In 2003 we were discussing problems facing cattlemen – What in the heck happened?

The Flemingsburg Gazette – Group discusses problems facing cattlemen

The Flemingsburg Gazette,  Thursday, May 15, 2003
by Guy Townsend, Publisher

“You’ve been driven to work at Wal-Mart in the morning, McDonald’s in the afternoon, and run your farm at night.”
– Mike Callicrate

What this country needs today is “local food for local people produced by local farmers,” Mike Callicrate told the Fleming County Cattlemen’s Association at the Fleming County High School cafeteria on May 6th.

Callicrate was introduced to the crowd of about one hundred by Wayne Pagle as “a well-informed, independent feedlot operator in St. Francis, Kansas. He’s an activist for the cattlemen. He doesn’t necessarily toe the line, or carry the briefcase, for any association, but he does a real good job of advocacy for the cattlemen.”

In a talk that lasted for well over an hour and was followed by more than half an hour of questions and answers, Callicrate told the group that “Never before has there been so much money in the food system, and never before has so little of the consumer dollar gone to the producer of that food.”

Callicrate left no one in doubt about where he placed the blame for the decline in fortunes of the American cattleman. The problem, he said, is that “we’ve got a lot of concentration and consolidation going on in agriculture,” and this is making it increasingly difficult for independent cattlemen to survive, much less prosper.

“Mike Callicrate doesn’t like Wal-Mart, and he doesn’t think you should either.”

Illustrating his talk with numerous slides, Callicrate relentlessly chronicled the decline of the fortunes of cattlemen, and the parallel increase in the profits of giant agribusinesses such as IBP, ConAgra, Cargill, and Tyson Foods, and giant retailers like Krogers, Safeway, and Wal-Mart. Especially Wal-Mart. Mike Callicrate doesn’t like Wal-Mart, and he doesn’t think you should either.

Callicrate put up a slide headed, “Breakdown of Retail Beef Dollar—A Picture of Abusive Market Power and Producer Poverty.” Pointing to it, Callicrate said, “The cattlemen over here in 1975 used to get 65% of the dollar. We’ve got the cattlemen in 2000 getting 49%, and we’ve shrunk down to 40% in 2001. It looks like it was a direct transfer from cattleman to the retailer.”

“We know the packer is making a lot of money; they post record profits, they buy each other out. There’s no shortage of money in packing—among the big guys. The little guys are being driven out of business.”

“What’s the deal there?” Callicrate asked. “We know the packer is making a lot of money; they post record profits, they buy each other out. There’s no shortage of money in packing—among the big guys. The little guys are being driven out of business.”

Callicrate said that the “biggest challenge” the packing industry has today is providing a plausible explanation for these drastic reversals. “They say, ‘Well, it’s because of value-added.’ That’s not true. It’s the same U.S.D.A. cuts. The same steaks, ground beef, and roasts. They say, ‘Well, it’s because of increased labor.’ No, that’s not true. They are paying less for labor now than they were twenty years ago.” The real answer, Callicrate said, is corporate greed.

“It’s important to know that you folks that raised that animal and myself that fed that animal, we put up 85% of the total capital that’s required to put the steak on the plate that you ate tonight. The meatpacker and the retailer put up about 15% of the capital. And they got how much again?”

Because of the decline in the cattleman’s percentage of the retail beef dollar, Callicrate said, the cattleman is getting $439 less per steer than he would have gotten at the 1975 percentage. “That’s how much we lost, and at the same time all of our expenses have been going up, we’ve all been getting jobs off-farm to try to keep the farm alive and to keep the cow herd. At that same time that packer and retailer are ratting away $439 of your money. Why is that happening?”

“The increasing gap between retail food prices and farm prices in the ‘nineties is due largely to the exertion of market power and not to extra services provided by processors and retailers.”

Callicrate quotes Auburn University’s Robert Taylor in answer: “The increasing gap between retail food prices and farm prices in the ‘nineties is due largely to the exertion of market power and not to extra services provided by processors and retailers.”

Callicrate flatly accuses the giant corporations, such as IBP and ConAgra, of using their muscle to manipulate and depress cattle prices. For example, he cited the following from the February 1998 Corporate Roundup: “In a move that made cattle feeders livid and has drawn attention from government regulators, ConAgra sold cattle to IBP for slaughter in late January [1998]. ConAgra (and IBP) pushed cattle prices down with the deal, and left cattle feeders wondering if a competitive market—or laws against market manipulation—were still in force.”

Callicrate is not content just to complain about the problem. He is a plaintiff in Pickett, et al. v. IBP, Inc., which is scheduled to go to trial in Federal Court in Montgomery, Alabama, in January of next year. The lawsuit accuses IBP of violations of the Packers and Stockyards Act of 1921, which was passed to curtail the very sorts of anti-competitive practices which the plaintiffs claim that IBP and others are engaging in today, under the blind eye of the federal agencies which are supposed to regulate them. Similar suits have been filed against ConAgra and Cargill and will be heard, in Omaha, after the IBP case is decided.

“I believe litigation has to be the last resort to resolve the problem, but how long has it been since we’ve been talking about competition?” Callicrate said. “Somewhere between when the calf is born and the steak hits the plate, we have got to talk about the price, and if you vertically integrate this system you will simply have a poultry industry, where the guy on the land basically ends up with nothing except a bunch of chicken manure. And that is precisely where Tyson [which now owns IBP] intends to take the cattle business if we don’t win this lawsuit in Montgomery in January.”

Callicrate sees few shades of gray in the conflict between cattlemen and the big corporations. For him, it’s mostly black and white. “You know, we’re wealth producers. Us cattle breeders, corn farmers, whatever. We basically take soil, water, and sunshine, and turn it into something of major value. But we are also a ‘cost to be reduced’ [to the big corporations]. At all expense. And look—what Tyson, again, did to chicken farmers, he will now do to cattle producers if we let him.”

But it’s not just Tyson and IBP that draw Callicrate’s fire. “The biggest threat to freedom and democracy is monopoly,” he said. “Wal-Mart is the biggest threat to our economy today. They search the world for the hungriest people that will work the cheapest, and then import the product to the United States, the highest consuming market, and sell it for a high profit.”

The problem is not that Wal-Mart is making high profits. Callicrate said the problem is that “Wal-Mart is putting people out of business …. Those stores, those Super Wal-Mart Stores, are an atom bomb in your community. They will put the competition out of business and leave nothing behind but minimum wage, to a few people, some of ‘em who used to actually operate a business in your community. And they dictate to Tyson; they dictate to their suppliers.”

“Why don’t you sue Wal-Mart? They’re the problem. They tell us what they are going to pay us, and we don’t have any choice but to pay you less.”

In support of this last statement, Callicrate cited none other than John Tyson himself. “John Tyson and I had quite a discussion in San Antonio a couple of years ago. He had just decided they were going to buy IBP,” and when Callicrate mentioned the pending lawsuit to him Tyson responded, “Why don’t you sue Wal-Mart? They’re the problem. They tell us what they are going to pay us, and we don’t have any choice but to pay you less.”

Callicrate had some tough advice for how his listeners should respond. He said that if they want to survive, “you will not sell to any national chain, company, or restaurant chain, or food store. You won’t do it, because they will put you out of business. I sat in front of the motel in Maysville earlier this evening, and I sat there and I scanned across. It went from Hardee’s to Wendy’s to Big K, to the Dollar General Store, to whatever. Every damned one of them is a national chain or restaurant or business of some kind, sucking your community dry. Totally eliminating your multiplier effect of a dollar produced in your community. It’s negative in a Wal-Mart community.”

Callicrate is aware that many people don’t see the problem in the stark terms that he relates. “You guys aren’t so worried about it yet, because you all have off-farm income. And I’m saying, you’ve got enough money invested you ought to be able to make a living on your farm, without off-farm income. You’ve been driven to work at Wal-Mart in the morning, McDonald’s in the afternoon, and run your farm at night. That’s slavery and it shouldn’t be allowed in America.”

“Regulation of economic power is required to ensure the preservation of the free market system.”

The answer, Callicrate said, is regulation. “Regulation of economic power is required to ensure the preservation of the free market system … You gotta regulate the market. You gotta regulate the players. You don’t allow monopolies. I’ve always said anti-trust laws are like the fence around your playground. You know, the fence around the playground keeps the kids out of the street. Keeps them safe. Anti-trust laws are around our market place, and if they aren’t enforced, our markets die. And that is precisely what’s happened. We’ve had no enforcement of anti-trust laws. It is time to rein in the huge meatpackers and reestablish a free, fair, and competitive market for independent livestock producers.”

In the Q&A session that followed his presentation, Callicrate was asked by Charles Cannon about whether he thought “that the best way to break up this monopoly and concentration was through the legal system.”

Callicrate responded: “I think it’s the only way. I think that we don’t have any other alternatives. We’ve tried a lot of different ways of addressing the problems. By meeting with the packers and saying, ‘Won’t you be nice and take your foot off my neck?’ To legislation, but they have way too much power in Washington, and we’ve failed miserably in our attempts to legislate it.”

Jere Cannon asked, “Do you think the Organization for Competitive Markets is one of the good media organizations going now?”

Callicrate responded, “I think it is just an outstanding organization. It was really a bunch of those guys, economists, and lawyers, and people that were very concerned and found no satisfaction in other organizations, that kind of came together, and they’ve become a think tank…. There’s a lot of new cattlemen’s organizations being formed today, and OCM is standing by to help those folks. And they’re effective, and I like them.”

Bob Reeves revealed a bit of impatience when he asked, “Excuse me, sir, but how’s this going to help us, as people that grow cattle? I mean, I’ve listened to you for an hour and a half, and I’m trying to figure out how I’m going to get more out of my cattle…. I mean, how long is this going to take, and how much more are we going to be getting?”

Callicrate responded at some length about the need to increase the number of buyers, saying, “So we increase the number of competitive bids that are out there. By doing that we’ll increase the price at the feedlot. The feedlot, then, will go to the auction markets around the country and they will buy their feeder cattle.”

But Reeves was looking for more concrete answers: “Like, now, say you’ve got a 700-pound steer and you’re getting 70 cents a pound for it. In the future, with this market you’re talking about, what should you get? What should it be worth? What should be a fair price?”

Callicrate replied, “Well, that’s for the market to decide. Nobody dictates in a market. So all you want to do is make sure there is a market.” Callicrate said that today’s markets aren’t truly open. “Can you sell a fat steer anywhere you want?” he asked. “No way. You can’t.”

” … if we’ve lost $400 of our share of the consumer dollar, and those big guys are saying they’re more efficient, we ought to be making a bigger share of the consumer dollar, not less.”

Reeves replied, “It’s according to who you are. I mean, you can get a price for it …”
Callicrate interrupted, saying, “And so we’re trying to fix that, and if we’re successful we will fix it, by restoring competition. You put more buyers in these sale barns, and the market decides what cattle are worth …. I’m just saying that in a competitive market, things work. Money gets distributed fairly. That’s all you can ask for. I can’t tell you how much, but if we’ve lost $400 of our share of the consumer dollar, and those big guys are saying they’re more efficient, we ought to be making a bigger share of the consumer dollar, not less. So it looks to me like there’s at least $400 to redistribute, somewhere, somehow.”

The next question came from Daniel Smith. “I’m just curious. You were talking about alliances. If we did come up with some type of packer thing, how would independent producers be able to participate further down the line?”

Callicrate responded with a question of his own: “Are you a meatpacker?” he asked, and Smith said he was not, Callicrate said, “Why should you participate down the line, except through a competitive market?”

“Do you know what you did? You bought the rope to hang yourself with.”

As for “alliances,” which Callicrate had denounced in his presentation, Callicrate said, “this idea of an alliance giving you a share of [their profit] is crazy. One of the biggest, most popular alliances that get shoved in your face every time you turn around is U.S. Premium Beef. They charged you guys fifty-six bucks a head for the slaughtering fee, and another couple of bucks for something else. Do you know what you did? You bought the rope to hang yourself with. They pay you $25 of that $400 they took away!”

Smith persisted, saying “at least you are getting a dividend back. You might be paying in and getting it back, and it would be a zero-sum, but shouldn’t that be a producer’s choice?”

“Absolutely,” Callicrate responded. “It should be a producer’s choice. But if it’s anti-competitive, if it’s at the expense of your neighbor—in other words, if you’re standing on the neck of your neighbor to make that money, it’s illegal under the antitrust laws. If what they do has the effect of reducing competition, the Packers and Stockyards Act says they can’t do it. It’s absolutely illegal and shouldn’t be allowed.”

Callicrate went on to say that the problem is that anti-trust laws are not being enforced. He said that Jim Baker, a former administrator of Packers and Stockyards with the USDA, was once asked, “Jim, if you had it to do over again, is there anything you would do different? Is there anything you regret about your job at Packers and Stockyards?” According to Callicrate, Baker’s response was, “Yeah. I wish I would have enforced the law.”

But that, Callicrate said, is not happening. “They aren’t going to do it,” and he said the reason “they aren’t going to do it is because of the revolving-door syndrome. We’ve got meatpackers and retailers moving in and out of the USDA complex.”

Harkening back to alliances, Callicrate said, “That U.S. Premium Beef deal is a fraud. It’s a fraud. They pay you twenty-five bucks of the four hundred they stole from you, and they say you got a dividend, but you’ve got to sell your stock to get it. It’s not right.”

Scott Porter asked, “The Pickett lawsuit you talked about, is it just targeting the packers, or does it target the retailers, too, the Wal-Marts and Krogers? To me, they look like they are beating the packers, they are bigger thieves than the packers.”

Callicrate agreed: “They are a bigger thief by far than the packers. A bigger thief by far.” But, he said, “The lawsuit only targets the packers, because the Packers and Stockyards Act that was passed in 1921 to break up the big meat packer monopoly back then only applies to packers.”

Chuck Marshall wanted to know “What response has the USDA given to country-of-origin label restrictions?”

“The USDA is dead set against country-of-origin labeling because it interferes with their globalization model of business.”

Callicrate responded, “The USDA is dead set against country-of-origin labeling because it interferes with their globalization model of business. We will see an economic disaster as a result of free trade. We pay high taxes, we’ve got a military, we’ve got police forces, we’ve got schools, we’ve got highways and we think shouldn’t have potholes in ‘em, we’ve got mandated costs of doing business that are incorporated right into the livestock we produce, and yet we’re supposed to compete with Brazil, who has slave labor? And who has producers that are also selling below cost of production?”

Austin Paul, following up on the labeling question, asked, “How are they going to enforce it? Are they going to do anything different? … How are we going to do this?”

Callicrate responded, “Well, basically, the way the bill reads is that what is imported should be marked and labeled. I mean, everything that we import in this country, whether it’s boxed beef, live cattle, or carcasses, is identified. All you’ve got to do is track it.”

Eugene Barber asked, “Mike, if the packer ban comes before the Senate, what would you recommend that we do about it, here?”

“If you don’t do something,” he said, “your off-farm job is going to have to get better and better to support your livestock enterprise.”

“Vote for it,” Callicrate said.

Barber wanted to know what should be done at the local level: “What do you think we need to do?”

Callicrate said, “Pass a resolution in your organizations to support a ban on packer ownership. Push your congressman, your legislators.”

Callicrate ended the evening with an ominous reminder. “If you don’t do something,” he said, “your off-farm job is going to have to get better and better to support your livestock enterprise.”

Guy Townsend is the publisher at The Flemingsburg Gazette in Flemingsburg, Kentucky, and can be reached at gazette@kywirelesscollc.com or 606-845-9211.

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Kroger just announced the end of Hero pay! Who will feed us?

Kroger, one of the largest food retailers, and a member of the meatpacker/retailer shared monopoly, just announced that their already low-paid workers are losing their “Hero” pay.

Like Kroger, Walmart, Albertson’s/Safeway and Costco, the big meatpackers were already raking in shamefully high profits, and now, even more with COVID-19.  President Trump’s “back to work” executive order has granted an even bigger pipeline of cash into the biggest food corporations, while they continue to exploit and endanger workers, and wipe out the few independent livestock producers we have left.

Who will feed us?

Break ‘Em Up!

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Seeking Freedom in America – Modern day slaves are denied justice

March 25, 2003

By Mike Callicrate

“A 38-year-old poultry grower in my county in North Carolina committed suicide in his chicken house Sunday morning.  After the first shock and sorrow for the family, I felt anger with myself for not visiting that community more often, then anger that the growers won’t stand up anymore even though I know that you can’t fight when your head is on the block and the sharp blade of the guillotine is held by a fraying rope,” reported a long time grower advocate. This is just one of many farmer suicides in production agriculture. The so-called efficient, vertically integrated, industrial manufacturing model of global food production and distribution has ensnared and enslaved farmers.  Pork producer necks are also now under the blade with beef producers being herded rapidly to slaughter by the meat integrators Tyson, ConAgra, and Cargill. This global cartel controlled food system, rather than nourish the people who sustain it, consumes them. The result is a food system that concentrates money and power at the top and poverty at the bottom while compromising food access, quality, and safety in the process.

Hopelessly indebted producers denied market access, have a choice: sign abusive, one-sided production contracts with built-in provisions barring their access to the courts or exit the business they love, leaving behind their property, homes, and unpaid debts.

Farmers and ranchers are failing under the low commodity prices and nonnegotiable fixed contracts of this food cartel at the same time as consumers are paying record-high prices for food. Hard fought new legislation, like mandatory price reporting, that sought to shine a revealing and healing light on market injustices, was gutted in rulemaking by the very packers and retailers it was designed to regulate. Now producers, fighting to save their latest legislative win, country of origin labeling (COOL), are being lied to, threatened, and intimidated by these same multinational fear-mongering rascals who stand to lose their exorbitant profits if consumers have the necessary information to choose where their food comes from and how it is produced and processed.

It’s been said that the foundation of suffering is ignorance. Most people don’t know how our food system is being monopolized and how producers and consumers are being exploited. They don’t know how our nation’s food security is being undermined?

Our current administration and many in Congress know, but they prove by their actions and refusal to enforce existing antitrust laws that corporate profits are more important to them than people. They don’t support local food security, human dignity, fairness, and a sustainable, affordable food system…the very foundation of human existence. Instead, they continue to sell out our vital interests to the big money that got them elected. Many have actually facilitated the takeover of the U.S. and global food systems by Tyson, Cargill, ADM, ConAgra, Wal-Mart, Kroger, and others.

The best selling book, Fast Food Nation, exposed a broken, unhealthy, and unsafe food processing and distribution system driven by fast food’s demand for higher and higher profits. You only have to look at McDonald’s earnings to see the change informed eaters are causing in the fast-food industry.

The newly published book, Plucked and Burned, exposes an equally abusive “immoral and fiendish” food production system that has turned once prosperous independent farmers into slave laborers.

Brother David Andrews, CSC, Executive Director of The National Catholic Rural Life Conference, www.ncrlc.com, recommends the book, “The truth about the poultry industry needs to be told, as it is here.  More importantly though, it needs to be heard, understood, received, and dealt with through justice and equity.  Eating is a moral act. The story Plucked and Burned blazes with moral insight and passion.  My prayer is that it leads to effective and prompt changes in a system that is morally degrading.” This model of control and abuse is now being fully executed on all of us, from those who consume, to those of us who produce everything from shirts to coffee to lamb chops.

Plucked and Burned completely captures the life and sadly the death of the poultry farmer. Poultry farmers cannot be away from the farm to walk the halls of the legislative buildings to tell their stories of unfairness and corruption to government officials. “Plucked and Burned” delivers the story to people who can change things as it takes the reader into a world of lies and deception,” Kay Doby, President, North Carolina Contract Poultry Growers.

The U.S., which sets the world market for food commodities is being “plucked and burned”. The fruits of our earth and the labor of the world’s people are stolen from its rightful recipients without the fair distribution of wealth provided by fair, open, and competitive markets. A properly regulated free market system is a proven delivery mechanism for the promises of America – economic freedom, economic fairness, social justice, and the opportunity to prosper.

Eating really is a moral act. Consider the difference you can make with your food dollars, the values, and ethics you can support. Your legislators should know you expect a just and safe food system free from monopoly control and that you want no less for other people around the globe.

Mike Callicrate is a cattle feeder from St. Francis, Kansas. He is an outspoken advocate for competitive markets, family farmers, ranchers, and rural communities. He is a plaintiff in the national class-action antitrust lawsuit against Tyson/IBP. The 12,000 head Callicrate feeding operation remains closed, waiting for a fair and competitive market.  

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Salina Media Connection: Mike Callicrate on COVID-19 and the beef with Food Insecurity – YouTube

My interview with Greg Stephens, Salina Media Connection – A look back at how we ended up with four big meatpackers controlling the cattle market and today’s failed meat supply chain.

The deck is stacked against small plants and independent livestock producers.

Why USDA is a big part of the problem in building local/regional food systems that serve both producers and consumers.

See interview

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How We Got Here … The food security crisis in America

And how do we return to a safe and resilient food system?

The year was 1981. It was the year we lost the cattle market.

Clark Willingham, an accountant and an attorney, not ever a cattleman but certainly a wine and dine consumer who liked the limelight, (Beef, 2001) filed a lawsuit to end the Packer Consent Decree of 1920. End it, he did. The win in that case for Hitch feeders was like a droplet of water hitting sulfuric acid destroying the market and the competition for cattle that kept the small town packing houses, the farmer/feeders, and the mom and pop grocery stores in business. The food supply for Americans was plentiful, top quality, and considered the safest in the world. Consumers knew their product. They knew Prime, Choice, and Select. They knew that aged beef was important to quality and flavor and when they asked a question of the grocery store butcher, the one who cut the carcass, they got an answer they could trust.

“The food supply for Americans was plentiful, top quality, and considered the safest in the world.”

What this litigation did to the consumer, and its domino effect, is illustrated by the numbers. According to a report by USDA Consolidation in the U.S. Meatpacking Industry, “Four-firm concentration in cattle slaughter remained stable from 1963 through 1977, then rose from 25 percent in 1977 to 71 percent in 1992 …The change in cattle slaughter concentration is unique: no other product class shows as dramatic an increase in any 15-year period” (USDA, 1996).

The decade of the 70’s just before the litigation was one of the best in American agriculture and the only time in history where the average return to the American farmer exceeded wages and salaries compared to other segments of the economy (PBS).

Willingham’s lawsuit is iconic of the end of that era. The end of competition. The end of fair markets. And the loss of dignity and dreams for small-town boys and girls and the farms and ranches surrounding them. And the end of a safe, secure, and affordable food supply. It denied the consumer from having a choice or any kind of say in the market. A lot of organizations gave lip service to “what the consumer wants” but ultimately, to the packers, what the consumer wanted was irrelevant and somewhat of an annoyance to their bottom line.

“This new era of agriculture was about efficiency and economies of scale.”

This new era of agriculture was about efficiency and economies of scale.  It was about “Get big or get out!” Secretary of Agriculture, Earl Butz said so. (Butz)  Efficiency and size took over, with no regard for quality, safety, or food security. By the late 1970s, IBP was the world’s largest meatpacker. It had done so by putting the smaller meatpacker out of business and eliminating the “inefficient” grocery store butcher by offering so-called efficient, boxed beef.  Chain grocery stores jumped at the new boxed beef, allowing them to eliminate well-paid skilled butchers and offer a cheaper product. They too began to consolidate.

The Wall Street Journal, November 1975, ran a front-page story, noting that IBP was larger than all five of its nearest competitors put together, and denouncing the company as a magnet for “criminals, gangland figures, civil wrongdoers … and people engaged in vicious beatings, shootings, and firebombings.” (IBP, Inc) But who cared? Boxed beef was efficient and cheaper. (Vicious Circles)

“The death of the Packer Consent Decree was a bright flashing green light to plunder and pillage one of our nation’s most important industries.”

In 1981 Occidental Petroleum Corporation, an oil company owned by Angus breeder hobbyist, Armand Hammer,  purchased IBP with the intent to expand the boxed beef market into the Soviet Union and to create a consolidated meatpacking operation there, based upon IBP’s growth model in the U.S (NY Times, 1981).  The death of the Packer Consent Decree was a bright flashing green light to plunder and pillage one of our nation’s most important industries.

In 1998 IBP developed an amazing tool to depress prices paid for live cattle, their biggest input cost. It was called the “Formula,” a new form of captive supply. Mike Callicrate termed this new formula the “nuclear warhead of captive supplies.” Captive supplies were the inventories of cattle the meatpacker controlled, either through ownership, contract, or in some other way, without having to compete.  Callicrate said, “IBP didn’t invest a single penny or build a single fence, they didn’t have to feed an animal or worry if an animal got sick or died, yet they could gain complete control of an inventory of cattle just by giving preference to a few large cattle feeders who were having difficulty selling their cattle in a market that was becoming less accessible by the day. If the big packers were robbing the bank, it was the big corporate cattle feeders who were driving the getaway car! It was brilliant! IBP got all the cattle they needed when they wanted them. The big packers were now fully managing the market rather than competing in it – and posting record profits.” IBP asserted its role as price leader and the other big packers were following. (IBP history)

“Today around half of our ranchers are out of business and over 80,000 cattle feeders are gone.”

As cattlemen, we lived the economic collapse caused by formula cattle. Today around half of our ranchers are out of business and over 80,000 cattle feeders are gone. The weakened cash seller became a tool of the packer to depress prices to all cattle producers, including the formula sellers that received preferential prices. We know the formula for its negative effect on prices overall, and its ability to control the flow of cattle into the packing houses, but we often don’t think about the impact on the entire food supply.

Here is what it did to the consumer: After IBP captured significant supplies, they weren’t totally out of the cash market–they were in it only long enough to drive prices in the direction they wanted. IBP became the price leader with the other big packers following. Their purchase volumes made it difficult for the smaller and regional packers to access important supplies of fat cattle, and their predatory pricing blocked smaller independents from selling to wholesale accounts. Feedyards also began to consolidate. Formula feedyards, receiving preferential pricing, had an unfair advantage over the smaller farmer feeder, who held on as long as he could by value-adding his own feed through his cattle. These smaller feeders saw their Rolodex shrink from twenty buyers down to two and maybe only one. Feedlots, instead of being smaller, environmentally conscious entities that provided valuable soil building manure fertilizer for grain and feed fields, became bigger, more concentrated, highly polluting entities serving the needs of the giant packing companies, and away from the more consumer and labor-friendly local and regional packing houses. (Duke, 2015)  And pigs were moved off the land and into factories.

Independent grocers were also having trouble accessing beef carcasses, finding anything except boxed pork and factory produced chickens. They had no choice but to also turn to preprocessed proteins.

Understand this about market consolidation:  It is why today, giant plants of 4,000 meat butchers and meat cutters standing shoulder to shoulder processing up to 400 head of cattle per hour, threaten our food safety and security. It is why chicken integrator, John Tyson, the now owner of a further consolidated beef packer, IBP, Inc., can arrogantly, blithely declare that the food chain is “broken” and call for help from the president to get the “chain moving again.”  He should know it is broken. His company broke it and he is ready and happy to profit from the breaking. (Bloomberg News)

Getting the existing fragile food chain moving again will not fix it. It will only perpetuate the harm. If you are panicking right now because you can’t sell your cattle, if you’re panicking right now because the grocery store shelves are empty, the biggest mistake you could make is to endorse and support our existing supply chain. To do so will keep cattle prices low, meat prices high and main streets of America empty.

“Everyone along the supply chain is hurting except the big meatpackers.”

The efficiency era is summed up this way: The nation’s largest meatpacker has bottlenecked beef and other meat, forced men and women back to work through a presidential executive order, and is charging the highest box beef prices ever to consumers, who cannot afford it, while at the same time–paying depression level prices for cattle. Everyone along the supply chain is hurting except the big meatpackers.

And nobody is stopping them.

Why should men and women risk their lives to grind $8 a pound hamburger that only a handful of consumers can afford to buy? Why should cattle producers be paid far less than their costs for the quality cattle they produce? And why should the American consumer, stressed and out of work pay $8 for a pound of hamburger?

This is going to be a white-knuckle ride.

Let’s make some points clear: Efficiency, as a mantra of business development, must be recognized for its clear, dangerous failure. COVID-19 is not to blame. (NY Times)

The model of efficiency did this:

1. Destroyed small businesses like independent grocery stores and destroyed family farming and ranching as evidenced by our boarded-up storefronts in rural America;

2. Destroyed food safety as evidenced by meat recalls and CDC food contamination reports;

3. Destroyed food security as evidenced by recent empty grocery store shelves and obscene meat prices;

4. Destroyed jobs, lots of them, as evidenced by the current unemployment rate yet to be fully disclosed;

5. Destroyed access to information about the food system, as evidenced by limited labeling on food;

6. Destroyed the consumer connection to the producer by providing false and misleading information on the products they buy;

7. Destroyed our independence by making too many believe that efficiency was security–the greatest lie of all. This economic efficiency has drained the wealth of our nation into the pockets of a few.

1996 was a year we tried to hit the reset button and tried to reverse the destructive efficiency model and get back to fair and competitive markets.  Herman Schumacher was Vice-Chair of the Commission on Market Concentration in Agriculture (USDA Advisory Group), working hard in the minority on a commission stacked in favor of the agribusiness giants, to get government officials to act. Mike Callicrate was filing litigation against IBP, Inc. fighting anti-competitive practices like captive supply, and Kathleen Sullivan Kelley (A Time to Act) had just published a report on Market Concentration in the Beef Industry. That year, Kelley and Callicrate both spoke to the South Dakota Governor’s Beef Conference on a panel with IBP CEO and chairman, Robert Peterson. Herman Schumacher was in the audience.

But January of 1996, was also the year the Beef Industry Council of the Meat Board and the National Cattlemen’s Association were merged into one unified organization purporting to represent all segments of the beef industry (NCBA, 2020). Clark Willingham, the accountant and attorney, the man who enjoyed the limelight of his litigation victory against the Packer Consent Decree, was the president-elect of the National Cattlemen’s Association and soon to be president of the NCBA.

“With hard-core committed, uncompromising cattlemen and women, R-CALF led the way to the passage of mandatory country of origin labeling …”

1998 was the year we slammed our fist down on the reset button. It was the year Herman Schumacher, Kathleen Kelley, and Leo McDonnell, Jr. (who later left the group) signed the 501-C6 organization papers to create R-CALF USA. (R-CALF USA) While Callicrate was never on the board of directors, his organizational skills became crucial to building the organization as an organization of independent cattle producers who were hell-bent on fixing the market. There were others too who risked their livelihoods to create an organization that could be the bullhorn for independent producers. Pat Goggins, Johnny Smith, Stayton Weldon, Buddy Blackwell, Margene Euguren, Forney Longenecker, James McKuen, Max Thornsberry, and so many others were critical to the credibility of the fledgling group.  With hard-core committed, uncompromising cattlemen and women, R-CALF led the way to the passage of mandatory country of origin labeling less than four years later. Certainly a major victory for the producer and the consumer. A short time later the organization, again, on behalf of the consumer, led the charge against allowing any cattle into the country from a BSE infected country. When the border from Canada closed, another great lie of the meatpackers was exposed: live prices in the US soared to our highest levels ever–and there was no export market. The lie that an export market was essential to shore up domestic prices was shattered. R-CALF USA has muscled in other major achievements over the years.

2020 must be the year for the reboot of our entire food chain, the point when we begin to build a safe, secure, and vibrant food chain that will never again hang producers and consumers. In partnership is our greatest strength. The recent petition calling for mandatory country of origin labeling shows over 340,000 signatures, and it clearly demonstrates how critical the partnership between producer and consumer has become.

R-CALF USA won and won big when the consumer was our partner. It is past time to build and entrench that partnership for the good of the whole.

The three of us are reaching out to you. We have dedicated our lives to changing this failed system.  We need you to help us change it–to help us fix the problem.

We have a three-point plan:

  1. The big meatpacking and big retail food industry must be broken up. Settlement must not be an option. Allowing any percentage of market control will only delay the inevitable collapse of an already broken system. The 1920 Packer Consent Decree is our initial road map (Consent Decree). The Federal Trade Commission was the oversight agency. The five biggest meatpackers held a 75% share of the beef market, in 1920. They were reduced to competitive levels of 25% in the 50s, 60s, and early 70s.  We can and must do it again. Our sovereignty, our freedom, our security, and our food safety depend upon it.
  2. Create a judicial branch of government that is not controlled by Wall Street and global corporations, but is solely responsible for antitrust law enforcement that protects both consumers and producers from abusive power– the people who buy and the people who produce. The economy should serve the people, rather than the people serving the economy or the corporation. No person should be forced to live in poverty, get sick or die, to make John Tyson rich. (Bloomberg, 2020)
  3. Invest stimulus funds into the rebuilding of our broken rural economies, building local/regional food systems, including farm to plate processing and distribution, renewing our rural wealth-creating communities and restoring abundant supplies of high quality, healthy food to people everywhere.

Let us all rally together to fix the problem.  Let us join together and drop the “us versus them” mentality that has kept us apart and away from substantive solutions.

Let’s fix the problem!

(Emergency Measures)

Herman Schumacher, cattle feeder and rancher from Herreid, South Dakota, was a co-chair and author of the minority report in 1996 of USDA’s Advisory Group on Market Concentration.

In 1998 he joined with fellow ranchers to form the Ranchers Cattlemen Action Legal Fund, United Stockgrowers of America commonly known as R-CALF USA, to address growing trade problems with Canada and Mexico. The group focuses on domestic and international cattle marketing issues in both trade and antitrust. Schumacher served as a founding board director of the organization.

Mike Callicrate

Mike Callicrate is an independent cattle producer, business entrepreneur, and political activist. He serves as an outspoken leader in addressing the rural, social, and cultural impacts of current economic trends.

He was a founding member of several farm advocacy groups including the Organization for Competitive Markets, R-CALF USA, and the Kansas Cattlemen’s Association. He also was a lead plaintiff in a class-action lawsuit against the world’s largest meatpacker, IBP, now part of Tyson Foods, alleging unfair and discriminatory marketing practices.

Kathleen Sullivan Kelley is a fourth-generation Colorado rancher and farmer whose life has been profoundly shaped by her agricultural heritage. She has written for numerous agricultural publications and wrote op-ed columns as a “Colorado Voice” for the Denver Post.

In 1980, Kelley at the age of 26 was the youngest woman ever elected to the Colorado legislature. In 1986 she received a Harvard Fellowship to the John F. Kennedy School of Government where she taught a 9-week study group on the American Farm Crisis. In 1998, she helped form the Ranchers Cattlemen Action Legal Fund, commonly known as R-CALF USA. Kelley served as its first Vice President until 2005 when she retired from the board.

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