The Economy Project
Fri March 12, 2010
Obama Administration Scrutinizes Big Ag
By Frank Morris
Kansas City, MO – It looks like banking isn't the only industry coming in for some added regulatory scrutiny from the Obama administration. US Attorney General Eric Holder and Agriculture secretary Tom Vilsack have launched a series of workshops probing anti-trust issues in agriculture. Some big agribusiness firms say the forums will showcase a well functioning, free market. But, many producers think they'll expose a system increasingly hostile to the traditional family farm.
GET BIG OR DIE
Twenty-five years ago Montgomery County, Missouri had about 200 independent hog farmers. Now, there are two.
Jim Foster, with his old, open-air hog barns, is one of them.
"I was born about three miles, as the crow flies, I was raised one mile, between here and there, then I bought this place in '63 when I got out of college and got married, been here ever since."
It hasn't been easy keeping this rambling operation together. Big packing companies took over most pork production years ago. That drove down prices and drove most of Foster's neighbors out of the industry. He's got just one steady buyer for his hogs.
Meantime companies that sell Foster supplies have grown just powerful, as the ones he depends on to buy his livestock.
That leaves Jim Foster trapped between giants. A situation he blames "hands off" economic policy.
"The biggest boar at the trough needs to win, no matter who he lashes out with his tusks and kills. Cause, the biggest company left standing will be efficient, and that efficiency will move down to the consumer. Well, that's hog wash. That doesn't work. We found out from the banks that it doesn't work that way. They keep that efficiency in their pocket."
Foster thinks the workshops starting this morning in Ankeny Iowa, mark a 180-degree sharp turn in thinking. He's not the only one.
"It indicates that the federal government, for the first time in a very long time, is willing to look at this problem area," said, Neil Harl, professor emeritus at Iowa State University.
A NEW EMPHASIS ON ANTI-TRUST
For 30 years, Mr. Harl has been howling about what he calls the "Towering Concentration" in agribusiness. Now, he's found an ally in Justice Department anti-trust chief, Christine Varney.
"Farmers are more and more facing very difficult issues of surviving economically and I'm very interested in looking at the factors that contribute to that difficulty," said, Ms. Varney.
There's also an investigation. The Justice Department and at least seven state attorneys are probing Monsanto, the world's largest seed company. They're looking into whether Monsanto patented its Roundup Ready gene to kill off competition and jack up prices. Monsanto spokesman Lee Quarles said the workshops will show it hasn't.
"We believe an objective review of the agriculture sector will reveal that competition is alive and flourishing," said Quarles.
Quarles said farmers wouldn't buy Monanto's seeds, if they didn't work.
LOOKING FOR ANSWERS
But something is killing family farms.
About 80,000 mid-sized operations disappeared just in the last five years. Agriculture Secretary Tom Vilsack said he wants to know just how much consolidation in agribusiness contributes to that decline.
"We're going to try to find out if there's a correlation. And whether or not when agribusiness purchasing power is reduced in to a small number of companies, does that create such an unlevel playing field that it compels those in the middle to either get bigger, or get out," said Vilsack.
Back on his farm, Jim Foster enjoys being with his grandkids, but worries about their future in agriculture. That's why he traveled to Ankeny, to testify at the workshop.
"I'm not interested in one guy farming our whole county. I'm interested in a lot of young families, with swing sets in the back yard, raising kids. That's what it's all about," he said.
Foster thinks there's a better than even chance the meetings may rebalance the marketplace and give midsized operations like his just a little more clout.
"You have to be optimistic," he said, but adds that decades from now, he doesn't want to have to explain that, back in 2010, he didn't even try to save the family farm.