Is It Time To Break Big Ag?

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In the spring of 2020, Dairy Farmers of America, the country’s largest dairy cooperative, purchased Dean Foods, the country’s largest dairy processor, for $ 433 million. DFA was formed in 1998, following the merger of four regional cooperatives. Last year its members, more than twelve thousand dairy farmers, sold fifty-six billion pounds of milk, or about twenty-five percent of the country’s total, and the organization as a whole reported nearly ten – eight billion dollars in revenue. With the acquisition of Dean, DFA has gained unprecedented power as a supplier and buyer of milk. Pete Hardin, editor and publisher of the dairy trade journal Milkweed, said to me: “He’s the star child of agricultural concentration and what Big Ag has become.”

For years, members and non-members of the DFA have complained about the cooperative’s growing market power. “The only reason I’m with DFA is there’s nowhere else to go,” one Ozarks dairy farmer told me, who asked to remain anonymous. “They have an exclusive ten year contract with all the bottling plants within a three hundred mile radius or so.” In other words, DFA is the only available buyer of its milk. A business with a single buyer, called a monopsony, usually means lower prices for producers. He added that when he started farming in the early 1970s there were a dozen local plants he could sell his milk to. “Over time, they kept getting kicked out,” he said. “I’ve been in steel now for ten years.”

Nationally, the four largest dairy cooperatives now control over fifty percent of the market. They were able to grow so big, in part thanks to a 1922 law called the Capper-Volstead Act, which provided significant exemptions from antitrust laws for farmer-owned co-operatives. “The agricultural industry is different from other industries because Capper-Volstead allows them to combine in a way that other people would go to jail,” said Allee A. Ramadhan, a former anti-trust attorney with the Department of Justice. Justice who investigated the dairy industry. me.

The protections in the law were aimed at giving independent small farmers the right to collectively negotiate prices for the processing and sale of their produce, but many large cooperatives, such as DFA, are increasingly looking like corporations. DFA has dozens of affiliates and joint ventures, but according to its most recent financial report, only about a quarter of the cooperative’s profits went directly to its farmer members. And, unlike publicly traded companies, DFA is not required to disclose how much its executives earn. Kristen Coady, senior vice president of DFA, told me that “out of respect for privacy” the co-op would not disclose any information about the wages or compensation of its employees. But, a few years ago, the Times reported that Gary Hanman, the founder of DFA, had access to a private jet and made thirty-one million dollars during the seven years he was CEO of the co-op. In 2017, DFA moved into a new thirty million dollar headquarters, which includes a twenty-five-foot-tall sculpture depicting milk, bocce and basketball courts, and a fitness center. “Where is the money going?” Peter Carstensen, a former Justice Department antitrust lawyer and dairy industry expert, said. “There is no transparency with cooperatives like DFA. It’s about as opaque as it gets. “

Meanwhile, DFA has paid large sums of fines and class actions brought by its own members. In 2008, Hanman, DFA, and another DFA executive agreed to pay a $ 12 million fine for attempting to manipulate milk prices on the Chicago Mercantile Exchange. Five years later, DFA paid a settlement of one hundred and forty million dollars for allegedly fixing milk prices in the Southeast. In 2016, she paid fifty million dollars to a group of members who alleged that the cooperative was in an illegal conspiracy to restrict competition, fix and suppress prices, and control the buying and selling of raw milk in the North. -East ; last year he settled another lawsuit, for an undisclosed sum, with a separate group of Northeastern dairy farmers. The purchase of processors such as Dean, which benefits from farmers paying lower prices for milk, critics of DFA have argued, has created a conflict of interest. Einer Elhauge, a professor at Harvard Law School, said the alleged conspiracy in the case had lowered the prices of nearly eighty cents per hundred pounds of milk for all dairy farmers in the region, not just those in the area. members of the DFA. (In every settlement, DFA denied any wrongdoing.) “DFA was so powerful in the industry, no matter where you turned, you dealt with it,” Ramadhan told me. “Where they were present, there were complaints.

The acceleration in the concentration of the agricultural economy is not limited to dairy products. Since 1982, the four largest beef packers have grown from about forty percent of the market to over eighty percent. The four largest seed manufacturers increased their market share from 21% in 1994 to 66% in 2018. As a result, farmers pay more for inputs (seeds, fertilizers) while selling their products at lower prices and at fewer competitive buyers. “It’s like the farmers are back to being serfs,” said John Peck, executive director of the nonprofit Family Farm Defenders. “They no longer have any independence, no autonomy – they belong to the Lord.”

The pandemic has exposed the fragility of America’s consolidated food supply chain. In April last year, as restaurants and schools were forced to abruptly shut down, DFA asked some of its farmers to empty their milk, which resulted in millions of gallons being dumped into manure lagoons. The brutal closure of slaughterhouses forced farmers to euthanize hundreds of thousands of pigs. And the cruelty was not limited to animals. As of last spring, according to the Centers for Disease Control and Prevention, meat packing plants were responsible for six to eight percent of all COVID-19 infections in the United States; at a Tyson pork processing plant in Waterloo, Iowa, managers bet on how many workers would contract the disease.

Curt Meine, an environmental historian at the University of Wisconsin, Madison, believes this transformation has inspired a political reaction. In the last election, Donald Trump won rural America by a larger margin than in 2016, garnering nearly two-thirds of his votes. “Concentration has fueled and fueled the politics of resentment, strengthened corporate power, depopulated the landscape and weakened the autonomy and agency of farmers, consumers, local governments and communities,” Meine said. . “I think it’s at the very heart of the rural-urban political divide.”

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