See full video of the hearing: From Farm to Kitchen Table: How Consolidation Spikes Food Prices | seattlechannel.org
“What we’re seeing is the tyranny of the middlemen.”
– Jonathan Kanter, former Assistant Attorney General for the Antitrust Division.
Congresswoman Jayapal opening statement
The video version of my testimony is edited for time. The full unedited statement follows:
Monopoly Busters Caucus Field Hearing
“From Farm to Kitchen Table: How Consolidation Spikes Food Prices”
Wednesday January 28, Seattle Washington
Good evening, Congresswoman Jayapal and members of Congress.
My name is Mike Callicrate. I’m a cattle and meat producer with operations in Kansas and Colorado. Thank you for the opportunity to discuss this important issue.
I’m here today because I believe due to decades of abusive market practices, lax antitrust enforcement, and growing monopoly control we’re entering the final stages of food system collapse.
A handful of multinational corporations control our food supply. Their hyper-extractive supply chains have gutted rural America, leaving our farm and ranch families bankrupt, and soil and water resources depleted and polluted.
In 1972, a local banker loaned me the money to buy my first cows. After weaning the calves, they were grown to feeder size and sold at auction to one of the many small feedlots in the region. The calf, feeder cattle, and finished live cattle markets were competitive and open to all producers. Farms were diversified, employing family members raising crops and livestock.
In 1978 I joined other local investors in building the first commercial feedyard in Cheyenne County, Kansas. As manager, I arrived early to work, oftentimes meeting a cattle buyer sleeping in his car hoping to get the first look at our market ready cattle. There were as many as twenty regional meatpackers from Colorado, Nebraska, Kansas, Oklahoma, New Mexico, and Texas, willing to buy our cattle. There was dependable profitability in all sectors from farm and ranch to meatpacker, and retailer. Rural communities were thriving. The American Meat Institute reported the 1970 producer share of the consumer beef dollar at 82%.
IBP (now owned by Tyson) built the world’s largest beef plant in Finney County Kansas in 1980. Feedyards were thrilled to have one more buyer, but the smaller independent owner-operated regional plants, especially the Denver meatpackers, protested loudly, including in their 1979 Congressional testimony. Attorneys for Averch, Litvak, and Pepper Packing in Denver asked the Secretary of Agriculture to enforce the Packers and Stockyards Act, which was passed in 1921 to prevent loss of competition in cattle markets. They testified they were competitors in a highly competitive meatpacking business in a geographic area covering the eastern Front Range of Colorado and spreading into western Kansas, western Oklahoma and western Texas.
They testified, unless the secretary enforced the Act, irreparable damage would be done to them and others by virtue of IBP’s unlawful acts, including predatory pricing, market consolidation, and supplier control.
They asked for a cease-and-desist order against IBP preventing its use of those unlawful practices. Like today, requests for enforcement were ignored. In a few short years the Denver plants closed, and IBP continued what the Wall Street Journal referred to as the “Death March,” wiping out smaller competitors across the country.
As meat plants went out of business, feedyards struggled to sell their livestock to fewer and fewer buyers. Marketing windows narrowed and take-it-or-leave-it low bids became the norm. Arizona governor Bruce Babbit, in his 1988 run for President, branded IBP a “corporate outlaw.”
In 1988, I built my second new and improved feedyard. Loss of competition for finished cattle was becoming a bigger worry. Feedyards were fearful to speak out. Like in the game of musical chairs, they scrambled to align with IBP and the other big meatpackers through Alternative Marketing Agreements (AMAs) seeking relief from the misery of selling in a controlled market that only saw cattle as a cost to be reduced. AMA’s, including IBP’s Formula pricing model, gave the biggest feeders preferential treatment for providing market-depressing captive supplies – inventories of cattle used to leverage the cash market lower.
With the AMA captive supplier market access advantage, the big feedyards got bigger, while the more efficient, resilient, and low-cost farmer feeders went out of business. The cow-calf producer saw fewer buyers and lesser share of the consumer dollar in the increasingly concentrated marketplace.
After years of futile complaining and speaking out, feeling like nothing more than a wealth transfer agent in my role of feeding cattle for others, I joined in a 1996 federal lawsuit against IBP claiming anti-competitive practices we believed were illegal under the Packers and Stockyards Act. (A 2004 jury agreed.)
By 1998, I was down to one packer buyer – National Beef. I hadn’t seen the Cargill buyer, who lived thirty miles away in Goodland Kansas, for eleven years. The IBP buyer would stop occasionally for a cup of coffee and to offer what was referred to as a “bid not to buy,” a low-ball price so low he knew I would almost certainly reject it. The practice was used to condition desperate sellers to eventually accept a lower price from their designated buyer. It was clear the highly profitable big four packers, were cooperating, delegating territories, and pushing prices lower for cow-calf producers, while handing higher and higher margins to the big retailers who continued to charge higher prices unrelated to the price of cattle.
I had 14,000 cattle in my 12,000 head feedyard when I was informed by my only buyer, National Beef, that they were done buying from me.
I asked USDA Secretary of Agriculture, Dan Glickman, why he didn’t enforce the Packers and Stockyards Act? He responded, “In today’s global marketplace we need big companies that can do business globally.” He leaned on ConAgra to buy my existing cattle, but I would have no future market. The closing of my feedyard meant the loss of fifteen jobs, while eliminating a major buyer of local feedstuffs.
In 2000, considering my options, which didn’t include aligning with a big meatpacker, I decided to scale back and sell meat instead of live cattle.
Despite the Packers and Stockyards Act of 1921, a powerful antitrust law designed specifically to protect the producers of livestock, as well as other anti-monopoly laws, meatpackers continue to operate above the law. Overall beef demand is at record highs, the big four meatpackers control 80% of the steer and heifer market, while selling beef to an equally concentrated, and even more powerful, retail sector. Today, the producer share of the consumer dollar is fifty percent, down over 37% from 1970. Over half our cattle producers, stewards of our land and livestock, are out of business. Now 86,000 of our independent feedyards are gone, and, tragically, we’ve liquidated 9.3 million head of our wealth-creating mother cows. Tyson is shuttering plants in communities like Lexington, Nebraska and slowing down plants in Texas, as cattle and beef imports continue to rise.
In closing, it’s past time to “Break ‘Em Up,” including big meatpacking, big retail, and big food service, as we aggressively rebuild, protect, and support existing and new local regional food infrastructure.
Thank you for your leadership on this issue. I look forward to your questions.
