Small Family Farms Challenged by Big Ag, Big Food Systems

We are all familiar with this mantra repeated by every politician: "Small business is the backbone of our economy."  While it is a true statement, the mantra is mostly lip service when it comes to policies that consistently favor Big business.  Subsidies in the form of tax abatements, infrastructure development, and creative incentives to attract business investment are rarely offered to small business owners. As economist Michael Shuman, author of the Local Economy Solution, observes: "You don't have to attract and retain small businesses - we're already here."

Just as publicly traded companies have steadily gained market share of almost every sector of the local economy - restaurants, hotels, pharmacies, grocery stores, department stores, hardware, office supplies, auto supplies, etc. - the same pattern has been happening in the agricultural economy.  Every small family farm is a small business, and we have been losing them steadily over the past 50 years. Pressure from agribusiness to industrialize food production (and from suburban developers) have forced small farmers to "go big" or sell out to investors.

The 32nd annual Farm Aid 2017 Concert led by Willie Nelson and fellow musicians John Mellencamp, Neil Young, and others was recently held in rural Pennsylvania, attracting nearly 23,000 farmers and friends from 48 states. Every year Willie raises money to support the work of family farmers, and every year he has to report the loss of family farms due to the concentration of large mega corporations that dominate crop production, seeds, pesticides, and industrial scale equipment.

Just as we advocate for small, sustainable, mostly locally owned businesses as the key to healthy local economies that provide good jobs, tax revenues, and accountability in our communities, it is important to advocate for small, locally owned farm businesses who are beginning to challenge market concentration in the food economy.

A large number of organizations (140+) engaged in the local food movement have come together in support of principles designed to ensure a "Fair Farm Bill" in 2018.  OSBC endorses these principles. All of us concerned about the mergers and vertical integration in the retail economy that threaten small businesses will see the importance of these principles in leveling the playing field in the rural economy.

Here are the principles:

Lessons learned from the global financial crisis: bigger is not better

As we saw a few short years ago during the financial crisis that drove us into global recession, allowing our economy to be controlled by a few large corporations puts our nation and its citizens in extreme jeopardy.  The same is true in our agricultural markets.  Despite this fact, the steady drum beat of industry consolidation and concentration continues unabated, and has been treated as inevitable and unstoppable by Congress and federal regulators. Farmers, workers and consumers have faced worsening economic conditions — with insufficient enforcement of important antitrust, farmer, labor or consumer protections. We strongly disagree with this ambivalent and ultimately destructive approach to our nation’s rural economy and the sovereignty of our food system.

Anti-trust enforcement in agriculture and food sector must be enhanced

 Our market economy relies on the long-established role of the federal government to enforce antitrust law, ensuring fair and open competition that promotes a thriving economy, and limiting the control of those markets by a few large entities that destabilizes our economy.  To ignore these responsibilities is to imperil our economy and the well being of our farmers, ranchers, farm and food chain workers, consumers and rural communities.

 Foreign ownership in U.S agriculture undermines U.S. farm income and drains resources from our rural communities

Foreign investment in the U.S. agriculture sector is one thing, but the extraction of U.S. resources from our rural communities by foreign agribusinesses, and the increasing control of U.S. farmland and other key aspects of the U.S. food system by foreign entities should raise alarm bells.  These trends are becoming increasingly evident in our dairy, beef, poultry, organic, farm input and seed sectors, and cannot be ignored.

Manipulation of livestock markets must be stopped

 Because of the consolidation of meatpacker firms in recent decades, livestock markets are extremely concentrated.  The market power of these remaining firms, both foreign and domestic, enables them to use marketing and pricing strategies that shift economic risks onto the backs of farmers and ranchers.

Meatpackers use packer-owned livestock as a major tool to exert unfair market power over farmers and ranchers, freezing independent farmers out of the market and artificially lowering farmgate prices to farmers and ranchers — while consumer food prices continue to rise. Meatpackers also use formula contracts, with no fixed base price, that are prone to manipulation, giving meatpackers unfair market leverage comparable to direct packer ownership.  Another livestock procurement tool, marketing agreements that are often negotiated in secret, result in the same market distorting outcome because the packers enjoy unequal information and power.

 Contract farmers are losing control of their farms and livelihoods to large integrated agribusinesses

Our country’s tradition of independent farmers making production and marketing decisions for their own farms is rapidly disappearing.  The newer model of vertical integration coerces farmers to surrender that independence to a large integrator company that takes over control of all decisions, and pays the contract farmer for their labor, land, and facilities.  History has shown that once farmers relinquish their independence, their pay, contract terms, and overall treatment by the integrator deteriorates.

Not surprisingly, when the U.S. Department of Agriculture has attempted to establish basic protections for contract livestock and poultry farmers, the companies who impose and control these contracts have vigorously fought those efforts. We understand why these firms want to protect their own interests by fighting against any federal oversight or scrutiny of their practices, but such oversight is an appropriate federal responsibility, and Congress must not allow unfair, abusive or deceptive integrator behavior to go unchecked.

Market transparency benefits producers and consumers

 Market transparency is a basic tenet of a fully functioning market economy. Policies should be enacted to establish open and transparent pricing practices for agricultural products, ensure clear access by farmers to information about production contracting standards used in various agricultural sectors, and set clear labeling standards to give consumers information about the origin and production methods associated with the food they purchase. Congress should reject attempts by agribusinesses to undermine proper market functioning with their arguments against fair, open and transparent markets and labeling.

USDA loan guarantee programs must be reformed to prevent abuse by large livestock and poultry corporations

The USDA loan guarantee programs are critical for U.S. farmers, but lending guidelines should be implemented to ensure that scarce federal resources are used wisely and allow full and fair access to credit by diverse and small-and-medium-scale producers, including implementation of real policies and procedures to assure equal credit access as required under existing law. In addition, basic protections should be established to ensure that USDA loan guarantee programs do not subsidize unsustainable and abusive contracting practices by large meatpackers and poultry companies.

Worker rights protections and enforcement in agriculture and food sector must be enhanced

 Agribusinesses, food manufacturers, distributors, foodservice companies and grocery retailers also extract economic value from the food system by pushing down on wages, benefits and working conditions. All workers throughout the food chain deserve dignity, economic opportunity and safe workplaces to contribute to the economic engine of rural communities.

We can all participate in the local food economy by supporting farmers markets, purchasing CSA Shares (Community Supported Agriculture), patronizing locally owned grocery stores and food co-ops, eating at locally owned restaurants, and drinking local craft beers, wines, and spirits. Politically, consider contacting your Congressional representatives to let them hear your concern as a business owner that "fair farm" principles will create a stronger local food system with "small family farms forming the backbone of our rural economies."