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Farm Aid News & Views July 1996



FARM AID News & Views
July 1996
Volume 4, Number 7
_________________________________________
Headlines:
- INDUSTRIAL AGRICULTURE:MAIN STREET VS. WALL STREET
- HOGS: PSF PROVES THAT BIGGER IS NOT BETTER
- HOGS: FACTORY FARMS SMELL WORSE THAN WALMART
- CATTLE:  BEEF PRICES CONTINUE TO DROP; CATTLEMEN SUE IBP
- POULTRY:  POULTRY GROWERS:CANARIES IN THE COAL MINE
- USDA RELEASES CONCENTRATION REPORT

INDUSTRIAL AGRICULTURE:
MAIN STREET VS. WALL STREET

The industrial revolution has hit farming.  The application 
of the industrial model has had profound impacts on 
agriculture, especially in the livestock industry.  Food 
corporations and processors now control the bulk of  the food 
dollar --  illustrated by the fact that farmers receive only 
21" per dollar spent on food, down from 37" per dollar in 
1980.  As the profits of the food corporations grow, five 
hundred family farmers go out of business every week.

Under the industrial farming system, family farmers are faced 
with the prospect of entering into contractual agreements 
with corporations or becoming extinct.  Independent family 
farmers have traditionally raised animals as part of 
diversified farming operations in numbers that don't 
overwhelm the environment.  Factory farms, in the name of 
efficient food production, do not waste valuable time or 
money worrying about  the environmental or social impacts of 
crowding too much livestock on too small a plot of land.  

The independent family farmer is losing ground.  The rise of 
factory operations has led to a clear choice for consumers: 
Who do we want producing our food?  Family farmers, stewards 
of the land, or corporate production managers, whose bottom 
line is profit?

Today, independent ranchers are unable to find a fair market 
for their cattle.  The threat of invasion by corporate 
confinement hog operations is uniting farmers and citizens in 
rural communities across the country.  Poultry growers have 
no choice but to sign unfair contracts that send them deeper 
into debt while lining the pockets of giant poultry 
companies.  This issue of FARM AID NEWS & VIEWS will explore 
corporate concentration from the perspective of cattle, hogs 
and poultry.     

HOGS: PSF PROVES THAT BIGGER IS NOT BETTER

Premium Standard Farms, Inc. (PSF), one of the top four 
factory hog production giants, appeared on the factory 
farming scene in 1988.  Touting a new model of hog production 
and backed by millions of dollars from outside investment 
firms, PSF planned to control every aspect of hog production 
-- in effect, to raise, slaughter, and process hogs 
themselves.  Eight years later, this  model of cost-effective 
efficiency, which featured farming without farmers, filed for 
Chapter 11 debt restructuring.  PSF president Dennis Harms 
states that "extreme market volatility in the last two years" 
was the cause of the bankruptcy.    

Rhonda Perry of the Missouri Rural Crisis Center stated that 
"It just goes to show that they weren't more efficient, they 
just had access to Wall Street money.  Family farmers have 
always had to deal with market volatility.  Who's kidding 
who?"

PSF, based in Princeton, Missouri, came under attack in 1995 
by family farm and environmental groups when it filed an $8 
million lawsuit against Lincoln Township, a rural Northern 
Missouri community with a population of under 250.  The 
lawsuit was filed after citizens called for the enforcement 
of county zoning laws which would restrict development by 
PSF.  The National Campaign for Family Farms and the 
Environment was formed last April when thousands of people,  
outraged by the lawsuit, rallied with FARM AID president 
Willie Nelson to unite against PSF.  In response to the 
rally, PSF dropped the monetary portion of their lawsuit 
against Lincoln Township, but continued to pursue legal 
strategies for combating the zoning laws.  

PSF representatives state that operations at all of PSF's hog 
confinement facilities will continue during the restructuring 
process.  However, other reports indicate that rival hog 
companies have been looking into buying out the PSF 
facilities.    

PSF's bankruptcy is a major victory for the Campaign for 
Family Farms and the Environment.  Premium Standard Farms was 
the first corporate target of the Campaign, according to 
Rhonda Perry.  "Through the Campaign's public awareness 
campaign, we have divided the industry.  PSF was the model, 
the flagship of the industry, but they couldn't take the 
public scrutiny -- we were able to expose them." Campaign 
members have been working to enact "good neighbor" policies 
that would require public notification of  the intent of a 
factory farm to come into the community; require lagoons to 
be bonded; and assure air and water quality, among others. 

Chirag Mehta of the Illinois Stewardship Alliance says that 
the Campaign's success can be attributed to its solid 
coalition of farmers, environmentalists and rural residents 
working to sustain rural communities and the environment.  
"The Campaign has been able to keep operations from coming in 
'whole hog.'  Companies know when they'll be stepping into a 
fight  it might make them think twice," Mehta said.  The 
Illinois Stewardship Alliance coordinated a rally on July 30 
in White Hall, Illinois, for community groups organized to 
address the impact of large-scale hog confinement operations 
in Illinois.

HOGS: FACTORY FARMS
SMELL WORSE THAN WALMART

When factory farms move into town, the effect on the local 
economy mirrors the effects of Walmart: Small producers are 
driven out of business when they can't keep up with the low 
prices that mass-production offers.  Unfortunately, in the 
case of factory hog facilities, the effect on the community 
is much more devastating.  One hog produces two to four times 
the waste as one human, and this waste is typically stored in 
open-air pits the size of several Olympic-sized swimming 
pools.  These lagoons are apt to leak or overflow, making 
neighbors sick and flooding ground and surface water with raw 
hog sewage.  This toxic waste contaminates drinking water and 
kills fish and wildlife.  One colossal spill  occurred last 
summer when a North Carolina producer's lagoons overflowed 
after heavy rains, spilling 25 million gallons of hog sewage 
over surrounding fields and contaminating a 17-mile stretch 
of a nearby river.

A study released this month from the Centers for Disease 
Control and Prevention (CDC)  investigated the link between 
the contamination of private wells by an Indiana hog 
confinement facility and an unusual cluster of miscarriages 
suffered by women in neighboring homes.  The CDC  noted the 
need for further investigation of allegations that nitrates 
>from  hog manure leach into drinking water and increase the 
possibility of miscarriage in women whose wells are 
contaminated.  

Another recent discovery, publicized by the Land Stewardship 
Project (LSP), was initiated by a rural Minnesota resident 
when her family experienced reoccurring illness after a 
factory hog facility called ValAdCo moved in next door.  A 
series of air quality tests showed that hydrogen sulfide gas 
emissions from one-fourth of the sites tested were well in 
excess of the state air quality standard.  Julie Jansen's 
family, who lives next door to the facility, has been 
suffering from headaches, diarrhea, vomiting, respiratory 
problems, dizziness and black-outs, all symptoms of 
overexposure to hydrogen sulfide, a gas emitted from 
livestock manure.    "This isn't just a problem between me 
and ValAdCo here," said Jansen.  "Huge lagoons owned by 
various pork producers are threatening the health of people 
all over the country."

CATTLE:  BEEF PRICES CONTINUE TO DROP; CATTLEMEN SUE IBP

Cattle prices have reached 10-year lows, while in 1996, 
corporate meatpacking giant IBP, Inc., enjoyed its all-time 
most profitable first quarter.  Cattlemen in the West are 
searching for answers and battling the monopolization of the 
cattle industry: four meatpacking companies control an 
estimated 87 percent of cattle slaughter.  Ranchers forced to 
sell their cattle at bargain-basement prices are accusing 
these large companies of suppressing beef prices for the 
entire industry  low prices which are not reflected at the 
supermarket.  This suspicion stems from the fact that  meat 
packers have their own captive supply of cattle fed in 
packer-owned feedlots or fed under contract for the packers.    
Many ranchers believe that competition and free markets are 
non-existent in the cattle and beef markets.
 
On July 10, cattlemen filed a class-action lawsuit against 
IBP, Inc., the nation's largest meat packer, contending that 
IBP is operating under violation of the Packers and 
Stockyards Act of 1921 by paying higher prices to producers 
who sign exclusive agreements with IBP.  In addition, IBP is 
accused of conspiring to fix prices paid on the open market.  
This new lawsuit comes on the heels of a similar 
investigation held last August which resulted in the 
Department of Agriculture charging IBP with violating the 
Packers and Stockyards Act.

The Western Organization of Resource Councils (WORC) is 
coordinating an effort asking everyone to  write Jim Baker, 
administrator of the Grain Inspection, Packers and Stockyards 
Administration  to adopt the following three-point rule:

1. Prohibit formula or basis pricing in forward-contracted 
cattle.  This means any contract offered will have to have an 
actual price attached to it.  Many feeders have been hurt by 
formula or basis contracts because the packer can manipulate 
the cash and futures markets, which are used for the starting 
prices on these contracts.

2.  Require that forward slaughter contracts be offered in an 
open, public manner.  This will insure that the price paid 
for contracted slaughter cattle will affect the public price.

3.  Require that packer-owned and -fed cattle be sold in an 
open, public market.  This means cattle owned by the packers 
will no longer be trucked from the packers' feedlot to the 
packing plant with no price fixed to them or reported.

Jim Baker, Administrator
Grain Inspection, Packers and Stockyards
Room 1094 South Agriculture Building
14th and Independence Ave. South West
Washington, DC  20250
 

POULTRY:  POULTRY GROWERS:
CANARIES IN THE COAL MINE

The poultry growers' plight is one that many fear to be the 
future of cattle and hog production.  The poultry industry is 
98 percent vertically integrated, which means that 98 percent 
of all poultry produced is bred, owned, butchered, and 
marketed by giant corporations such as Tyson, ConAgra, 
Perdue, the top three.  Independent family farmers are locked 
out of the market.

"Feed mills, hatcheries, initial processors, and further 
processors are all under one roof, so to speak, and the grow-
out of the birds is done under contract with family farmers 
who supply the land, buildings, equipment, and labor," says 
Mary Clouse of the Rural Advancement Foundation International 
(RAFI).  Growers have no input in the management of their 
facilities, and often times the corporations require massive 
facility improvements which can cost hundreds of thousands of 
dollars.  "The farmer owns nothing but the debt," says Rhonda 
Perry of the Missouri Rural Crisis Center.  

In the past, when disputes arose over the terms of the 
contracts, farmers were able to win lawsuits against the 
corporations.  Now, however, contracts are written to state 
that arbitration is the only acceptable means of contract 
dispute resolution.  "Arbitration is no choice," says Mary 
Clouse.  "Growers are treated like slaves.  The system has 
within itself the seeds of its own destruction."  

Since the major poultry corporations have regional 
territories, if a grower refuses to sign an unfair contract, 
he or she has no other options for signing with another 
corporation.  Companies often will not contract with new 
growers on old growers' farms, making it impossible to sell 
or lease the farm.  In addition, corporations threaten to 
pick up and leave an area if the growers do not agree to the 
terms of the contracts; this threat could easily become 
reality with the passage of NAFTA.  Growers, saddled with 
enormous debt and with their mortgage on the line, are forced 
to sign unfair contracts.  

The National Contract Poultry Growers Association is 
currently fighting to pass national legislation that would 
recognize grower cooperatives as a bargaining agent for 
negotiating the terms of fair contracts.  Poultry growers 
recently celebrated a legislative victory when the USDA Grain 
Inspection, Packers and Stockyards Administration (GIPSA) 
modified regulations under the Packers and Stockyards Act 
that require strict procedures for weighing poultry on 
electronic scales.  Previously, growers were often cheated on 
poultry weight (and therefore the price they were paid).

The system of contract farming is moving into hog production.  
Initially, the contracts seem like a good deal for farmers; 
their risk is lowered, as they have a guaranteed market for 
their product.  However, if history repeats itself, the 
contracts will gradually become more and more unfair to 
farmers.  Says  Mary Clouse, "The poultry growers have been 
the coalminer's canaries."  For more information, contact the 
National Contract Poultry Growers Association at (318) 251-
9227. 

USDA RELEASES 
CONCENTRATION REPORT

The current allegations of collusion in the cattle market and 
unfair treatment of poultry growers and independent hog 
producers come just weeks after the release of a report by a 
USDA committee that was developed to investigate these very 
allegations.  The Committee was formed by Secretary of 
Agriculture Dan Glickman and "charged with investigating 
concentration in virtually any segment of the agricultural 
economy where it may be evident."  One major finding of the 
Committee was that the Secretary of Agriculture's authority 
to enforce the provisions of the Packers and Stockyards Act 
are "sweeping."  In the past, the USDA has made claims that 
legislation would be needed in order to enact measures that 
would reduce the monopolization of corporate packers.   The 
Committee stated that "Major policy efforts should be 
directed to creating an atmosphere of open disclosure of 
basic operating facts, including many aspects of price 
discovery, earnings levels of packers and feeders, 
environmental management concerns, and contract terms between 
integrators and producers."

The findings of the Committee have been met by a mixed 
response from the various livestock groups; many feel that 
the findings fall short in policy recommendations by failing 
to recommend specific actions that USDA can take to establish 
a fair livestock market.  "The committee majority fell well 
short of demanding that anything specific be done to fix the 
wreck in the cattle market," said Tom Breitbach, chair of the 
Agriculture Issue Team of WORC. 

According to Agriculture Secretary Dan Glickman, in a 
statement released in response to the Committee report, "We 
[President Clinton and Glickman] are committed to promoting a 
system of American agriculture in which unfair trade 
practices are not tolerated, and in which family farmers and 
ranchers can continue to make a good living on the 
land."  Family farm advocates are pushing the 
USDA to implement specific administrative reforms recommended 
in the wake of the Committee report.

EVENTS

FARM AID president Willie Nelson has announced plans for the 
FARM AID '96 concert, which is to be held in Columbia, South 
Carolina on October 12.  To date, FARM AID co-founders Willie 
Nelson, Neil Young and John Mellencamp will be performing at 
the benefit concert along with Columbia natives Hootie and 
the Blowfish, the Beach Boys, Jewel, Martina McBride, and 
John Conlee.  In a press conference announcing the event, 
Willie Nelson said, "We hope this concert will remind the 
nation that we need to change the way we think about the food 
we eat and the people who grow it.  It's important that we 
have someone there growing the food who cares for the land."  
Stay tuned for details; tickets will go on sale in September. 

RESOURCES

"Concentration in Agriculture: A Report of the USDA Advisory 
Committee on Agricultural Concentration," United States 
Department of Agriculture, June 1996.  Call the USDA Office 
of Communications, (202) 720-2798.

"Understanding the Impacts of Large-Scale Swine Production: 
Proceedings from an Interdisciplinary Scientific Workshop," 
Kendall Thu, Ph.D. et al, proceedings released June 1996.  
Call (319) 335-4438.  

"Swine Systems for Iowa," proceedings of a conference held 
February 21, 1996 at Iowa State University.  Leopold Center 
for Sustainable Agriculture, (515) 294-3711.

"The Industrial Reorganization of U.S. Agriculture," Rick 
Welsh, Henry A. Wallace Institute for Alternative 
Agriculture, April 1996.  Call (301) 441-8777.

National Campaign for Family Farms and the Environment, 
contact Rhonda Perry, (573) 449-1336.

Western Organization of Resource Councils, John Smillie, 
(406) 252-9672.
________________________________________
Farm Aid News is produced by the Institute for 
Agriculture and Trade Policy for Farm Aid.  Editors 
Harry Smith and Kate Hoff.  We encourage the 
reproduction of Farm Aid News & Views.  Comments and 
suggestions welcome. Farm Aid, (617)354-2922.  Fax: 
(617) 354-6992. Email: Farmaid1@aol.com.  For more 
information on agricultural publications contact IATP, 
(612) 379-5980. Fax: (612) 379-5982.  Email:farmaid1@aol.com