Food monopolies Continue to Plunder and Pillage

by Mike Callicrate | May 18, 2018

1940: Farmers’ Share Does Not Increase As Price Margins Widen

Despite the efficiency of large-scale production, the farmer has continued to get a smaller and smaller share of the consumer’s dollar as monopoly control has increased over the past 25 years. An analysis of figures put out by the Bureau of Agricultural Economics shows that the margin going to the processors and distributors has swollen considerably over this period.

In a recent report the Agricultural Advisory Council stated that on food-stuffs alone the farmers are losing $2,000,000,000 a year because of the present disparity between farm prices and other prices.

While a one cent reduction in the farmer’s share of the consumer’s dollar seems like a trivial sum, the cumulative effect adds up to a staggering total. Thus, in the case of dairy products, the farmer’s share has dropped from 55 cents in 1913 to 42 cents in 1939. The effect of this shift is to reduce the income of dairy farmers by approximately a third of a billion dollars annually.

The farmer’s margin has decreased on practically all food products, but two most extreme cases are white flour and pork products. Though the farmer got 58 cents on the consumer’s flour dollar in 1913, this proportion had gradually dropped until by 1939 it was only 39 cents. In the case of pork products, the farmers had been getting 80 cents in 1913, but this had fallen by 57 cents by 1939.

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The most striking point about middlemen’s margins is their rigidity and fixity in recent times. Price changes are passed either forward or backward, but absolute price spreads remain surprisingly constant despite vigorous changes in farm and retail prices.

Prior to 1915 the farmer received about 53 cents out of the consumer’s dollar spent for all foods. Durin gthe 20’s the farmer’s share dropped to about 47 cents. In 1938 and ’39 it remained unchanged at 40.5 cents.

These price spreads are figured in terms of a standard budget comprising 58 foods selected by the Department of Labor as typical of an average workingman’s family.

–courtesy of Tom Giessel

The National Farmer’s Union currently reports farm share of the consumer dollar at an all-time low of 14.8%.

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98.3 KXDJ Radio asks what can the Trump administration do to help agricultural producers?

Listen to the KXDJ Radio Interview with Mike Callicrate by clicking here

How did we lose our markets? See the following editorial from 2013:

It’s Still Called Stealing

By Mike Callicrate | April 5,2013

Grade and yield buying used to be called “Grade and Steal” by most cattlemen. Today, it’s called Value-Based Marketing by the big packers and their cheerleaders, like Certified Angus Beef’s (CAB) Miranda Reiman. In her March 4th article, “Value-based cattle marketing dominates”, Reiman attempts to mentally condition Angus breeders and other cattlemen to accept their fate in Big Food’s supply chain where performance enhancing drugs, added flavorings, Pink Slime, various pre-digestion methods, and meat recalls, do more to damage demand than CAB quality can possibly do to help it.

Cattle feeders once knew better than to let the packer decide what their cattle were worth after the hide was removed. It was just plain bad business not to negotiate the price. Economics professor, Dr. John Helmuth once said, “Somewhere between when a calf is born and the steak hits the plate, price has to be discussed”. Not known for their benevolence, the packer, admittedly, always wants to pay the lowest price possible. Giving the packer the ability to solely determine the value was considered foolish.

Those born after 1975 (Miranda Reiman) have likely not participated in a competitive market for fat cattle. By the spring of 1994, the big meat packers proved they had essentially eliminated competition for live (fat) cattle. IBP, following the advice of the Boston Consulting Group, had decided in the late 1970’s that it was more profitable to cooperate than compete with the other very large packers. Together, the biggest packers systematically eliminated most of the smaller independent regional packing companies, drastically reducing competition. Additionally, they were feeding more of their own cattle and making preferential pricing and exclusive market access deals with the biggest feeders for additional large volumes of cattle that they didn’t have to bid on. Armed with enough captive supply cattle to stay out of the cash market for an extended period, the packers dropped the price of fat cattle $17 per cwt. in six weeks – a loss in value of around $200 per head. Over a thousand angry cattlemen packed the Holiday Inn in Omaha, Nebraska. The packers got the message. The market recovered about $12 per cwt. right away. The packers learned an important lesson – without competition, the market, and people’s perceptions, would have to be managed.

From deep in the meat packers’ pockets, the economists, market touts, and those receiving preferential treatment, bleated all kinds of phony excuses for the price drop – from ‘supply and demand’, to the standard ‘too much chicken and pork’, and, of course, cattle feeders were poor marketers. Dr. Helmuth’s explanation was simple and accurate, “There’s an economic term to describe this phenomenon, it’s called stealing”.

Big packers fear two things – Competition and court rooms

Attorney Robert M. Cook, representing one of the biggest cattle feeders in Nebraska, described forcefully in “Helmuth” language what the packers had done to the market – IBP sued him.

The trial revealed the accuracy of Cook’s statements:

“At times, the company over purchases its entire needs, with forward contracts. (See Supp. App.Ex. 197) Exhibit 197 shows that during April-June of 1994, a time critical to this case, IBP contracted for as much as 122%, and as little as 53%, of its entire projected kill with cattle contracted for forward delivery. IBP’s corporate policies required it to sell these cattle on the commodities market before they were contracted for purchase from a cattle feeder. IBP killed 180,000 head of cattle per week in 1994.”

When closing argument was presented against IBP in the Cook case (USDC Neb. 1995) I argued to the jury that IBP had become the largest owner of cattle feedyards in America through the artifice of contracting. Forward contracts had permitted IBP to buy up, control, and therefore effectively own, an overwhelming portion of America’s cattle production capacities “without buying one acre of land, pouring one cubic yard of concrete, installing one linear foot of feed lot, digging one post hole, stringing one wire, or investing one dime.”

The jury reacted to the argument with widened eyes, then, as I could see the thought sink in, their amazement turned to disgust.

They rewarded my client with their verdict.
– David Domina, Attorney for Robert M. Cook

Awarding cattlemen $1.28 billion in a 2004 trial, the jury found Tyson/IBP had manipulated the cattle market with as much as 170% captive supply (70% more cattle than they needed), more than in the spring of 1994. Additionally, head cattle buyer Bruce Bass admitted that IBP paid less for cash cattle when captive supplies were plentiful. Grade and yield data showed that the cash cattle IBP was forced to bid on (to set the price for captive cattle), were better quality than their so-called value-based purchases. Judge Lyle B. Strom, a Reagan appointed “de-regulation”-“bigger is better” judge, reversed the jury’s verdict, handing the cattlemen’s win over to Tyson/IBP and sticking cattlemen with Tyson’s court costs.

Like losers in a Monopoly game, independent producers are out of money and sitting on the couch. The so called value-based, moving-target, grade-and-yield fools game, where quantity trumps quality and discounts are often ten times the premiums, is leaving independent producers, from ranchers to feeders, with no chance for a fair price and no hope of survival. Honesty, integrity, and meat quality have disappeared along with antitrust law enforcement and a fair cash market. The retailer monopoly (Walmart, Kroger, Safeway, etc.) is charging record high prices for beef as independent producers are slaughtered with their livestock.

Epilog 2018: According to USDA data, between 1990 and 2012 we lost 204,000 ranching operations, and between 1996 and 2016 we lost 81,887 feedlots.

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Crop Statisticans, 1908

Send them to prison

Texas Union Would Adopt Extreme Measures Against Crop Statisticans

The Farmer’s Union of Reagan, Texas, has taken an advanced stand on the question of crop statistics by adopting the following resolution:

Resolved, That Reagan Union No. 4279 ask all unions in the United States to instruct our legislative agents at Washington and in all the State legislatures where we have unions organized to do away with the bureau of crop statistics, as it has cost the farmers many millions of dollars and is of no benefit to us, but keeps the gamblers posted with reports in their favor; in fact, the whole thing is against the farmer and increases his burdens to the amount of $25,000,000 in the Nation and State, and it should be a penal offense to give out any news as to crops, and should have not less than five years’ servitude attached.

–courtesy of Tom Giessel

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NY Times: At Hamburger Central, Antibiotics for Cattle That Aren’t Sick

The Cactus Feeders feedlot in Tulia, Tex.CreditDylan Hollingsworth for The New York Times

Many industrial feedlots see routine use of antibiotics as essential. Some cattlemen disagree, calling them “performance enhancing drugs.”

By Danny Hakim | March 23, 2018

Ben Holland holds a Mason jar, tilting it slightly to show the powdery 90 milligrams of the antibiotic tylosin inside.

“It’s about the amount that one animal gets in a day,” he explains, in a small factory that produces feed for 48,000-odd cattle packed in pens in Tulia, Tex., south of Amarillo. Nearby, rumbling steam towers turn corn kernels into flakes.

Dr. Holland is the director of research at Cactus Feeders, a feedlot giant. During a recent visit, I found myself surrounded by men with Ph.D.s and cowboy hats like Dr. Holland. Several wore jackets bearing drug company logos that were sure to smell of steamed corn and flatulent cattle by day’s end.

Behind Dr. Holland, antibiotics were stacked in large bags rising to his shoulders. Every day, cattle here, whether sick or healthy, are given antibiotics in their feed.

But it’s an increasingly debated practice on industrial farms.

Bacteria resistant to antibiotics turn up in turkey, pork chops and ground beef in the United States; in grocery store chickens in Britain; and at poultry farms in China. Antibiotic residues are found in groundwater, drinking water and streams, and in feedlot manure used as fertilizer.

Some 70 percent to 80 percent of American antibiotic sales go to livestock. In addition to the emergence of resistant disease strains, some microbiologists worry that the proliferation of antibiotics, despite their miraculous health benefits, is having a chaotic impact on microbes in the human gut.

The Cactus feedlot is hamburger central, the middle passage of cattle’s industrial journey. Calves come from farms to be fattened up on corn and grain for several months, and then are shipped out for slaughter and processing.

Cattle, however, evolved to eat grass, and their time on a feedlot causes health complications. Hence the antibiotics. Tylosin controls liver abscesses, and Rumensin, another antibiotic feed additive, fights intestinal disease.

While Cactus has taken steps to limit the use of such drugs, it sees cheap and plentiful hamburgers and steaks as a byproduct of industrialization.

“We’ve got to take that potential value and balance it against the risk,” said Paul Defoor, co-chief executive of Cactus. “Antibiotic resistance is a fact of life, no two ways about it,” he added. “We want to make sure that by virtue of our using these products we’re not contributing to it.”

Others, however, see the risk far outweighing the reward.

Herman Jean-Noel for The New York Times

Dr. Martin J. Blaser, a white-haired scientist in a V-neck sweater and black Mephisto sneakers, walked me through his lab recently at a Veterans Affairs hospital in Manhattan.

“Both on the farm and in human medicine, we’ve become addicted to antibiotics,” he said. “We’re using them as if there was no biological cost to using them. And there are costs.”

Regular use of tylosin on farms, he added, “is a genuinely bad idea because of cross-resistance, involving important drugs used in human medicine.” Tylosin is part of a widely used class of antibiotics used by humans, including Z-Pak.

But Dr. Blaser’s career has largely been focused on a less talked about symptom of the proliferation of antibiotics: tracking disappearing microbes in the human gut.

We moved down the aisle of his lab, amid a jumble of computer screens and rows of lab desks, beakers, binders and pipettes. Dr. Blaser introduced a cadre of assistants. Many were connecting specific diseases to the disappearance of particular gut microbes, often due to antibiotics.

“Tim here, who’s a graduate student, he works on asthma,” Dr. Blaser said. Another is “running a very big project” on juvenile diabetes.

A visiting Chinese scholar studies obesity and antibiotics. Two more researchers, Dr. Blaser said, are looking at “an organism that many people have in their gut that may be protective against kidney stones.”

Some microbes are misunderstood. Take Helicobacter pylori, a passenger in the human gut for thousands of years linked in the last century to certain cancers.

“Because of ulcer and stomach cancer, doctors, mostly gastroenterologists, said we should just get rid of H. pylori from everybody,” Dr. Blaser said. “But I began to think differently.”

Research from the National Cancer Institute published in January found a potential downside to its disappearance, linking its loss to a new gastric cancer more likely in younger patients and women.

“Nature abhors a vacuum, and if Helicobacter, which was dominant, is gone, something is replacing it, or some things are replacing it, and that has consequences,” Dr. Blaser said.

Scientists like Dr. Blaser worry that we are too often exposed to antibiotics, beyond when we actually need them. But the United States has resisted more aggressive restrictions on livestock antibiotics that countries like the Netherlands have taken. As of last year, the Food and Drug Administration barred meat producers from using antibiotics to increase the growth of animals, rather than to treat disease. Veterinary prescriptions are now required for farm antibiotics.

But the new rules were designed in cooperation with drug companies and industrial farm groups.

“That didn’t affect us,” Mr. Defoor of Cactus said of the ban. Similarly, Zoetis, a major livestock drugmaker, said on its website that farmers “will see little difference” in its tetracycline feed additives, beyond needing the appropriate paperwork from veterinarians.

But demand for antibiotic-free meat is eclipsing regulation. Annual sales of antibiotics for farm animals fell 10 percent in 2016, before the F.D.A.’s new policy began.

Dr. Blaser turned reflective. In his office, a colorful pinwheel maps the microbial population of his poop.

“It’s just like global warming,” he said of modern changes to our internal microbiology. “It’s a big ecological shift, except it’s happening within the human body.”

Dylan Hollingsworth for The New York Times

“There’s a pen up here I’ve been wanting to look at.”

Dr. Carter King oversees 10 feedlots for Cactus and some two million head of cattle a year. It was before 8 a.m., and he was guiding a Toyota Tundra pickup truck around the feedlot, his wallet resting on a blue bandanna on the center console. Cowboys roamed on horseback, trained by Dr. King as medics, alerting him to trouble.

The work is not for everyone.

“We’ve tried taking guys that came off a ranch somewhere, and you put them in a pen of cattle on a feed yard and a lot of times it doesn’t work,” Dr. King said. “They’re used to green grass and trees, and cows standing under trees in the open air, and a feed yard is an adverse, harsh place to work.”

He stopped the truck. Smoke plumed from the distant tower where corn is flaked. He pointed to a smoky-colored calf.

“That calf doesn’t feel good,” Dr. King said. “He’s by himself. He’s just kind of standing there. He’s a little drooped.” He motioned to nearer calves coming forward to investigate. “You look at these calves here, they’re alert — they’re looking at us trying to figure out what we are.”

Dr. King was “raised on a ranch out in the middle of nowhere.” He has had his own veterinary practice, and has worked for the drugmaker Upjohn and even at a zoo, where he learned to wake up gorillas anesthetized by blow darts. (“You pull his tongue over his nose, and you insert the needle into that vein.” And then bolt.)

Early in his career, a large cattle business asked Dr. King to prescribe a banned antibiotic. He knew he was “going to blow this opportunity because I’m going to tell this guy, ‘No,’” he said. He did, and lost a customer.

Still, Dr. King and other industry veterinarians support using antibiotics in feed. Keith E. Belk, a Colorado State University professor who works closely with the beef industry, said research on risks like liver abscesses was more uncertain than many studies suggested. And “the industry has a whole lot of research to find substitutes,” he added.

Especially in chickens. Zoetis said last year that its “portfolio of alternatives to antibiotic medicated feed” was “the primary driver of growth” in poultry.

For now, the view from the feedlot is that the risks are not evident enough to stop using drugs like tylosin.

“Until we see clear evidence that this drug is actually causing an increase in resistance, then we can go down a different avenue,” Dr. King said. “But today we just don’t have it.”

Ryan David Brown for The New York Times

A blunt-spoken former bull rider, Mike Callicrate raises cattle in Kansas and Colorado. To him, antibiotics are “performance enhancing drugs,” and he lumps them in with other industrial additives like steroid hormones.

“We’re all worried about athletes using performance enhancing drugs during the baseball game, but we’re not worried about the hot dogs that were produced using the same chemical compounds and that are being eaten by our children,” he said during a recent visit to his farm on the Kansas-Colorado border.

This is not to say he refuses all antibiotics. He uses them to treat sick cattle, but does not mix them into feed for healthy calves.

“We need the tool when we need the tool, but the fact is we’ve overused the tool to offset the negatives of industrial production,” he said.

Mr. Callicrate took me around his farm, a bucolic vision of grazing cattle and open fields. He’s an outspoken guy, who calls the feedlot giant JBS the “rotten meat mafia,” attacks industrial practices on his website and once sued the government to protest the management of a nationwide program to promote beef.

He gave up on the industrial production model years ago, and now has a small operation that encompasses all steps of the business, from birth to slaughter to a retail meat counter in Colorado Springs.

“We can litigate, we can legislate, but who’s building the alternative?” he asked during lunch over chipped beef in downtown St. Francis, Kan. “So I felt compelled. I’ve got to build the alternative. I can’t be such a loudmouth and such a critic of this existing system without giving people an alternative.”

Still, it is difficult to buck the system and make a buck. Agriculture is now built around the industrial model. Mr. Callicrate has the luxury of raising cattle the way he does because he invented a contraption to castrate bulls humanely.

“This makes money,” he said, while he showed me how to cinch a bull’s testicles in the Callicrate Bander, which looks like a slingshot crossed with a fishing rod. “Everything else loses money.”

Antibiotic-free beef also costs consumers more, though groups like Consumers Union feel it “is worth the extra money.”

For Mr. Callicrate, keeping his cattle off the feedlot changed his perspective.

“I’ve decided to take a different path, slow down a little bit,” he said. “If I have to be responsible for the steak on the plate, I’m going to change the way I’m producing it.”

Danny Hakim is an investigative reporter for the business section. He has been a European economics correspondent and bureau chief in Albany and Detroit. He was also a lead reporter on the team awarded the 2009 Pulitzer Prize for Breaking News. @dannyhakim Facebook

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Two Chief Economic Classes in America, 1906-2018

Must Collectively Own the Machines

We quote from a statement made by J. G. Stokes, the young millionaire, who for several years has been devoting his talent and means to advance the interest of the industrial and producing class. In his statement he said: “It has required a vast amount of accumulated evidence to convince me that it is, and for long has been impossible for the average worker to secure such material things as are necessary for his welfare and advancement, and this in consequence of the exploitation of his labor by privileged persons, who take for their own enjoyment a large portion of the product of his toil.

“I have been long in perceiving clearly that there are two chief economic classes in America, as elsewhere: Those whose poverty compels them to produce more than they require for their own maintenance, and those whose wealth enables them to control and consume more than they produce and more than they render proportionate service in exchange for; that the reward of the former class is invariably less than the value of its product, whereas the reward or income of the latter class is greatly in excess of the value of its product and bears no proportionate relation to the value of the service it renders.

“I have learned but gradually the injustice of the situation which confronts the average worker. Honest and earnest men and women by hundreds of thousands suffer privation and want although surrounded by prosperity and plenty, and owe their sufferings chiefly to the monopolization of the land and of the machinery of production by the few exclusively for the purpose of private gain: access to the land and machinery being denied, unless the workers will produce enough, not merely for their own support, but for the maintenance of the idle and luxurious as well. This is to my mind a great injustice, and one that demands early remedy.”

–courtesy of Tom Giessel

And now today, March, 2018, the dairy coop Agri-Mark provides their farmers with a suicide hotline instead of a better milk price. Consumers have never paid more for food, while farmers have never received so little of what consumers spend. We must reduce this abusive and destructive power of the Big Food monopoly, beginning with Walmart. Break them up!

Note: St. Paul’s Husbandman message is cut in stone above the main entrance of the USDA building in Washington DC, along with two other messages about the importance of agriculture.

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