Agriculture is increasingly seen as synonymous with agribusiness. While the two are related, there are major differences and often conflicts of interest. The "business" of agriculture encompasses the service industries -- inputs, marketing, promotion, further processing and distribution -- that are required by farmers in the process of growing crops and livestock and getting them to consumers. It must be remembered that farmers buy from, and sell to these industries. While agribusiness and farmers often share interests, they often compete in the marketplace. "Agribusiness" defenders like the American Farm Bureau are increasingly reluctant to talk about the actual original production of the raw commodity, the creation of a physical tangible product from which everything else is derived. The thriving agriculture that we hear so much about at meetings like the AFBF convention in Orlando is really a non-sustainable opportunistic bubble riding on the back of an increasingly exploited and fragile farm and ranch production sector. Disadvantaged and increasingly impoverished family farmers and ranchers are shouldering more of the investment and risk while earning less of the profit through the strategic efforts of big corporations. To keep the whole family farm and ranch system from collapsing, Farm Bureau and others maintain their status as family farm advocates only through continued record government emergency farm payments. Never before has there been so much money in the food system with so little going to the producer. As beef-packing four-firm concentration has increased from 36 percent 20 years ago to more than 80 percent today, beef producers have lost their marketing options along with 20 percent of their share of the consumer meat dollar, equivalent to more than $300 a head. Today, on every 1200 lb. slaughter steer, the retailer gets $722; the packer $160; and the producer $779. The retailer and packer handle the product for a few days; cattlemen raise the animal, supply the labor and the high-capital inputs like land and breeding stock, and invest 2 or 3 years in each animal. Is this a fair distribution of income? If we look closer, income and expense analysis show retailers are making nearly $400 per head profit. Even if we figure a less-than-generous break-even price, cattlemen who retain ownership of their cattle through slaughter are losing $100/head or more. Farm leaders often tout value-added agriculture, the ownership of further processing through alliances and cooperatives like U.S. Premium Beef, as the way to farm and ranch prosperity. In its best year, U.S. Premium Beef returned just over $13/head on average to members who put up over $50/head to join. Meanwhile, those cattle all became committed to Farmland National, the fourth largest packer, without price negotiation. Those "captive cattle" thin the cash market and undermine the prices every single producer is being paid, regardless of their marketing arrangement. This is really just a form of vertical integration, or supply chain structures. So far, they work against farmers and ranchers rather than for them. The debate about whether a cooperative is top-down or bottom-up is irrelevant; farmers are still making a high-risk investment in something that feeds into an increasingly concentrated food production sector and bargaining away their negotiating power as independent producers in the process. That independence is crucial to a safe, dependable, and secure food supply. It is essential to human society, as evidenced by the recent failure of the Soviet Union's centrally-planned system. If getting $13/head today essentially means losing $300/head or more every year due to lost competition and negotiating power, it's not worth it. In fact, it represents self-destruction. I do believe that value-added production can help producers, but only if it decentralizes and disperses the food system, encouraging entrepreneurship and competition between many different private innovators, rather than accelerating vertical integration and concentration. We need a new food system that creates opportunity through cooperatively owned small, smart, safe, sustainable food processing plants, distribution of technology and information, and fair access to the marketplace. I am working hard with producers all over the country to make that a reality (www.nobull.net). Only by standing firm to high ideals can we avoid selling out to short-term gain. Instead, I'm convinced organizations like AFBF are peddling a cheap, self-serving and false vision of the future for farmers and ranchers. While modern industrialized agriculture is simply not sustainable in the long run, some trends offer indications that we are beginning to change course. The public is increasingly aware of the following: More farmers are seeing through the popular lie promoted by many farm economists that getting bigger, farming more acres, is their salvation. This is only true on the basis of government farm subsidies that put large farmers in the role of more efficiently farming the government. If farmers are losing $10/acre farming 800 acres, how do they benefit from farming 4,000? Many farmers have experienced and are frustrated by the feeling of having reached the point of diminishing returns where efficiencies rapidly decrease. Many large agribusiness corporations achieve their profits by externalizing costs, shifting the environmental and social burdens onto others, while quickly skimming away unfair profits to their corporate coffers. Family farms can't externalize costs but they often end up paying for mistakes and liabilities created by misguided mega-companies, further placing themselves at an unfair disadvantage economically. The public is also becoming more concerned about food safety and production practices, such as use of sub-therapeutic antibiotics and synthetic growth hormones. They want to know their food is produced by family farmers in local or regional environments and that the food is fresh and wholesome. The industrial, large-scale, factory-style production and retail model moves us away from meeting these objectives, with consumers increasingly looking for alternatives to the domination of huge grocery stores and chain restaurants. Finally, food production will always be a national security issue. It is unprecedented in world history for a world power to give up the ability to produce its own food and still remain a world power. Increasingly, we are encouraged through trade agreements to rely on foreign-produced foods and to count on shipping our domestic surplus to other countries, all of which are all increasingly self-sufficient and as desperate for foreign markets themselves as we are. Is our enemy really the farmers in other countries, struggling with the same hardships, or is the enemy a little closer to home? As the AFBF convenes their annual convention, they should take the opportunity to feature more than the usual corporate leaders and mainstream economists who offer worn-out refrains about value- adding, product branding, product differentiation, and glamorous new global marketing strategies. True agricultural leaders will expand their inquiry to include the broader social-economic, long-term impacts of today's decisions and look beyond quick-fix, sexy-sounding solutions to deeper problems like market concentration, corporate control, loss of price negotiation, food safety and security, rural poverty, and social collapse. Independent producers have the chance to anticipate the changes already underway and profit from them, before the big, bureaucratic slow-moving corporations and universities even know what's happening. Involvement in what are commonly called alternative farm groups like the Organization for Competitive Markets can help farmers benefit from this exciting transition much faster than most of the meaningless dribble Farm Bureau convention-goers will hear this week. Remember, when all of the hoopla is stripped away, the real business of American agriculture is still farming and ranching. Mike Callicrate has a degree in animal science and owns two commercial feeding operations in northwest Kansas. About 10 years ago, be began a drive for price discovery reform, after becoming disgruntled with the formula agreement his local buyer was using to buy cattle. Since that time, he has spoken out against consolidation of the packing, processing and retail segments of the beef industry, and the devastating effects of captive supply. |
