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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

In early December, the USDA published four watered-down revisions and updates to the Packers and Stockyards Act. The only full-fledged rule to come into effect prohibits mandatory arbitration clauses in poultry farmers’ contracts—vindication for many, including Tom Green and his wife, Ruth, but hardly a sweeping victory. The other three revisions are vague “guidelines” for the USDA. None of them explicitly prohibit arbitrary and exploitative conduct by the processing companies under the notorious tournament system.

In January 2012, Butler resigned from the USDA. Then in May, the DOJ quietly published a report summarizing the five nationwide hearings conducted in 2010. The report detailed both a lack of competition in the industry and abusive behavior. It went on to claim that the DOJ couldn’t act to address these wrongs because, no matter how outrageous the conduct of the processing companies, their actions did not amount to “harm to competition” as defined by the current antitrust framework.

Administration officials who took part in the hearings say two factors thwarted their attempts to protect farmers from exploitation by processing companies. One was a deliberately obstructionist Republican-controlled House set on derailing countless reforms, not only in agriculture, and on protecting big industry from any tightening of regulation.

The other factor the administration blames is the weakened state of America’s antitrust laws. In the past, antitrust law was used to promote competition and to protect citizens from concentrated economic power. But today, enforcers say they are handicapped even when confronting markets that are no longer competitive. “However desirable, today’s antitrust laws do not permit courts or enforcers to engineer an optimal market structure,” the DOJ wrote in its recent report on the 2010 agriculture hearings. Far-reaching actions—like the Wilson administration’s challenge of the meatpacking industry ninety years ago—are, they say, simply unimaginable under today’s narrow antitrust framework.

Varney, who has since left the DOJ for private practice, says that the Justice Department pushed the law as much as it could under her tenure. “If you overreach in the courts you will lose, and the very behaviors you are calling illegal will be validated by the court,” she said. “This is not about a fear of taking risks or a fear of losing. It’s a fear of setting the producers back.”

One wonders, though, whether the administration’s actions—taken as a whole—did not set the farmers back as much as would a loss in court. By documenting the big processing companies’ exploitation of independent farmers, then failing to stop that exploitation and retreating in almost complete silence before entirely predictable resistance from the industry, the administration, for all intents, ended up implicitly condoning these injustices. The message to the processing companies is, after all, absolutely clear: you are free to continue to act as you will.

It is no stretch to assume that, from the perspective of the White House, the choice to abandon an apparently failed effort to protect independent farmers from such abuses may have seemed politically pragmatic. But over the longer term, it may prove to have been a strategic political failure. By raising the hopes and championing the interests of independent farmers against agribusiness, the administration effectively reached out to the millions of rural voters who don’t normally vote Democratic but whose ardent desire to reestablish open and fair markets for their products and labor often trumps any traditional party allegiance. Instead of translating that newfound trust into political capital, the administration squandered whatever goodwill it had begun to earn. Worse, the administration’s silent retreat amounts to a form of moral failure. Having amply documented the outrageous abuse of fellow citizens, it decided it was not worth expending more political capital to right this wrong.

The message to the farmers, it seems, is also clear. “A lot of farmers have gone pretty quiet around here,” Staples said, “from being scared.”

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.