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November/ December 2012 Obama’s Game of Chicken

The untold story of how the administration tried to stand up to big agricultural companies on behalf of independent farmers, and lost.

By Lina Khan

One problem with the tournament system is that no standards regulate the quality of feed and chicks that processing companies deliver to farmers, which means there’s no way for a farmer to know if he’s getting the same inputs as the other farmers against whom the company makes him compete. Another problem is that the processing companies often weigh the full-grown chickens behind closed doors, out of the sight of the farmer who raised them. This enables the companies to favor or punish whichever farmers they, or their local foremen, choose. Any farmer who complains about the system, or about the specific provisions of a contract, or who even signs some sort of petition that a processing company doesn’t like, risks seeing his “earnings” arbitrarily cut.

Farmers are still expected to own their own land and to bear all the risks of investing in facilities, like chicken houses, just as they did when they sold into fully open and competitive markets. But almost all the authority over how they run their farm and what they earn now belongs to the companies. “A modern plantation system is what it is,” said Robert Taylor, a professor of agriculture economics at Auburn University who has worked with poultry farmers for close to three decades. “Except this is worse, because the grower provides not just the labor, but the capital, too.”

In most other industries, labor law protects workers from such forms of manipulation and exploitation. Farmers, though, aren’t protected under labor law because—at least until recently—it was assumed that open market competition enabled them to take their business to another buyer. Today, however, even as they become more like employees, laboring for a single company, the law still treats farmers as if they were their own masters. “The shift to vertical integration means that farmers no longer own what they are producing,” explains Mark Lauritsen, director of the food processing, packing, and manufacturing division at United Food and Commercial Workers, the union that represents workers across many industries, including agriculture and food processing. “They are selling their labor—but they don’t have the rights that usually come with that arrangement.”

The specific type of contract and the payment scheme offered by companies vary by sector, and the hearings indicated that the worst practices are generally found in the poultry industry. What applies across the board—in cattle ranching and dairy and hog farming—is the stark and growing imbalance of power between the farmers who grow our food and the companies who process it for us, and how this imbalance enables practices unimaginable in any competitive market.

Watts, the farmer who drove from North Carolina to attend the Alabama hearing, says he and his fellow poultry farmers are independent only in name. “What I can make through my work is entirely dictated by many hands before it ever gets to me,” he said in an interview. “My destiny is no longer controlled by me.”

Farmers and activists have been fighting to restore fair agriculture markets since the 1980s with little to show for it. Both Democratic and Republican senators have periodically introduced legislation to level the playing field for independent farmers and ranchers, but those measures have repeatedly collapsed under the weight of corporate lobbies.

Most consequentially for farmers, the once-groundbreaking Packers and Stockyards Act has been weakened over the decades by both the courts’ and the executive branch’s narrow interpretation of its broad, sometimes ambiguous language. As a result, the act is no longer sufficiently powerful to protect their rights. The administration of George W. Bush essentially halted enforcement of the act entirely. In 2006 the USDA’s own inspector general reported that the agency responsible for enforcing the act, the Grain Inspection, Packers and Stockyards Administration (GIPSA), had been deliberately suppressing investigations and blocking penalties on companies violating the law. The inspector general found that Deputy Administrator JoAnn Waterfield was hiding at least fifty enforcement actions in her desk drawer.

In 2008, independent farmers seemed at last to have caught two big breaks. First, in the 2008 Farm Bill, Congress instructed the USDA to revise and update specific issues that the eighty-year-old act either had never addressed or had left overly vague. As the agency regulating the Packers and Stockyards Act, the USDA, and, more specifically, its subsidiary body GIPSA, already had the power to revise and supplement its laws. Now it had a political mandate to do so, too.

The second big break came during the 2008 campaign, when Senator Barack Obama spoke directly about the need to address such abuse of independent farmers. Four days before the Iowa caucus, he even organized a conference call with independent farmers to discuss their concerns. In the primary, the farmers’ votes swung toward Obama, helping him beat Hillary Clinton and making him a serious contender for the nomination. In the general election, the appeal may have helped Obama win some rural, traditionally Republican counties in Colorado and North Carolina.

Some farmers and activists criticized Obama’s choice of Vilsack, a former governor of Iowa, to lead the Agriculture Department, mainly because of his close ties to biotech companies, including Monsanto. But the administration soon balanced this out by appointing Mississippi rancher and trial attorney Dudley Butler to head GIPSA. Farmers and ranchers trusted Butler, who had been a private lawyer for thirty years and had long been on the front lines representing chicken farmers against processing companies.

In August 2009, eight months into Obama’s first term, the administration announced plans for a series of hearings the following year—the most high-level examination of agriculture in decades, overseen by the new antitrust chief, Christine Varney. At the opening event in Ankeny, Iowa, in March 2010, Attorney General Holder spoke boldly, assuring the crowd that reform was now a Cabinet-level priority. “Big is not necessarily bad, but big can be bad if the power that comes from being big is misused,” he said. “That is simply not something that this Department of Justice is going to stand for. We will use every tool we have to ensure fairness in the marketplace.”

Over the next nine months, officials held another four full-day hearings, in Alabama, Wisconsin, Colorado, and Washington, D.C., to investigate the poultry, dairy, cattle, and seed industries, as well as to look at the discrepancy between the price consumers pay for food and the price farmers receive for producing it. Each hearing featured several panels with a range of perspectives, and each included time for comments from many of the thousands of farmers, ranchers, industry representatives, activists, and academics who attended. In addition to the hours of testimony collected publicly, the administration provided computers in adjacent rooms where those reluctant to speak out could privately register their concerns and fears.

The administration also consulted experts like Taylor, the professor at Auburn University. At one point, the USDA sent an entire team of economists and lawyers to Alabama with a full day’s worth of questions. “It was clear these were conscientious, committed officials who had spent a lot of care investigating the issues,” Taylor said.

Lina Khan is a reporter and policy analyst with the Markets, Enterprise and Resiliency Initiative at the New America Foundation.

Comments

  • DC M on November 14, 2012 10:55 PM:

    Too many people for the planet requires terrible crowded factory farming. Churches and corporations need new consumers to grow. How it fix and how to make changes in a bad economy when many are on foodstamps or less and cant afford organics and free range ?
    As it is, people like me on fixed incomes often have deficiencies and if forced to live on high priced organics and happy chickens we wouldn't last long.

  • Florence Dezeix on November 16, 2012 7:43 PM:

    Thank you for writing this article. It is good to know the facts. Fear of scarcity plays in the hands of agribusiness. It would be interesting to compare what percentage of their income a family in America spends in food. People in Europe spends a higher percentagd on real food, not juices, power bars, vitamins. i appreciate the time and effort spent in writing this article,
    Sincerely,

  • Holly on November 17, 2012 11:53 AM:

    Good history. But is the story really over?
    I hope that in Obama's second term, we can return to efforts to protect independent farmers from exploitation by big processing companies and abuses by large agribusiness.

  • Melissa on November 18, 2012 7:31 AM:

    Fear of scarcity and concerns over end prices to consumers are an issue linked to the (I believe erroneous ) perception that we need animal protein in every meal. Cheaper sources of protein are available in legumes for example and it might help put a lot of things in perspective to look at things from this angle. Ie potential allies in this fight, strategies to help counter the meat packers power etc..

  • Joanne on November 18, 2012 11:05 AM:

    Good article and information.
    Somebody or something is paying for all the cheap meat being produced by the corporate ag system. Our culture needs to be more mindful and conservative in our eating habits (and living habits) many have gotten use to an over-consumtive way of life as being the norm. Education on these issues is important.
    Support local small farms and grow your own. Support, in some way, local businesses, community associations, non-profits that are working for good change. It is happening everywhere. Help it grow - "be the change"!.

  • DG on November 20, 2012 4:20 PM:

    Well-researched and well-written article, thank you. We need to circulate petitions to the White House to get the President back on track with these issues, which are complex, but not that complex that they cannot be solved. Thank you for this information.

  • Heaterman on November 20, 2012 11:22 PM:

    One of the biggest road blocks to "local" production/consumption is the enormous burden placed on slaughter houses and packing operations by USDA. It is against the law to process and sell meat which has been butchered in anything but a USDA inspected facility. We need to get some of the ludicrous rules regarding meat processing thrown out so competition can come in under the big packing operations or things will only continue to get worse.
    This is a good example.......Farmer Jones has a cow that breaks her leg and needs to go to the slaughter house. Since the "mad cow" tempest in a teapot, USDA has decreed that any animal has to be able to walk in under its own power. Obviously, there is nothing wrong with the broken legged cow or the meat it will provide but because USDA says it has to walk, all that can be done with it out on the farm is to be killed and buried. What a waste!!! People all over the world are starving, even people right here in the country. Why can't USDA regulate with a little common sense?

  • Name Withheld on November 26, 2012 8:19 PM:

    Great article. The only problem was the faint left-leaning political bias that was unproductive. It was the corporate interests that killed this agricultural markets reform. Not a Republican conspiracy. That needed to be made more clear.

  • Anonymous on November 26, 2012 8:34 PM:

    We all get to vote 3 times a day. Buy organic and non-GMO foods. Many organic products are only 10% more expensive than their pesticide-laden counterparts. Organic bananas usually only cost a couple cents more per pound than regular bananas, for example. Shop at Whole Foods, Trader Joe's, your Saturday farmer's market, and online. If you're concerned about the extra cost, buy in bulk and cut back on some of the frivolous purchases. Right now, organic foods are only 5% of the market. But if we keep buying them, they will grow and grow.

  • Jeanne Rohl on February 21, 2013 12:38 PM:

    If you think that this systematic destrucion of agriculture is do any paricular politcal party you folks need to do more research and stay totaly unbiased. This is a good article and very informative for those who don't know what has been going on since the turn of the last century. Even before that if you want to get really technical. The powers that be, want the land. They will get it just as they did from the First Nations people. We farmers and ranchers have only been the pawns. I used to counsel poultry farmers and hog farmers who were caught in these traps. They(the government, the multi nationals, the trade entities and the processors know exactly what they're doing. Who controls the food supply controls the people. Good reading for anyone who actually wants to educate themselves on this issue. I recommend the NORM Primer (National Organization for Raw Materials Economics, FOODOPOLY and Dollar Harvest for starters. Read the policies of the Committee For Economic Development. This all has been carefully planned and implemented. Don't know if there is much we can do about it now. No one would believe it or labeled us "conspiracy quacks". The jokes on the non farm consumer and the packman theory of pushing your neighbor out(because YOU are the BETTER farmer don't cha know)by the Bank lenders. LOL We got us a "cheap food policy" while all said groups above have reaped billons of stolen profits off the backs of a few.