Resolved: That the United States should substantially change its federal agricultural policy.
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|Source: Multinational Monitor, August 2000 p16.
Title: Flimflam on the Farm.
Full Text COPYRIGHT 2000 Essential Information, Inc.
The American Farm Bureau's Betrayal of Family Farmers, Taxpayers and the Environment
WHEN FARM POLICY CONTROVERSIES ERUPT in Washington, D.C. or the U.S. heartland, one of the loudest voices inevitably belongs to the American Farm Bureau Federation. With its roughly 3,000 constituent state and county farm bureaus, and its claimed membership of more than 4.9 million members, the Farm Bureau has artfully portrayed itself as the voice and champion of U.S. family farmers for nearly 80 years.
The vast majority of the Farm Bureau's members, however, are either policyholders of one of numerous insurance companies affiliated with state farm bureaus or are customers of other Farm Bureau business ventures. Such members have no say in establishing or carrying out Farm Bureau policies and, in most cases, have no particular interest in agriculture (indeed, the U.S. Department of Agriculture says there are only one million full-time farmers left in the United States).
But there is no disputing the organization's influence. Surveys by Fortune magazine regularly rank the Farm Bureau as one of the top 25 most potent special interest groups in Washington, D.C. The organization is no less formidable a presence in state capitals, county seats and rural communities. And its influence extends into business and financial circles, to which it has major and profitable ties.
"They are an incredibly powerful lobby," says Sam Hitt of Forest Guardians, a Santa Fe, New Mexico, environmental group. Hitt has run up against the Farm Bureau time and again on environmental issues, such as protection of streamside ecosystems. "Legislators seem to go google-eyed when they see them walk through the door, and that's caused the loss of a lot of our wildlife heritage," he says.
The Farm Bureau spends considerable money and energy aggressively defending the interests of factory farms and fighting such environmental initiatives as the Endangered Species Act, the Clean Water, Clean Air and Safe Drinking Water Acts, wetlands laws, pesticide regulations and efforts to curb global warming.
One possible explanation for this agenda is that the Farm Bureau's views may have more to do with the organization's s own financial interests than with the needs of family farms. The national, state and county Farm Bureaus also control some 54 insurance companies producing annual revenue of some $6.5 billion and cooperatives producing revenue of some $12 billion.
[Graphic omitted]The Farm Bureaus also have investments in banks, mutual-fund and financial services firms, grain-trading companies and other businesses. Many of those businesses in turn own stock in oil and gas, pulp and paper, timber, railroad, automobile, plastics, chemical, steel, pesticide, communications, electronics and cigarette companies and even a nuclear power plant. The lists of stocks held by Farm Bureau companies read like a who's who of corporate heavyweights: Philip Morris, Weyerhaeuser, DuPont, Union Carbide, AT&T, Ford Motor, Raytheon, International Paper, CBS, Tyson Foods, Archer Daniels Midland (ADM) and many more.
Donna Buss lives just down the road from the Durkee wine Farm, a confined animal-feeding operation with a record of pollution problems so serious that Illinois' attorney general at the request of the Illinois Environmental Protection Agency last year sued the owner for water quality and odor violations. A state inspector had found concentrated runoff from a waste lagoon flowing directly into a creek where fish kills had been reported.
Buss and her husband have lived in this Henderson County farming community for more than 20 years. "We'd never had problems with any of our neighbors' farming practices before," she says, until the hog operation started up in 1995. "The stench from this place is unbelievable," she says. "You'd think the Farm Bureau would be a little concerned about maintaining the quality of rural life."
But the Illinois Farm Bureau gave exactly the opposite response. In March 1998, its board voted to offer Durkee Swine Farm legal assistance. And when Buss and other neighbors, including several Farm Bureau members, filed complaints and wrote letters to local newspapers, she claims a delegation from the county Farm Bureau paid them a visit to pressure them to back off. "I don't know if this was scare tactics or what," Buss says.
If Buss is angry about the Farm Bureau's failure to rake a stand against agricultural polluters, she is not alone. With the exponential growth of huge hog farms in recent years, rural residents in hundreds of communities across the nation have watched their quality of life deteriorate.
Instead of following the small hog farm tradition of using waste for fertilizer, confined animal-feeding operations (CAFOs) with tens of thousands of hogs pipe waste from these huge facilities into enormous lagoons that too often leak and nearly always stink. Leaking lagoons can contaminate water supplies with nitrogen, phosphorus, sediment, pathogens, heavy metals, hormones, antibiotics and ammonia. And as production becomes more concentrated, the pollution threat escalates [see "The Dirt on Factory Farms," page 24].
Farm Bureau leaders insist they do not side with the interests of corporate agribusiness over family farmers.
"We're taking the side of growth in the livestock industry," says Illinois Farm Bureau communications director Dennis Vercler. "We have to have a good political climate, a favorable public climate, a positive regulatory climate to allow this industry to grow. We've said we need to concentrate on making sure we have the ability to expand the size of the industry regardless of the size of individual operations."
Yet in nearly every state that has tried to curb the size of these mostly corporate farms or to control the pollution from them -- including South Dakota, Colorado, Illinois, Idaho, Maryland and Oklahoma -- the Farm Bureau has actively worked to defeat new laws, regulations or rules to control factory farms.
In Iowa, for example, a 1982 "right-to-farm" law in Iowa had protected farmers from public-nuisance lawsuits. As long as the farmers abided by state regulations, neighbors could not sue them over odors, contaminated runoff or other problems.
In September 1998, the Iowa Supreme Court struck down that law as unconstitutional. The court found that a bad stench from hog manure can be the equivalent of a physical invasion and therefore a violation of property rights. In essence, the court said, the government had been allowing hog farms to take odor easements across their neighbors' property without compensation or due process.
Despite its purported aggressive defense of "property rights," the Iowa Farm Bureau joined the hog operator in appealing the decision to the U.S. Supreme Court. In January 1999, the Supreme Court declined to hear the case.
The Farm Bureau saw preservation of the small farmer's right to protect the quality of his or her property as a porential evil. "This has opened a Pandora's box, and it does not bode well for Iowa's farmers," commented Iowa Farm Bureau president Ed Wiederstein.
In Illinois, where more than 160 new factory farms have started up in only the last two years, the Illinois Farm Bureau brags of "maintaining a positive environment for growth in the state's livestock industry through the defeat of a moratorium on new facility construction or expansion." The Bureau also opposed legislation to require annual state inspections of waste lagoons on big farms, odor control and a quarter-mile set-back between dead animal compost and homes. The legislature approved the legislation anyway, along with a measure allowing county boards to hold public hearings on new hog farms.
On the opposite side in most of these battles, other farming groups, including the National Farmers Union and the National Family Farm Coalition, have joined forces with environmentalists in sometimes successful efforts to curb the worst abuses of factory farms.
These farm groups say that factory farms have helped drive independent hog producers out of business. A glut of factory farm-produced hogs has driven down prices to Depression-era levels, they note; and while many of the corporate farms are owned by packers that deliver final products to stores -- where prices have not fallen -- and therefore can withstand or thrive with low hog prices, small farmers cannot survive with rock-bottom prices.
HOG TIED TO AGRIBUSINESS
One reason why the Farm Bureau defends factory farms and corporate agriculture may be the extensive investment holdings Farm Bureau affiliates maintain in factory farm operations.
For example, when Continental Grain and Premium Standard Farms (PSF) merged in 1998, the combined company became the third largest hog producer in the nation, with 162,000 sows each producing 20 pigs a year. Continental Grain is also the largest U.S. beef feedlot operator, annually moving 405,000 head of cattle through six lots, and the company ranks second in the grain-trading business.
And with its 18,872 shares of stock in PSF, Southern Farm Bureau Annuity Insurance now has a stake in one of the biggest agribusinesses in the world.
Southern Farm is not the only Farm Bureau insurance company investment in big pork. Farm Bureau Mutual Insurance Corp. of Idaho and Western Community Insurance Co., both affiliated with the Idaho Farm Bureau, own more than $500,000 in bonds from Archer Daniels Midland (ADM), according to annual reports.
ADM, one of the largest U.S. agribusinesses, is also an emerging powerhouse in the pork industry. ADM owns 13.5 percent of IBP, the nation's largest pork packer.
In addition, the Idaho Farm Bureau's insurance companies hold 3,000 shares of stock in Tyson Foods, the nation's seventh largest pork producer with 2,470,000 pigs a year and the nation's top chicken producer.
The Farm Bureau's ties to the giants of the pork industry do not stop with insurance company investments. Farm Bureau affiliates are allied in joint ventures or direct partnerships with major players in the pork business.
* Cooperatives associated with the Farm Bureaus of Illinois, Iowa, Wisconsin, New York, Ohio, Indiana and Michigan jointly own two businesses with Farmland Industries. Farmland is the nation's fifth largest pork packer and sixteenth largest pork producer.
* In 1997, Nationwide Insurance, with close ties to the Ohio Farm Bureau, merged with Farmland Industries Cooperative Service Co., a Farmland-owned insurance company.
* Land O' Lakes, the fourteenth largest pork producer, with 1.2 million pigs a year, merged with Countrymark Cooperative in the fall of 1998. Countrymark is affiliated with the Ohio, Indiana and Michigan farm bureaus.
* In Cass County, Illinois, where the Land O' Lakes cooperative runs a 90,000-pig operation, citizens filed a lawsuit after the co-op built a hog manure lagoon that extended into the water table. The Illinois attorney general asked Land O' Lakes to develop a groundwater monitoring plan.
* Growmark, a cooperative controlled by the Illinois, Iowa and Wisconsin Farm Bureaus, has agreed to joint ventures with Land O' Lakes to market oil, gas, feed, seed, pesticides and fertilizer.
* Growmark merged its grain terminal division with Archer Daniels Midland in 1985. Growmark traded its grain facilities for stock in ADM. Glenn Webb, chairman of the board and president of Growmark, sits on the ADM board.
CHEERING MERGER MANIA
The Farm Bureau denies that its support for arguably anti-small farmer policies may be due in part to its financial interests in cooperatives and other big businesses.
"What's the influence in Farm Bureau [of Farm Bureau businesses on bureau policy]?" asked former Farm Bureau President Dean Kleckner. "It's zilch. They don't talk to me. They don't pressure me, If they tried to I would say 'buzz off.' They don't drive us. They don't help us pay the bills. Our dues pay the bills. Farm Bureau membership fees pay the bills, so there's no connection."
But doubts persist. Institutional self interest, for example, may account in part for the Farm Bureau's split personality when it comes to antitrust policy.
Worried about the concentration surge in agribusiness, delegates at the Farm Bureau's 1999 convention called for an "immediate investigation into the mergers that are occurring in the agricultural industry" and for "action that will protect producer interests." The resolution declared that "the continued mergers of agribusiness firms" threaten "the free enterprise system that is based on competition."
But when an Iowa delegate offered an amendment calling on Congress to "examine antitrust laws to determine if changes are needed to more effectively protect farmers," Farm Bureau leaders quickly shot the idea down. "Mr. Chairman, I have a terrible time with those additional lines there -- that whole 'examine antitrust.' Think about Capper-Volstead for a minute, where we're at there," said Wisconsin Farm Bureau President Howard Poulson, referring to the antitrust provision that exempts farm coops -- once small farmer-controlled ventures but now often huge enterprises that have moved into nearly every aspect of agricultural production, selling seeds, fertilizer, pesticides, crop advice, market news, livestock feed, antibiotics, additives, growth hormones, oil, gas, tires and batteries; marketing produce, grain and livestock on behalf of farmers; buying grain on behalf of traders; buying and raising livestock; slaughtering hogs and cattle; packaging meat; transporting products; providing financial services; and advertising all this. "I urge that we defeat this additional language," Poulson said. The amendment was defeated.
The Farm Bureau has actively lobbied against legislation that could put the brakes on what Senator Paul Wellstone, D-Minnesota, calls "merger mania." Wellstone's bill, introduced in 1999, would put an 18-month moratorium on mergers between big agribusinesses and set up a commission to review the issues of concentration and market power in agriculture. That sounds like just what Farm Bureau members voted to support at their last convention -- so the Farm Bureau did not at first publicly acknowledge its opposition. Instead, Farm Bureau lobbyists quietly circulated a letter to members of Congress asking them to oppose the bill.
Unfortunately for the Farm Bureau, Mike Callicrate of the Cattlemen's Legal Fund obtained a copy of the Farm Bureau letter and posted it on his website, "nobull.net."
Forced to admit that it had opposed the Wellstone bill, the Farm Bureau now offers the argument that a moratorium would delay better antitrust enforcement. In an article on the Farm Bureau's website posted November 16, 1999, Cheryl Stubbendieck of the Nebraska Farm Bureau called the Wellstone proposal dangerous, saying that "a moratorium can result in nothing of consequence happening until the time out is nearly over. American farmers can't wait 18 months for concrete action on an issue that so greatly affects their livelihoods."
Even some state Farm Bureaus aren't buying those arguments. In December, 1999, the Mississippi Farm Bureau unanimously approved a resolution condemning the Farm Bureau for opposing the merger moratorium. "The national Farm Bureau policy book is full of statements expressing concern about concentration of market power and monopoly in agribusiness," said Mississippi Farm Bureau member Fred Stokes, who introduced the resolution. "Yet [former Farm Bureau] President Dean Kleckner and the national staff consistently sell out their members and jump in bed with agribusiness." Stokes went on to characterize the Farm Bureau's lobbying activity as "a gross breach of faith and detrimental to the interests of producer members."
This challenge from the Farm Bureau's grassroots failed to shake the Farm Bureau's stance on the regulation of big business. At the January 2000 convention in Houston, Texas, the voting delegates again approved resolutions calling for investigations of mergers. The language used was nearly identical to that of the 1999 policies. But delegates also adopted a new policy opposing any moratorium on mergers.
For years, the Farm Bureau has fought laws designed to protect wetlands, wilderness areas, drinking water and streams. It has lobbied aggressively to weaken pesticide regulations and the Endangered Species Act and has been instrumental in blocking Senate ratification of international treaties to safeguard biodiversity and counteract global warming.
Despite the many pressing issues in agriculture and the current economic crisis for family farmers, the Farm Bureau continues to rank opposition to wolf reintroduction at Yellowstone as one of its top 10 priorities. Defenders of Wildlife and other groups hoped to persuade the Farm Bureau to change its policy on wolves at the 1999 Farm Bureau convention, but delegates there adopted a new resolution calling for return of the Yellowstone wolves to Canada.
That plan was never a viable option, however. Interior Secretary Bruce Babbitt told Congress in 1998 that Canada would not take the wolves back.
Defenders of Wildlife ran newspaper advertisements asserting that removing the more than 200 Yellowstone wolves would be "tantamount to a death sentence" because there is no place for the wolves to go.
The Farm Bureau disputed this contention. The "Farm Bureau has never advocated killing any wolves," said Kleckner.
But Montana Farm Bureau executive vice president Jake Cummins acknowledged that the wolves probably would be killed if the Farm Bureau prevailed in its legal challenge. The government "should round [the wolves] up right now and ship them back to Canada where they came from," Cummins wrote in an essay. "But they won't. They'll avoid obeying the law as long as they can by stringing out the appeal. The wolves will keep killing livestock. In the end federal agents will have to shoot the wolves they brought in and all their offspring."
At a news conference during the Farm Bureau's 1999 convention in Albuquerque, New Mexico, Defenders of Wildlife president Rodger Schlickeisen accused the Farm Bureau of exaggerating the threat wolves pose to ranchers. "They picked the wolf as a particular target for their rhetoric, and they have tried to inflame the farming and ranching community well beyond any reasonable measure of the problems that the wolf represents," Schlickeisen told reporters.
Kleckner insisted that wolves and other predators cause ranchers grave economic harm. Losing even a few calves can make a huge difference in a rancher's ability to survive, Kleckner said.
To hear Farm Bureau officials tell it, these predators could destroy the ranching economy. "Our membership really wonders why the federal government is spending millions of dollars putting predators into rural areas where farm and ranch families are having a real difficult time hanging on to the family ranch," said Farm Bureau lobbyist Jon Doggett.
Although Defenders of Wildlife in the last decade has paid more than $100,000 to compensate ranchers for livestock losses to wolves, Doggett says ranchers do not believe they can always prove, or even know for sure, that a calf has been killed by a wolf.
But Defenders' northern Rockies representative, Hank Fischer, says determining whether livestock has been killed by wolves is not difficult.
"Wolf kills are way down on the list of things that harm livestock, way below being struck by lightning or hit by automobiles," he adds. In fact, wolves killed only seven head of cattle in 1996, according to government reports. Domestic dogs killed nearly twice as many cattle as mountain lions, bobcats, bears and wolves combined. "We are talking about a small level of predation," Fischer says.
Department of Agriculture statistics show that in 1996, the last year for which figures are available, all predators combined killed about 117,000 head of cattle -- a small number compared to the 417,000 lost to bad weather and more than 2 million felled by respiratory and digestive problems.
The magnitude of health-related cattle deaths surprised Farm Bureau leaders. "I've never heard that before," Kleckner said in a radio interview during the 1999 convention, "and frankly, I don't believe it.
The hard-line dogmatism from the Farm Bureau is distressing to many family farmers and environmentalists, who would like to concentrate on the common goals of protecting the environment and preserving family farms.
"The Farm Bureau has tried to drive a wedge between the environmental community and the family-farming community, which really should be natural allies," says Defenders of Wildlife President Rodger Schlickeisen. "Family farmers protect the land, we want to promote their continuation. I wish the Farm Bureau would focus attention on bridging the gap, because we'd be the first ones to get up and on that bridge and meet them halfway."
Efforts to build such a bridge, however, seem unlikely as long as the Farm Bureau represents the interests of corporate agribusiness and the big business community generally, rather than those of family farmers.
This story is based on "Amber Waves of Gain: How the Farm Bureau Is Reaping Profits at the Expense of America's Family Farmers, Taxpayers and the Environment, by Vicki Monks, a report issued by Defenders of Wildlife. (c) 2000 by Defenders of Wildlife.
TAKING ON CORPORATE PORK
Bryce Oates the director of communications for the Missouri Rural Crisis Center in Columbia, Missouri, an organizational member of the Campaign for Family Farms.
Multinational Monitor: What is the National Pork Producers council (NPPC)?
Bryce Oates: NPPC is a commodity group that is supposed to speak for pork producers in the United States. They are based in Des Moines, Iowa, and have affiliates in more than 40 states. In Missouri we have the Missouri State Pork Producers Association (MSPPA). MSPPA says they have about a thousand members. The bulk of the membership of these state affiliates and therefore NPPC are not farmers but people who sell goods such as feed, antibiotics and growth hormones to farmers.
MM: How is NPPC funded?
[Graphic omitted]Oates: NPPC is funded largely through what is called the pork check-off, which is a tax collected by the National Pork Board on every hog sold in the country. Every time a farmer sells a hog, there's tax on it. If you sell $1000, you are supposed to then send a check for $4.50 to the National Pork Board, which divvies up the money to the NPPC, state affiliates and anyone else who has a contract with them.
The National Pork Board is supposed to promote pork. It gives the vast majority of their contracts to the NPPC and state affiliates. The National Pork Board is quasi-governmental task force appointed by the Secretary of Agriculture. Their whole purpose is to collect the check-off money and decide where it goes.
The Pork Board has been controlled by corporate interests for a long time. Some family farmers are still trying to get on the Pork Board, but that hasn't been a very successful strategy, so we decided that the best thing was to go after the NPPC's funding. NPPC also gets membership dues and corporate donations but the check-off money is about 75 percent of their budget.
MM: What does the NPPC use the money for?
Oates: The pork check-off was voted into existence in 1986. Since that time NPPC has pushed the interests of corporate pork They've pushed neo-liberal, free trade policies in Washington D.C. in the name of family farmers, when in fact the policies they support have been part of what's driving family farmers out of business.
NPPC supports deregulating corporate factory farms, including by cutting back the requirements of the Clean Water Act and the Clean Air Act. These laws can benefit small family farmers because family farmers for the most part are not operating large, confined animal feeding operations.
NPPC also supported the Freedom to Farm Act, which has hurt family farmers in a number of ways. They were part of the major coalition that wrote the bill and then pushed it through Congress. That farm bill has been disastrous for the rural economy. It mostly deals with grain. But as the saying goes, "cheap grain has a long tail:" cheap grain leads to cheap livestock prices paid to family farmers.
A year and a half after that bill was put into place the price of hogs paid to farmers was 8 cents per pound the lowest price ever.
Al Tank, the CEO of NPPC, said that producers should use that opportunity to seize market share and expand. Eight cents a pound is not much of opportunity for family farmers, because it costs farmers between 40 and 43 cents a pound to produce hogs.
But vertically integrated corporations are immune to the market price. They bought up hogs from the farmers who went out of business.
We had a long price drought after that as well. In 1998 and 1999 the two-year average was about 28 cents which is still below the cost of production.
According to the last USDA count, there are about 95,000 hog farmers in the United States. That down from nearly 375,000 hog farmers in 1987.
MM: How active is NPPC on trade issues?
Oates: They supported NAFTA, the creation of the WTO and just about every position of the U.S. Trade Representative on agriculture. They also participate in many of the corporate free trade alliances related to agriculture.
NPPC also supported PNTR for China. This was supposed to benefit American hog farmers by opening China to American pork. But we're not convinced that will happen. China is exporting pork right now. We're a much higher cost producer than China and Chinese pork is cheaper.
MM: What is the check-off campaign?
Oates: This is a campaign organized by hog farmers who object to NPPC's promotion of corporate control of the food industry while claiming to speak in the best interest of family farmers in the U.S. Hog farmers organized a petition drive, gathering more than 19,000 hog farmer signatures -- well over the 15 percent required to call for a vote to repeal the check-off. We turned them in to the USDA and spent more than a year attempting to force them to have this vote. USDA Secretary Dan Glickman has said the vote will be held September 19, 20 and 21. Now we're organizing with hog farmers across the country to win the vote.
Even though the vote hasn't yet happened, NPPC has already become more tight-lipped. Now that it's coming up for a vote, they have been getting more money from the biggest pork producing corporations in the United States -- including Smithfield, Premium Standard Farms, Continental Grain and Seaboard. The check-off money is supposed to be used only to promote pork and not to support the check-off program itself. So the corporations are organizing a $4 million "grassroots" campaign against us. They're working through the state affiliates to get hog producers to vote for them.
MM: How are the remaining smaller farmers still surviving?
Oates: There are some innovative projects helping farmers get a fair price for sustain-ably raised pork. For instance, Patchwork Family Farms in Missouri is a coalition of 12 independent family hog farmers that raise their hogs the old-fashioned way on pasture and with fresh air and sunshine. They're paid no less than 43 cents per pound through direct marketing and cooperative efforts. If the market price goes above 43 cents a pound, they are paid 15 percent above that. This is one way that farmers can do direct marketing and try to rebuild the system for themselves and consumers.
[Graphic omitted]Since the check-off has been in place, the hog farmer share of the retail dollar has dropped from 46 cents to 20 cents. Seventy-five percent of the hog farmers have gone out of business, and we've had concentration in the industry. So it hasn't been a very good deal for hog farmers.
MM: Are there any laws that could reverse this trend?
Oates: It used to be illegal for the same corporations who processed livestock to own and raise livestock. There's been legislation in the last couple of sessions to try to make it illegal for pork packers and beef packers to own the livestock that they slaughter. In states like Iowa and South Dakota, those laws exist. They don't exist in Missouri or at the national level.
A lot of the midwestern states have laws that restrict corporations from owning land, so they can't produce livestock. But there are a lot of ways they can get around that, such as contract farming. If we had a national policy, it would go a long way towards ensuring that farmers got a fair price for what they produced.
MM: How has NPPC reacted to efforts to organize this kind of legislation?
Oates: Large-Scale corporate factory farms started to come into existence in the early 1990s in the Midwest. Groups like ours started to organize the communities targeted by these multinationals. In 1995, we had a large rally in northern Missouri with Willie Nelson and others. It was called the Lincoln Township Rally. Farmers from all around the country, as well as anti-corporate activists and environmentalists, came together to speak out against Premium Standard Farms and corporate control of the food supply.
After that, the Campaign For Family Farms and the Environment came together which is a coalition of family farmers that ran the pork check-off campaign.
Seeing that they were facing strong opposition from family farmers, NPPC started an investigation of the groups involved in the rally and with the campaign for family farms. That included the Missouri Rural Crsis Center, the Land Stewardship Project for Minnesota, the Animal Welfare Insitutute, Iowa Citizens for Community Improvement and the Illinois Stewardship Alliance.
NPPC used check-off money to investigate these groups. Hog farmers were outraged, because they were attempting to paint groups like ours as unreasonable environmentalists who were militant vegetarians. This was a complete joke. We are a family farm organization, and most of our members raise livestock on their farms.
We were outraged when we found out what was going on. They were using check-off money to distribute information to the agricultural press and the media a large to discredit us.
Once we found out what was going on, we took it to the Agriculture Marketing Service (AMS), which administers the check-off campaign for the USDA, and AMS acted quickly to say that it was misuse of check-off funds. So that money had to be refunded to the check-off and the family farmers that pay it.
A SERIOUS BEEF WITH THE NATIONAL CATTLEMEN'S BEEF ASSOCIATION
Jeanne Charter is a Montana-based rancher active in Northern Plains Resources Council, a member group of the Western Organization of Resource Councils.
Multinational Monitor: What is the National Cattlemen's Beef Association (NCBA)?
Jeanne Charter: Until 1996, when they merged with the Chicago Livestock Meat Board, it was called the National Cattlemen's Association. Through the merger, which was approved by USDA, they got control of what is called the beef check-off fund, which is supposed to go for non-partisan beef promotion. Now the vast majority of NCBA's funding comes from the check-off. The check-off brings in about $85 million a year, and they get at least $55 million of that. As a result, their annual budget grew from $12 million to $55 million. It covers all of their overhead and staff costs.
Multinational Monitor: How does the check-off work?
Jeanne Charter: It's assessed each time a cow is sold, whether it's a calf sold to a feedlot, whether it's the same call when it's sold again to be slaughtered, or whether it's a mother cow when it's culled from the herd and slaughtered. So it's assessed each time there's a sale. It's a mandatory assessment that has been in force for 12 years under the Beef Promotion and Research Act of 1985.
In some Western states, where cattle are branded for ownership purposes, the state brand inspection officers are often the ones who collect it. A lot of brand inspectors hate it, because it undermines their police authority because there is a lot of unrest about this and it has turned them into fax collectors.
Because they administer the check-off, NCBA claims in public and before the U.S. Congress to represent a million cattlemen. It's not a voluntary representation; their voluntary membership is only about 3 percent of cattlemen in the country, something like 30,000.
MM: What does NCBA do with the money it raises through the check-off?
Charter: NCBA does a lot of lobbying in Washington, and a lot of advertising in agricultural publications. They're probably the biggest advertisers (mostly to support the check-off) on rural radio stations, which in rural-areas is where most people get their news. There are very few agricultural stations that will say anything critical about them because of that. In the last three or four years they've put about $8 million dollars into advertising to create a media blitz in support of the check-off program itself. And the U.S. government is letting them do that.
MM: What else does the NCBA do with the money?
Charter: In recent years, most of the $55 million goes to branded trademark product promotion for table-ready products like table-ready pot roast sold by giant food wholesalers such as Sysco and Sara Lee. This is our money, being used to develop products for these giant firms. NCBA has 18 product development professionals who do this. They develop the product and then let the company they're working with trademark it. I'm also not so sure about the nutritional value of these products. They're not just meat -- they're full of preservatives and other chemicals. That's where our money is going -- to develop those kind of nutritionally questionable products. I think their weak-witted idea is that if they sell a lot of this, the benefits will trickle down to the industry.
MM: What kind of lobbying positions does NCBA take in Congress?
Charter: We object most of all to the positions that they take -- supposedly on our behalf -- on market and trade issues. NCBA's position on livestock market is basically that there should be no government policing of them. But the markets are getting more and more manipulated because the buying sector is becoming increasingly centralized. The arrangement is becoming increasingly like the chicken sector, where people are basically under captive contracts where it starts out good but it becomes increasingly predatory over time. In Congress, NCBA has always opposed a series of initiatives to get more competitive market enforcement. And they say they do that on behalf of everyone in the industry.
The other place NCBA is notorious is international trade. The inner circle of members that they serve tends to be both packers who have international operations and very large feeders that are also large multinationals. They're basically advocating wide open borders to the United States, arguing that we're going to export more beef.
In Europe, the NCBA is really pushing beef with artificial growth hormones. While they say they are doing that for the cattlemen, they're really doing this for the pharmaceutical makers, who are considered an allied industry."
Similarly, NOBA supports opening up South America for trade. It's really scary for someone in our position. Brazil has a herd that's bigger than the U.S. beef herd. In this case the allied industries" sell them semen and other things.
MM: How has the industry come to be dominated by large corporate interests?
Charter: Twenty years ago the packing market was quite competitive and there were lots of packers. Since then it's been consolidated. There's not that many of them left. There are three dominant firms -- Iowa Beef Packers (IBP), ConAgra and Cargill. They basically operate as a cartel. They control nearly 85 percent of the fed slaughtered animals. We mostly sell feeders to feedlots where they're slaughtered under different ownership. It's not like the old days where people would raise cattle.
The companies form strategic alliances" where feeders get under long-term contract with one of the three packers, with no competitive pricing ability. They commit to deliver product -- fully-fattened animals ready to slaughter - and they derive their prices off a reference market. There's still a cash trade that's not forward-committed and they'll give them a premium off of that. Or sometimes they'll do it off of futures, which are weakly competitive. All of these arrangements create a negative downward pressure on prices.
It's not bad for everyone. If you're big enough as a feeder, you can do all right. Also, the packers have their own feeders. For instance, ConAgra feeds hundreds of thousands of heads themselves. If you feed hundreds of thousands of animals a year, you can get by with a very small margin. At the feed lot level, their biggest cost is cattle, so if they can do something to drive down the cost of input cattle, it means a lot to a big feeder. So our interests are opposed to the interests of those we sell to -- whose interests are represented by the NC BA.
MM: What have you done to challenge NCBA's work on behalf of these corporate interests?
Charter: We had been upset for some time by the fact that NCBA got control of the check-off fund, so my husband and I deliberately refused to pay the check-off on a yearling sale in the fall of 1997. It was about 247 head of yearlings. We wanted a hearing because we thought the government had made a mistake when they approved the merger in 1996. The next spring, we sold three cows, for which we also refused to pay. So it was a total of 250 animals. We wrote a letter to the editor of our paper explaining why we didn't pay and that we wanted a hearing.
The government filed suit against us in the summer of 1998. Their opinion was that they could fine us $5,000 per head. Later they asked what we were worth, because they thought they could fine us what we are worth.
We finally had a hearing before a U.S. Department of Agriculture administrative law judge on this in the summer of 1999. Her ruling was basically a rubber stamp of what the USDA bureaucrats said, which is that the check-off is a government program voted in by a national referendum of producers in 1986. But once we voted for it, it was USDA's program. In her ruling this April, the judge said that the USDA should be given "substantial deference" in how they interpret their own regulations.
The NCBA knew the outcome three weeks before we did, because the USDA's marketing service had faxed it to them. That's how close they are.
We are appealing the decision We have to first go through a second administrative review before we expect to go to district court.
We think we're in a good legal position There was a Sixth Circuit Court of Appeals decision in Tennessee in 1999 related to a parallel forced check-off in the mushroom industry. A big mushroom processor sued on the basis that it was unconstitutional, and they won unanimously at the appeals court level. The opinion is clear.
MM: What is the check-off campaign and how did it start?
Charter: It's similar to the pork check-off campaign. Independent ranchers and cattle producers have joined together with the Livestock Marketing Association (LMA) to demand a recall vote on the beef check-off. LMA is the national trade association for livestock auctions and cattle buyers. They have as much to lose from a captive supply system as independent cattle producers. They're based in Kansas City.
LMA organized a petition drive. A total of 146,000 signatures were handed in to USDA secretary Dan Glickman over eight months ago. That's far more than the minimum necessary, which is about 108,000 to insure that USDA will find enough valid signatures to call for the referendum. Glickman has yet to respond.