker monopoly. Instead, he was celebrating the lifting of import restrictions on South American beef, giving greedy meat packers and retailers all the leverage they needed to drive down U.S. cattle prices to far lower South American values while inflating their own profits.

Banning packer ownership of livestock now isn’t the solution it would have been had it been enacted when it was sorely needed. Years of de-regulation and antitrust neglect have allowed the biggest, most aggressive companies to gain monopoly control of our food supply. Competition is dead, and, without competitors, a true market can’t exist.

Our founding father Ben Franklin described family farm agriculture as “. . . the only honest way [to acquire wealth], wherein man received a real increase of the seed thrown into the ground, in a kind of continual miracle, wrought by the hand of God in his favor, as a reward for his innocent life and his virtuous industry.” Today’s environment is more akin to Jurassic World. farmerfounders Rather than creating wealth from the land, the winner-take-all super-predator corporations are running a giant mining operation. No new processors, feeders or producers can succeed, even though new players are what we critically need to revive competition, restore market access and keep cattle prices honest.

If food security is important to Americans, we need far more than a ban on meat packer ownership of livestock. We must break the monopoly power of big retail, big meat packing and big food in general and create a pathway for family farmers and ranchers to re-establish their traditional connection with consumers. An all-out effort must be made to rebuild a healthier family farm food system all the way from soil to table, giving new life to the most important sector in our economy — American agriculture.

Broke Cattle Markets, Broken Cattle Feeder

The U.S. cattle industry has lost nearly half our cattle ranchers and over 70% of our feeding operations.

Is it time to do something about the abusive market power of the meat industry?

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A self-explanatory table and a chart showing monthly net returns to feeding.
Data are through March 2016.

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A 12-year moving average of returns.

Competitive markets adjust over time to big losses and to big profits. Due to the long biological cycle for cattle, such adjustments can take years.

Before consolidation and captive supplies, all of you know that we observed cyles of 10-15 years duration due to these lags. In a competitive market we would expect the 12-year moving average to be fairly stable with no significant trend. Not so. The overall trend in this moving average is strongly negative, revealing a loss of over $100/head in the past 20 years.

The major feeders must be incurring huge losses …. or getting big kickbacks.

Broken markets. Absolutely.

Bob Taylor
Organization for Competitive Markets

Real World Ranch Restoration

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In late March, a fascinating group of forward-thinkers, innovators and change-makers converged at Callicrate Cattle Company for a ten-day intensive regenerative farm planning and design workshop led by Darren Doherty, a world recognized consultant and facilitator.

Owner Mike Callicrate met Doherty a few years ago on a business trip to Australia and immediately began a long-term collaboration with the native Australian, who is considered a leader worldwide at shifting farms and ranches from the current “extractive industrial model of production” to sounder approaches based on regenerating and rebuilding soils, landscapes, ecosystems and rural communities.

“I wanted to put together a systematic plan going forward that accomplishes our goals rather than just talking about it and never doing it,” Mike explained. “It’s a complex undertaking. It’s hard rebuilding a broken food system. It’s hard for a ranch even to stay in business without fair markets or a democratic food infrastructure that serves everyone equally.”

In the final analysis, he considered it as important to avoid missteps as to brainstorm the full range of possibilities suited to the short-grass prairie environment, which is particularly fragile because it overlies the rapidly depleting Ogallala Aquifer. (He discusses his concerns about the dwindling water supply HERE as part of an HBO special investigation.)

Mike’s northwest Kansas ranch was the second stop on Doherty’s 2016 Regrarians 10 tour (aka REX), which began in California and has additional workshops scheduled in Tennessee, Texas, Oregon and upstate New York, as well as Chile, Mexico, France and Morocco.

Comprised of 1,200 acres of contiguous semi-arid plains, Callicrate Cattle Co. is on the large end of the spectrum of farm sites Doherty plans to visit this year. He was enthusiastic about the venue and its unique challenges.

“I like to work with host farms that are representative of their region, since my emphasis is on working agricultural landscapes,” Doherty explained.

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At the outset of the planning process, Mike (shown above right) expressed several long-term goals for the property, including optimizing the production of multi-species livestock and developing a soil-building operation that would create additional revenue while benefiting neighboring farms. His son Teegan, a gifted metalworker and construction manager, also shared several big-picture priorities, such as growing healthy food, passing on a healthy environment to his infant son and retaining or attracting more young people to the local community.

Several attendees came from Colorado Springs and Denver but others traveled from as far as Eastern Canada to attend the mix of classroom-style strategy sessions and on-farm evaluation and planning exercises.

Doherty has presented more than 200 landscape design workshops in all kinds of geographies and climates around the world. His format is a comprehensive review of every feature of a farm, including placement of water sources, roads, buildings and future tree plantings; livestock rotation and foraging patterns; soil types; and more. The process builds on an inter-related series of questions. How can water runoff be captured and stored for future use? How can fences, roads, trees and buildings be configured to best enhance the farm’s workflow? How can various revenue streams be integrated so they support and enhance the farm’s overall economy?

Each day entailed a combination of reading and plotting new configurations on maps, interspersed with studying, measuring and intuiting the land, water, wind and vegetation.

“We put a bit down on paper and then we go out and look at it, and then we come back in and add some more scribbles,” Doherty explained.

He established a participatory, peer-based learning environment by dividing participants into small groups each charged with developing their own plans, making presentations and asking questions at the same time as he was conducting his own assessment and design.

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Not surprisingly, the roughly two-dozen who participated in all or part of the course were interested in food production, landscape management or both. More intriguing was that everyone brought a broader social mission to their ambitions as well.

That common thread made perfect sense to Doherty.

“Agriculture is a social act, because it feeds the world,” he said. “In some ways it’s the ultimate social activity. It’s the foundation of civilization as we know it.”

Those attending from the surrounding region included Brian Lassek, of Black Forest, who is involved with Fox Hole Homes, a New Mexico nonprofit that seeks to create sustainable off-the-grid housing communities for homeless veterans. “For me, all of this stuff is about freedom,” he said, emphasizing the importance of psychological freedom and freedom from addiction. He wants to redesign communities in ways that enhance the health, well being and social support of residents.

“I understand that homelessness is not just about financial or social issues. You can’t solve it by throwing money at it,” he said.

Becky Elder, owner of Blue Planet Earthscapes, a permaculture design business in Colorado Springs, was attracted by the chance to watch ecological design principles applied across sweeping acreages.

“I’ve been doing permaculture on a small scale since 2002, but it’s so interesting to look at this from the standpoint of a large expansive farm and the acres beyond it,” she said. “I’ve wanted to do something like this for a long time. Converting 500-square-foot yards is great, but it doesn’t have the same effect. It isn’t the solution. I just think seeing this process done on a broad scale is really powerful.”

Similarly, John Hoag, a Colorado Springs-based architect specializing in green building, said the project had broadened his perspective.

“Water has many more roles in the function and management of a property than I previously imagined,” he said. “I’m finding things here that might apply to my future endeavors and also learning about what the most passionate permaculture practitioners are doing around the world today.”

Also hailing from southern Colorado was Ryan Sanders, who owns 6 ½ acres near Beulah at the headwaters of the Arkansas River. As he develops the property, he hopes to create a sustainable management model for grazing lands that can be adopted by neighboring ranchers.

One last-minute guest to the party was Christopher Gish, who works in food service at Linger Restaurant in Denver. Doherty and his family had dinner there with Mike Callicrate the night before the course began and offered Gish, who ended up waiting on them, a scholarship to attend. Gish was blown away by the invitation, in no small part because it gave him a chance to become intimately familiar with the ranch that provides the beef featured in several popular dishes at the restaurant, including the sliders, barbecue tacos, Cubano sandwiches and something called “hangover ramen.”

“I knew about the past history and the cattle marketing lawsuits Mike had been involved in and everything, but being able to see firsthand the future of the farm unfolding and how it’s setting the path for other farms, that was just an incredible experience,” he said. (Read more of his reflections, HERE.)

Gish traded out part of his time at the workshop with another member of the Linger waitstaff, Eric Goodline. The two are supporting the development of an eco-friendly orphanage and library in Nepal through the Seeds of Change Foundation, which Gish founded.

Other participants came from farther afield. Skyler Adamson works with a community orchard and edible landscaping project in Lawrence, Kan. Peter Allen is a former ecology professor from Madison, Wis., who wanted to put his preaching into practice by starting a successful sustainable farm and meat CSA. Justin Bramhall runs a retreat center an hour and a half south of Tucson and dreams of transforming it into an ecological demonstration site.

Jenny Bowen, a musician and local food advocate from Wichita, Kan., hopes to apply what she’s learned to a community farming project in that city. Reading about the concept of regenerative agriculture lit her fire to learn more about it, she said.

Cassandra Noel, of Santa Fe, said she was drawn by the workshop’s emphasis on holistic planning. She’s become increasingly interested in the nexus between soil health, food production and climate change. She’s also an interfaith minister who looks at education, health and land management through a spiritual lens.

No one traveled further to be there than Adam MacLean, who came all the way from Prince Edward’s Island, Canada. His attendance was mostly a function of timing, since once the growing season gets underway he’ll be too busy to leave the land he manages back home. He hoped to begin applying some of the things he’d learned immediately on return.

“I’ve done lots of education in this space, but I hadn’t been to one of Darren’s courses before,” he said. What sets Doherty’s training apart? It’s “pragmatic” and “grounded in reality,” MacLean said, a view echoed by other attendees as well and testament to Doherty’s reputation for creating functional, workable designs.

Joe Johnson was charged with recording the daily proceedings on the Regrarians’ REX2Kansas Facebook page. He is a nondenominational minister from Arizona and has done developmental work in Haiti. “I want to learn about this but I’m still not entirely sure how I’ll use it,” he said. “What I do know is this training brings together people who have a real social dimension to what they do. I don’t think you can get here without that.”

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restore4During the course, participants had the chance to attend an evening screening of the documentary film Polyfaces, which was produced by Doherty’s wife, Lisa Jane Heenan. It was shown at the local Cheyenne Theater in downtown St. Francis, Kan., and presented free to the public in exchange for a goodwill offering. Heenan’s visually arresting film tells the story of Polyface Farm, one of the best-known examples of alternative agriculture in the country. It traces the farm’s history, makes clear why owner Joel Salatin remained committed to sustainable principles, reveals how the farm eventually developed a cult following and how its influence shaped the lives of its owners, workers and customers along the way. (DVDs of the film and information on guest screenings are available HERE.)

Heenan explained that the project was a five-year labor of love that began in 2011 with one main objective: encourage viewers to shop consciously by considering the type of agriculture they support when they spend their food dollars.

The Regrarians course concluded on March 31, but Doherty said in many ways the end is only the beginning. Using Facebook and Google Docs, he plans to engage roughly 240 alumni from this year’s tour in an ongoing dialogue. Graduates will have the chance to interact, ask each other questions and brainstorm new ideas in the months and years to come.

Meanwhile, Callicrate Cattle Co. now has a thoughtfully honed and meticulously detailed blueprint to follow as the farm continues its transformation toward a more regenerative, self-sustaining, ecologically attuned production model.

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