America’s Last Family Farms?

America’s Last Family Farms?

It’s part of our heritage: Family farmers struggling for their community. But the modern reality is different. A handful of giant corporate agribusinesses are squeezing the life from our family farms. You can help stop it.

It’s still the primary vision of American democracy. Our country’s heart and soul, rooted in the land, protected by millions of family farmers. They work cooperatively; they feed their communities; they live a rich cultural life. They are America’s economic and spiritual backbone.

But it’s fast becoming a fantasy. Family farmers are being demolished by giant global corporations. And it has nothing to do with "efficiency." Here are some details.

I. Disappearing farmers

Seventy years ago, there were nearly seven million American farmers. Now there are about two million, even though the general U.S. population has doubled. In Wisconsin, where there were 200,000 mostly small farms in 1935, there are 78,000 today.

Between 1987 and 1992, America lost an average of 32,500 farms per year, mostly family farmers. In Minnesota, 5 of 6 farmers who went out of business were small farmers. Of those small farmers still on the land, 80% have farm income below the poverty line. They’ve had to make most of their income off the farm.

This has been the story in America for decades: more bankruptcies, fewer farmers and ever larger farms. 75% of U.S. farm production now comes from only 50,000 farming operations.

The shift to giantism in farming is very apparent in hog production. As late as 1993, almost 2/3 of hog farmers owned fewer than 100 sows, but now corporate "factory farmers" may own 80,000-200,000 each. They raise their animals in concentration-camp like conditions, adding to problems of disease and pollution from animal waste and toxins.

Corporate farmers say that the trend to big farms happened because small farmers are "less efficient." But as explained in previous ads in this series [for copies, call number below] small farmers are actually more efficient than big ones, especially if you count the devastating environmental and social costs from factory farming, now subsidized by government, and passed on to taxpayers.

The real problem is this: consolidations and mergers at both ends of the farming cycle -- inputs that the farmer has to buy (seeds, fertilizers, chemicals), and outputs; what the farmer gets at the selling end. Both ends are increasingly controlled by corporate giants, aided by government policy. Small farmers are caught in a squeeze play.

II. Anatomy of bankruptcy

The five biggest seed suppliers in the world control 75% of the global market for vegetable seeds. The ten biggest agrochemical manufacturers in the world control 85% of the market. Just four companies control 69% of North America’s seed corn market. Sometimes the seed companies are the same as the pesticide companies (for example, Monsanto). With such reduced price competition farmers must pay what these corporate giants demand. (Some of these companies also promote genetically engineered seeds. Farmers who are convinced to use them must sign contracts, giving up their traditional, efficient practice of saving seeds to replant. Now they're required to buy new seeds each year from the same companies.)

Meanwhile, at the selling end of the cycle, farmers face even greater consolidation from food processing and manufacturing companies. For example, if you are a farmer growing cereal grains, you face four huge companies that control 84% of cereal manufacturing. (Kelloggs, General Mills, Phillip Morris, Quaker Oats.) If you raise beef cattle, only three meat-packing companies control 81% of the market. (Cargill, ConAgra, IBP Inc.) Similar numbers apply in poultry, hogs, soya et al. Real competition is gone. It’s just small family farmers up against global oligopolies.

From 1982 to 1993, the index of prices paid by farmers for inputs increased by 23%, while the index of prices received by farmers rose by only a third of the cost increase. In other words, the situation got steadily worse. Among corn growers, for example, in 1997-1998, it cost farmers about $2.64 per bushel to grow (according to government estimates). But they were able to sell on average at only $1.91 per bushel. So they lost 73¢ on every bushel of corn they sold. In 1999, the price was down to $1.82 per bushel while costs continued to rise.

Returning to hogs, by the last quarter of 1998, hog farmers could only sell hogs to processors at 15¢ per pound. But the cost of production was 55-60¢ per pound, thus increasing small farmer foreclosures and bankruptcies. During that same period, however, the world’s largest hog processor, Smithfield Foods, showed increased profit of more than 60%.

Economic globalization is making a bad situation worse. Big food processors say they must keep farmers’ prices down to be "competitive" with Third World producers. (This same argument is used to keep industrial wages down for American labor, placed in competition with Third World workers.) But in fact, it’s often American companies producing in the Third World, paying those low wages. Third World farmers are as squeezed as American ones, and the oligopolies take profits from both sides of the ocean.

Meanwhile, at supermarkets, retail prices to consumers have steadily increased. Where’s the money going? Only pennies go to the farmers; most goes to the corporate middlemen who squeeze the farmers at both ends of the cycle.

III. The failure of government

Politicians love to talk about the great American farmer. But what they mean by "farmers" are the same giant corporations (who also donate to political parties). American farm policy is in service to these corporate giants, and pitted against family farmers. Some examples:

1) Refusal to bring anti-trust cases. The U.S. has many laws against the kinds of anti-competitive mergers we see in food and farming. Farm groups have been trying to get the U.S. Attorney General to act on these but, for apparently political reasons, she does not.

2) Commodity Checkoff programs. These programs are supposed to benefit all farmers by funding market promotion of specific commodities. All farmers, large and small, pay a mandatory tax to fund these programs but corporate agribusiness operations dictate their direction. They use it to benefit themselves, particularly through support of factory farm livestock production, and exports. For most farmers, these programs have failed and should be abandoned.

3) Subsidizing large corporations at the expense of small farmers and taxpayers. Back when government cared about family farmers, the U.S. established a realistic price floor that enabled farmers to recover basic production costs, similar to a "minimum wage." But no longer. Corporate lobbyists successfully pushed for ever-lower levels, far below the farmers’ costs, so they can buy-up commodities cheaply and dump them overseas at huge profits. When the government then assists family farmers, it looks like a subsidy to them, when actually it’s a subsidy to big corporations on the back of starving family farmers. The policy is obviously backwards.

4) Crop insurance. Sounds good, but payments for failed crops only kick-in when farmers have paid premiums for it; small farmers often cannot afford those. Secondly, it only applies to catastrophically huge losses. So in practice, crop insurance is another subsidy for big agriculture corporations and insurance companies.

5) State anti-corporate laws. Eight states have enacted laws to protect family farmers, either banning corporate-owned farms, or controlling the size of farms. A good idea, but it too has been overcome by lobbyists who have gained so many exceptions for corporations, that most of the laws are ineffective.

Reverse course

The situation is desperate. Farming was once the most diversified and democratic economic sector in America, but today it’s become among the most narrowly concentrated and anti-competitive. The effect on small farmers is to make them nearly extinct. It’s America’s great disgrace.

The groups listed below, among others, are attempting to reverse this course. You can help them. To find out more about what they are doing -- working with farmers, taking legal actions, and campaigning -- please contact us at the number below.

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