What could 300 million dollars do?

Workers at Callicrate Cattle Co. processing hogs with a new more efficient and humane facility design.

November 1, 2021

Estimated costs for building one large 1,500 head-per-day industrial beef slaughter facility is around 300 million dollars. This is for a plant that would likely fail, as it would be dependent on existing big retailers and food service companies that have, for many years, been purchasing below cost of production meat from their highly predatory big meatpacking partners.

Instead, that same 300 million dollars could be used to build hundreds of smaller cooperative and owner-operated local/regional plants capable of processing between two and six times more total cattle, plus other species of livestock, than one large 1,500 head-per-day mini-Tyson, Cargill, JBS and Marfrig style plants.

Multiple small plants would provide family farmers, ranchers and consumers a far more resilient, sustainable and fair food system with safer, higher quality and more affordable local sources of food. Newly trained butchers and meat cutters could once again practice a valuable and respectable trade, earning living incomes in better designed, more productive, and safer workplaces.

The smaller, more efficient, and reliable multi-species plants providing services and markets to livestock producers able to earn more of the consumer dollar, would keep wealth and kids in the community and build important farm-to-plate-rural-urban connections, while improving food security, animal welfare, and the environment.

Whole animal butcher shops with access to fresh carcasses could once again profitably serve the specific needs of communities, instead of supporting corporate interests by buying untraceable, boxed meat from members of the multinational meatpacker cartel.

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Please explain: “Instead, that same 300 million dollars could be used to build hundreds of smaller cooperative and owner-operated local/regional plants capable of processing between two and six times more total cattle, plus other species of livestock, than one large 1,500 head-per-day mini-Tyson style plant.”

According to Tyson’s reporting on capacity and labor force at their largest plants, Dakota City, Nebraska and Garden City, Kansas, they are processing less than 1.6 cattle per day per employee.

Small owner-operated plants are typically able to process somewhere around four head per man per day with a more skilled and stable workforce. This is where the 2x comes from. One small plant I’m familiar with consistently processed ten head per highly-skilled worker with a simple and inexpensive cradle system. Prior to going out of business, the plant expanded to an expensive overhead moving rail system with a mechanical hide puller and production per worker was cut basically in half.

The mobile slaughter unit (MSU) that just arrived in Montana last week is capable of processing a beef animal every twenty minutes with four skilled workers. The cooler has a capacity of between 15 and 18 head depending on animal size. A quartering and docking section extends rearward from the cooler, providing a space outside the cooler for quartering, increasing daily capacity by making more room inside the cooler for hanging the half carcasses. The MSU cooler is emptied at the beginning of each day, either into a holding cooler or onto a carcass transport trailer or truck, where the carcasses are shipped to our cut facility in Colorado Springs.

Original mobile slaughter unit setup with corral and kill box.

Mobile slaughter unit is housed in a building for all weather use.

Prior to selling the above MSU, Callicrate Cattle Co. constructed a building to house the unit for all weather operations with intentions to eventually move the unit out, constructing a kill floor with an attached cooler, including a thirty head drip side and forty head finish and holding area. This increased kill capacity to thirty head per day with additional labor.

The new purpose built kill floor processes multi-species efficiently in a safe working environment.

The new carcass cooler attached to the existing building allows for increased processing by adding carcass holding and aging capacity prior to transporting to Colorado Springs for further processing for our retail and wholesale markets.

The above facilities cost between a one-third of a million for the MSU, and nearly one-million dollars for the permanent purpose-built facility to manufacture and construct. Three hundred thirty-head per day plants, costing one million dollars each, would provide a processing capacity for 9,000 head per day, hence the 6x number. It’s also important to know that the small plants are single shift, unlike the big plants that run two kill shifts and one cleanup shift.

As with the large plants, the MSU and small slaughter facilities don’t process to retail cuts. For many years, big retailers and food service, along with their big meatpacker partners have been shutting out competitors and cooperating in reducing the cost of livestock and labor, as well as externalizing many other costs onto the public with captive supplies and boxed beef being the major market wrecking weapons. Cattle producers have lost over 30% of their share of the consumer beef dollar due to this abusive market power and labor has lost a living wage and a humane workplace. It is critical in building new local/regional food systems to develop markets for carcasses once again. We need many more carcass processing facilities combined with whole animal retail butcher shops like we have in Colorado Springs.

Big meatpacking’s real efficiency is in their ability to extract wealth from both the producer and consumer.

 

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Texas A&M, and Other Land-Grant Economists, Lead Effort to End Competitive Livestock Markets

Following the recent collapse of our industrial food supply chain, on October 7, 2021, the House Agriculture Committee held a “Hearing to Review the State of the livestock Industry.” Chairman Scott opened the hearing with an eloquent statement of how most important and urgent it was to address issues facing our livestock sector. Then he submitted the Texas A&M report, “The U.S. Beef Supply Chain: Issues and Challenges,” which essentially says there is little problem with the current system.

Montana rancher, Gilles Stockton, along with many other independent livestock producers, see it differently:

October 21, 2021

Critique of the U.S. Beef Supply Chain: Issues and Challenges

By Gilles Stockton

Ag economists need to understand and respect the real world of livestock production.

Proceedings of a Workshop on Cattle Markets (June 2021) Agricultural and Food Policy Center, Texas A&M University

The above-named proceedings, authored by 17 economists, was obviously written to prevent the adoption of initiatives currently under consideration. Initiatives which many producers feel would improve the competitiveness and transparency of the fed cattle market. In the Proceedings first paper, by Dr. Derrell S. Peel, he starts by insulting cattle producers with the following quote from a 1999 paper by Dr. Wayne Purcell:

“The beef cattle industry is caught up in difficult times. As economic pressures intensify, reactions tend to move away from the objective and toward the emotional. Calls for solutions are becoming more strident and many are taking the form of proposed legislative remedies… The big danger is that all the attention on short-run and highly visible issues will block recognition of the problems that are long run and structural in nature and, in the process, prevent efforts to move to programs and policies that have a legitimate chance of helping.” 

Then Dr. Peel goes on to write:

The issues facing the beef cattle industry today are not new; indeed, they have changed little in the past 30 years, and some have roots that extend back over a century. It is perhaps reassuring that the industry has, for the most part, avoided embarking on policies targeting issues ‘that are more nearly peripheral in nature and often deal with the symptoms of economic problems rather that the causes’ (Purcell, 1999). Mandatory Country of Origin Labeling (mCOOL) is a notable exception, but the United States did back away from the detrimental policy. However, like many other issues, mCOOL has not gone away. Indeed, the emotions, anger and frustration accompanying recent events such as the Holcomb packing plant fire in 2019, the ongoing COVID-19 pandemic beginning in 2020, and the winter storm of February 2021 have fueled demands for an array of potential legislative actions that attempt to jump to a solution without addressing the complex structural and behavioral issues that brought the industry to the current situation. The risk is that these overly simplistic solutions will have long term detrimental impacts on cattle producers, the industry, and consumers, and jeopardize the ability of the industry to compete in dynamic global protein markets for a successful future.

“There is critical need to understand why the industry has evolved to have the structure that exists today and to function the way that it does.”

The more pressing need, as identified by Dr. Purcell, is to understand and address issues “that would help the long run and structural issues that are prompting the price pressures” (Purcell, 1999). There is critical need to understand why the industry has evolved to have the structure that exists today and to function the way that it does.

The rest of the 183 pages proves beyond a shadow of the authors’ doubt that supply and demand market forces explain all price discrepancies; that increased levels of “spot” market sales will result in lower cattle prices; that Alternative Marketing Agreements (AMA) are absolutely essential to the functioning of the cattle industry; and that it is only because of the economies of scale of the packers that cattle prices are as high as they currently are. The arguments on all four of these core assertions are chock full of convenient omissions and inconsistencies.

Supply and Demand In many places in these Proceedings it is asserted that supply and demand fully explains the discrepancies in market prices. There is not one reference to the many studies that show conclusively that with increase in captive supply (aka AMA) there is a decrease in price.

For instance, John Schroeter and Assedine Azzam, using market data from 1995/96, found that there was $1.13 per head decrease in price for each 1% rise in captive supply.  That would mean that the difference in price for a 1,300-pound steer where there was zero percent (0%) AMAs and sixty percent (60%), would be $67.86.  I may not be an economist but that does not seem like peanuts to me. Incidentally, Ted Schroeder and Stephen Koontz, both of whom are authors in these Proceedings, also published a study that indicated a strong negative (and statistically significant) correlation between increased captive supply and decreased prices. Somehow, they fail to take their own research into account.

Spot Market: The initiative that these economists collectively most want to prevent is the 50/14 proposal introduced by Senators Grassley and Tester. This amendment to the Livestock Marketing Act would require that fifty percent of all fat cattle be purchased through the negotiated spot market.  In Chapter 3, Bastian et. al,  cites an experiment done by Menkhaus et.al, which found that negotiated sales when compared to auctions resulted in prices 10% lower than optimal.

It is this that Koontz in Chapter 5 extrapolates, claiming that by mandating that 50% of the cattle are sold on the spot market, it would cost producers $2.5 billion the first year and $16 billion over ten years. But if increased use of the spot market results in lower producer prices, then why does he not recommend the elimination of all negotiated spot market sales? That would be the logical course of action, if negotiated spot markets sales cause lower prices for producers.

However, Dr. Koontz does go on to explain that use of “…AMAs do not create market power as they do not change the supply and demand fundamentals, nor do they change control of the transaction process.” If this is true, why then would increasing the numbers sold on the spot market decrease prices as he had just maintained.  Would not the “supply and demand fundamentals” still be the same? Maybe it is just me, but there appears to be some confusion.

“Intuitively, most of us would agree that when one of the 40,000 or so feedlot operators negotiates with one of the 4 packers, the feedlot owner is at a natural disadvantage.” 

Intuitively, most of us would agree that when one of the 40,000 or so feedlot operators negotiates with one of the 4 packers, the feedlot owner is at a natural disadvantage.  Whether this results in a negative 10 percent result or not, I am not sure, but a negotiation between parties where there is a major discrepancy of power will most often result in a disadvantage to the one in the weaker position.

On a personal level, I am not a fan of the 50/14 proposal but for very different reasons. First, no one has explained how the Agricultural Marketing Act of 1946 can be amended to mandate that cattle sales be conducted in a prescribed manner. Second, if 50% of cattle are required to be marketed through a negotiated spot market, this implies that the other 50% will then be legally marketed through captive supply.  It is my reading of the Packers and Stockyards Act that captive supplies should be declared illegal.

Alternative Marketing Agreements: Many of the words in these papers are devoted to telling us what fantastically beneficial things are these AMAs (aka formula contract and captive supply).  Apparently, without AMAs, beef would be tough tasteless stuff. Listen to Senate testimony of meatpacking industry representative Mark Gardiner. They go on to claim that only through the use of AMAs can feeders get paid the true value for their cattle, because when selling through the spot market, feeders only receive average prices.

I think that cattle buyers would be bemused by this notion.  Every cattle buyer with a few years of experience under their hat that I ever met always knew exactly what they were buying. Naturally, they would negotiate to pay the least possible, but if you had quality cattle to sell you would get paid for that quality. The reported negotiated spot market averages sales together, but those prices include high prices for quality cattle and lower prices for lesser quality.  The notion that feeders can only be paid for their quality through AMAs is ludicrous. If this is the case, how does one explain that the use of AMAs are highest in Texas, which has the lowest quality cattle, and the least used in Nebraska, which has the best.

“It may be that these economists are in danger of confusing correlation with causation, a sin, economists in general, delight in accusing others.”

The other questionable assertion is that it has been the use of AMAs that has driven the improvements in beef quality.  It may be that these economists are in danger of confusing correlation with causation, a sin of which economists in general delight in accusing others.  Seed stock producers would certainly make a strong argument that it has been the adoption of EPDs and embryo transfers that has resulted in a rapid and significant improvement in the quality and uniformity of the U.S. cattle herd.

Economies of Scale:  Another claim by Koontz is that producers benefit from the economies of scale of the large packing plants. He shows that there is a $20 per head difference in efficiency between a plant that can slaughter 70,000 head per month versus one that processes 140,000. Apparently, the smaller of the large plants can kill for about $200 per head while the very largest for $180. Dr. Koontz’s goes on to assert that producers are the financial beneficiaries of these economies of scale, and that this benefit outweighs whatever benefits might accrue from better market competition. He does not, however, explain why owning 10 or 20 of these large packing plants, as is the current practice with the dominant packers, is necessary. The economy of scales that he describes are only for operating a single plant.

Incidentally, my neighbor who operates a custom-exempt slaughter facility, charges $120 for killing, chilling, and aging a steer. Chances are for another $60 I could talk him into cutting it into chunks and dropping it all into a box.

Addressing the Complex Structural and Behavioral Issues: The authors complain that cattle producers are not “…addressing the complex structural and behavioral issues…” and that “… overly simplistic solutions will have long term detrimental impacts on cattle producers…” However, in the entire 183-page document there are only three half-hearted attempts to identify and address what are, in their estimation, the “structural and behavioral” issues.

In Chapter 6, Maples and Burdine question the need for maintaining the confidentiality of the packers in reporting sales and make a case for increased reporting.  Maples and Burdine also like the idea of a published library of contracts.  This would allow feeders to understand the deals being offered to other feedlots. Senator Deb Fischer of Nebraska has introduced the Cattle Market Transparency Act which addresses both of these issues.

Bastian et. al. in Chapter 3 reminds Dr. Peel that he had written in 2020 that “…adding a transparent electronic trading platform for spot market transactions could improve price discovery for fed cattle markets with even a small amount of transactions.” Bastian et. al. goes on to say, “We extend that suggestion here as an alternative for consideration to policies focused on mandating increased negotiated cash trade. Research suggests that a double auction would likely be the best trading institution for such an endeavor (Menkhaus et. al., 2003). Price discovery will tend to be efficient in this institution provided a sufficient number of buyers and sellers participate.”

What Bastian et. al. are proposing has already been proposed, and all of the other economists featured in these Proceedings should well be cognizant of this proposal. However, they somehow fail to mention it. In 1997, the Western Organization of Resource Councils (WORC) petitioned the Secretary of Agriculture for rule making that would require that all fed cattle transactions be transparent and competitively priced.  In 2007, Senators Tester and Grassley picked up the concept in their Captive Supply Reform Act.

“Competition was restored to the cattle market until the Reagan Administration stopped enforcement of the P&S Act.”

This approach is similar to that of the original Consent Decree accompanying the passage of the Packers and Stockyards Act in 1921. At that time, the packer cartel owned the market place. As a result of the Consent Decree, they were required to purchase their cattle through a third-party marketing system. It worked. Competition was restored to the cattle market until the Reagan Administration stopped enforcement of the P&S Act.

We have a similar situation today, because the packer cartel has de facto ownership of the fed cattle marketing platform. Therefore, the same solution should apply. Packers should be required to make their purchases through a third party operated market. The WORC/Captive Supply Rule would require that all AMA contracts have a base price set at the time of initiation which would be subject to a premium or discount when delivered. This approach maintains all of the benefits said to accrue to the use of AMAs, while providing full transparency and optimum price discovery.

Country of Origin Labeling: Dr. Peel goes out of his way to disparage mandatory COOL and appears relieved that it was rescinded. However, he does not explain why he feels that it is beneficial to the U.S. cattle industry to have consumers believe that they are buying beef born, raised, and processed in the USA when it in fact comes from Brazil.

Final: Since these economists prefaced their papers by insulting cattle producers, perhaps it is only fair that a cattle producer concludes this review of their work with blunt candor. When Land Grant university economists come out from behind the security of their tenured publicly subsidized positions, such that their paychecks are subject to the uncertainties of supply-and-demand market forces, then they will earn the right to lecture those of us who do.

Gilles Stockton
Grass Range, Montana

 

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It’s our last chance!

The following article appeared three years after the IBP lawsuit was filed. The largest poultry company, Tyson, purchased IBP, the largest beef packer, before the case went to trial in 2004. The jury awarded the cattlemen $1.28 billion, which was unimportant compared to the injunctive relief that would follow. Judge Lyle E. Strom (A Reagan appointed de-reg judge) reversed the jury verdict and made cattlemen pay nearly $80,000 in court costs, giving the green light to today’s meatpacking monopoly.

April 15, 1999

It’s our last chance!

Tyson/IBP, along with other members of the monopoly meatpacking cartel, own congress and the courts.

 

“The IBP lawsuit is all that is standing between the cattle producer and bankruptcy.”

– Randy Beard, attorney, Pickett vs IBP

The market power of the big four packers is forcing cattle producers out of business and is clearly on a path, if left unchecked, that will lead to the total elimination of a sustainable cattle industry.

“It is clear proof of greed and monopoly control when consumers are buying record pounds of beef at record high prices and producers are going broke. Market prices are fixed below producer cost. U.S. cattle producers have not produced enough beef to meet U.S. consumer demand since 1951. This year will be the smallest U.S. calf crop since the early 1950’s. There is something wrong when packers are allowed to operate in blatant violation of federal laws, the P&S and RICO Acts,” Callicrate charges. “I am calling for immediate Department of Justice action.”

– The Agribusiness Examiner

Former Arizona Governor Bruce Babbit, now Secretary of the Interior, during the 1988 Iowa Democratic presidential caucuses branded IBP a “corporate outlaw.”

IBP is the biggest packer controlling nearly 40% of the cattle slaughter market. We believe IBP leads the way in setting prices and the other packers follow. In the early to mid 1970’s IBP and the other big packers found it more advantageous to cooperate rather than compete (The Boston Consulting Group analysis). They continue with that same philosophy today. The biggest four firm concentration has increased from 36% of the U.S. cattle slaughter to today’s current level of 87%. IBP continues to set record profits at the same time cattle producers continue to go out of business.

Former Arizona Governor Bruce Babbit, now Secretary of the Interior, during the 1988 Iowa Democratic presidential caucuses branded IBP a “corporate outlaw.” He singled it out as “a monument to everything shabby and backwards and wrong in the American economy – not only because the company lies and cheats, but because it believes its employees are the problem and not the solution.”

Today’s problems are not new:

“It has been brought to such a high degree of concentration that it is dominated by few men. The big packers, so called, stand between hundreds of thousands of producers on one hand and millions of consumers on the other. They have their fingers on the pulse of both the producing and consuming markets and are in such a position of strategic advantage they have unrestrained power to manipulate both markets to their own advantage and to the disadvantage of over 99 percent of the people of the country.  Such power is too great, Mr. President to repose in the hands of any men.”

-These words were spoken on the floor of the U.S. Senate by Wyoming Senator John Kendrick in 1921

The government has failed in its duties to enforce the P&S Act while ignoring clear violations, resulting in what researchers today agree is another powerful packer monopoly.

Following the intense pressure of producer litigation, the Packers and Stockyards Act of 1921 (P&S Act) was successfully legislated to prevent a packer monopoly from occurring again. Unfortunately, concentration of the big packers is far worse today than in 1921.

The government has failed in its duties to enforce the P&S Act while ignoring clear violations, resulting in what researchers today agree is another powerful packer monopoly.

Recent USDA studies have failed to show a problem with concentration of captive supplies. Why, when every feedyard manager with a Monday morning showlist knows there is essentially no market?

The Russell Parker-John Connor study, SMALL BUSINESS PROBLEMS IN THE MARKETING OF MEAT AND OTHER COMMODITIES (Part 7–Monopoly Effects on Producers and Consumers), related the following:

“In about 1950, economists and econometricians started doing statistical studies relating the level of concentration to the level of profits.  Some of

the studies related concentration to the level of prices, and others to price-cost margins computed by the Bureau of the Census.  All of these variables roughly measure the same thing: the costs of high concentration.  Nearly all of the studies showed a positive relationship: as concentration increases, profits, consumer prices, and price-cost margins increased.

“The studies were also interested in looking for critical levels of concentration.  If they could be identified they would be very useful to public policy considerations. Is there some range of concentration where industries are workably competitive?  Is there a concentration value below which antitrust authorities and other public policy organizations shouldn’t be concerned?  Beyond this critical point does concentration rapidly become a problem?

“Models which were specified to determine if there was a critical level have shown that up to about the 40-percent level of four-firm concentration, there is no evidence that concentration is related to the levels of prices, profits or price-cost margins.  In other words, industries with that level of concentration or lower are effectively competitive.

“… the effect of monopoly starts appearing when concentration goes above 40 percent and by the time concentration reaches 60 percent an industry is quite monopolistic.”

“Starting at about the 40-percent level of concentration, prices and profits start increasing and go up rapidly to about the 60-percent level of concentration where they level off.  There is no significant further increase in prices or profits beyond about the 60-percent level of four-firm concentration.  The conclusion is (pointing at the figure) that the effect of monopoly starts appearing when concentration goes above 40 percent and by the time concentration reaches 60 percent an industry is quite monopolistic.”

At the same time as four firm packer concentration has increased from 36% twenty years ago to today’s current high levels, consumers have continued to pay increasingly higher prices while producers have continued to receive less of the consumers’ meat dollar. Today the cattle producer has lost approximately 20% of the consumer dollar or about $300 per head. This has occurred at the same time the cattle producer has done more to produce a better product and the packer and retailer have done less. We believe this is clear evidence of abusive market power.

Independent packers have been regulated and predatory priced out of business.

Anti-competitive practices, evidenced by what IBP termed the “Death March,” (Wall Street Journal) have eliminated competitors as well as producers. Independent packers have been regulated and predatory priced out of business. We are now left with a packing monopoly that is stealing from both producers and consumers as well as threatening not only our food supply but a safe food supply.

The P&S Act; the law currently in place to prevent this tragedy, has been ignored. The Secretary of Agriculture, Dan Glickman is responsible for the enforcement of this law but apparently lacks the political will to enforce it.

The P&S Act basically says that if what a packer is doing has the effect of reducing competition, they must stop. The Secretary has injunctive power to stop packers from violating the Act.

Recently IBP’s highly secretive captive supply arrangements have provided them with captive supplies as high as 122%.

It has been proven that IBP uses captive supplies, those inventories of cattle available to IBP outside of the competitive market, to lower prices paid to producers. Recently IBP’s highly secretive captive supply arrangements have provided them with captive supplies as high as 122%. The cash market determines the value of these captive cattle. What is the cash market if the price leader IBP, doesn’t need any cattle?

The big packers do business with each other. 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.”

USDA market reporters confirmed ConAgra sold 7250 head of cattle to IBP, breaking the cash market approximately $60 per head …

USDA market reporters confirmed ConAgra sold 7250 head of cattle to IBP, breaking the cash market approximately $60 per head from cattle feeder asking prices. In today’s market a sale of this volume causes the entire industry to flush their inventories of cattle at the going low price. Feeders have only minutes to decide on the take it or leave it offers by the big packers.

The P&S Act prohibits packers from engaging in any unfair, unjustly discriminatory, or deceptive practice or device; or showing undue preference to any particular person of locality.

  • Feedyards on the IBP formula receive preferential treatment, both with higher prices and the ability to market finished cattle on a more timely basis realizing improved performance and feed efficiencies.
  • IBP bids “not to buy” at some feedyards, thereby discriminating against certain feeders. These are the cash feedyards that set the formula price for IBP’s formula feedyards.

The Act prohibits packers from apportioning territory.

  • The exclusive “Formula” arrangement shuts other packers out of IBP formula feedyards.
  • Simplot, the largest cattle feeder in the Northwest has a full joint venture partnership with IBP, sharing in packing plant profits. IBP controls the Northwest finished cattle market with essentially no competition in the area.

It’s now up to us; our government, the USDA, charged with protecting our freedom, maintaining economic fairness and equal opportunity has failed in its responsibility. The Packers and Stockyards Act gives individuals private right of action in the courts to address the damaging anti-competitive practices of the big packers.

In Pickett vs IBP, we are first asking the court for injunctive relief to make the packers stop interfering with the market, causing low cattle prices. For every $1.00/cwt. IBP is able to lower the yearly price paid for live cattle they make $115 million.  Secondly, we are asking the court for compensatory and punitive damages.

Regardless of whether a cattle producer is a plaintiff or a member of a potential class depending on the extent of class certification, all cattle producers will win if a fair market is restored.

This is the beginning of a national effort to restore market fairness and profits back to the farm gate. Independent agriculture is looking at the IBP lawsuit for an indication of where we are headed. A win in this lawsuit will be a win for the consumer, all independent agricultural producers and their communities. It will mark the end to the relentless pursuit of corporate profits at the expense of producers and consumers.

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Packer Concentration – Historical Context, by Domina Law and Mike Callicrate

 

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Continuing on from the Domina Law timeline:

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Click on image to listen to full hearing.

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Family Farm Dairies Hope “Build Back Better” Helps Soon

America needs a new food system, free of the market predators that have forced producers and workers into lives of perpetual fear and bankruptcy.

The most ideal organic dairy farms will be history if the Biden administration doesn’t act.

As of September 29th, 2021, one-hundred and seventy-eight of the best organic dairy farmers in the nation have been given a notice – a death notice. French dairy giant, Danone, is cancelling their contracts. This means certain death in today’s highly concentrated, monopoly-controlled marketplace, which Danone rules over.

Photo by Nick Levendofsky – 2021 Dairy Expo

Why isn’t the consumer of dairy products being informed of the loss of their local/regional food supply, instead of being fed the lie of how regenerative and forward-thinking Danone is? Currently, as our nation is recognizing the importance of a more local, decentralized, and resilient economy, why aren’t we jumping at the opportunity to build a new local/regional food system in the Northeast, keeping the ideal independent dairies and farms like Danone claims to support in business, while providing consumers the ability to eat better food from their own communities?

Rather than importing from Danone’s aquifer depleting, hyper-industrial factory-farm mega-dairies in the west, consumers of the New England states should have the choice to support the multi-generational family farm dairies close to home.

It’s Danone that should receive notice

It’s well past time for the monopoly power in our critical industries to be broken up, especially foreign market predators like Danone. It’s past time to expose the massive lies of efficiencies and economies of scale that have misled lawmakers and enforcers, enabling big corporations to capture the food system, leaving Americans with bare grocery shelves. How efficient is it to transport Danone’s dairy products from arid faraway places, like Texas, Western Kansas, and New Mexico, to the fertile and forage rich climate of the Northeast – a region fully capable of sustainably feeding itself? How smart is it to destroy local wealth creating enterprises, like family dairies, in favor of below-cost-of-production imports, produced with the extraction of precious and depleting resources, the exploitation of workers, mistreatment of animals, and the disastrous and on-going environmental degradation of industrial style agriculture?

The pandemic has raised awareness among both producers and consumers of the importance of a dependable and safe food system.

The Biden administration is talking local/regional food system development with “Build Back Better,” a plan to address the national security risk of a few corporations controlling farming and food and destroying our ability to feed ourselves. What will “Build Back Better” look like? How will the money be spent? How can the investment in infrastructure be sustainable and resilient? Will Big Food capture, control, and kill the efforts to rebuild, or will new antitrust actions stop these market predators?

Big Food corporations block fair market access to farmers, ranchers, and small food companies.

The safest pathway to consumers is going around the Big Food cartel.

Any new local/regional infrastructure should guarantee a safe pathway for family farmers, ranchers, and small processors to reach consumers, feeding people and communities instead of corporations.

Question: “Is the Ranch Foods Direct model scalable?” Answer: “No, it’s replicable. It’s not meant to be scalable.”

At Ranch Foods Direct our motto is “building community around local food.” To make that happen, we left the industrial food model to sell as directly as possible to the end consumer, seeking to avoid the Big Food monopoly and their predatory practices, which have eliminated many independent food producers attempting to compete.

Northeast dairy farmers are pleading for a fair, open, and competitive market for their milk, but one doesn’t currently exist. Like our nation’s desperate independent farmers and ranchers, they had no alternative but to be part of the abusive Big Food (Danone) below cost of production supply chain – a forced transfer of their work, health, and wealth, until all is lost, including the community. Why have we continued to allow unchecked corporate greed to destroy those who feed us?

Mid-sized regional food producers like Ranch Foods Direct are a more efficient, humane, and safe alternative than the big meatpacker, retailer, and food service cartel, allowing animals to be processed where they are raised and the carcasses transported to the whole animal butcher shop like we have in Colorado Springs. Fresh milk (raw) cheese, and other dairy products direct from the farm should have a major presence in any new market development, setting a new standard and acceptable price level for both producers and consumers.

What kind of alternative market infrastructure?

Globalized corporate supply chains aren’t the solution. The local food movement, along with the local farmer and food story, has been captured and falsely promoted by large multinational food companies like Danone. Producers lack places to process, prepare, and market food, and deceived and misled consumers are struggling to find ways to support authentic local/regional food production.

The pandemic has raised awareness among both producers and consumers of the importance of a dependable and safe food system. It has also left empty spaces in and around urban centers that could be ideal locations for new local/regional food infrastructure.

Local food related businesses have long been at the mercy of rent-seeking developers and property owners. Other options should be considered for new infrastructure that provide more direct connections between the producer and consumer, with more of the food dollar remaining in the community and region, building healthier, fairer, and more resilient economies.

One alternative would be publicly owned infrastructure like the historic Queen Victoria public market in Melbourne, Australia:

Another option is a private vendor-owned multi-establishment food hub and retail market connecting local/regional food producers to consumers using a cooperative-condo ownership model.

A new co-op designed ownership model could offer a better option in which a diversity of member/owners could own and control the food-hub/market real estate, earning appreciation in land and facilities, while benefiting from the synergy of co-locating. Consumers and local restaurants would have access to local food from the whole animal butcher and baker to the produce vendor, cheese maker, brewery, grain miller, coffee roaster, etc., in a lively community space within either existing or new purpose-built facilities. The food-hub/market could also offer opportunities for education and job skill development, as well as indoor and outdoor space to incubate new food related businesses. Fair market access would restore producer and worker share of the consumer food dollar and provide consumers with an affordable, healthy, safe, and dependable food supply.

Perhaps the place to begin building something better is in the Northeast where there are many appropriately sized, sustainable, but very worried dairy farmers.

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