By Dave Carter
A couple months back, I happened to stand next to a Kansas grain and livestock producer at the back of a convention hall as a panel of international trade experts extolled the opportunities awaiting agriculture in the new world marketplace. I noticed that my friend from Kansas began to fidget as each panelist talked about the importance of exports for the American producer.
At last, my friend leaned over to me and said, “The experts keep telling us that we’re selling into a world market. But where I live, I have to sell toCargill. Cargill may be selling into a world market but, so far, they haven’t shared the profits with me.” It is all about the marketplace.
New markets may be springing up all over the world, but the logistical realities of accessing those markets force most local producers to deal with the handful of large companies that now dominate the agribusiness economy.
That thought weighs heavily on the minds of wheat producers this summer as the combines roll northward across the fields of the Great Plains. Despite the promises of blossoming world markets, this year wheat producers are receiving some of the lowest prices in recent memory.
Irrigated producers share the frustration as they tend to crops of corn and sugarbeets that seem destined to bring record-low returns.
The grain market collapse of the past three years underscores the failure of the Freedom to Farm Act, which was billed as the farm-bill-to-end-all-farm-bills in 1996. Freedom to Farm was built on the assumption that “unshackling” farmers from burdensome federal farm programs would free producers to respond to the signals of the competitive marketplace.
The major problem is that the competitive marketplace disappeared somewhere along the way.
One large grain corporation now owns 82 percent of the Colorado elevators capable of loading unit train facilities. The choice for many producers is to sell their grain to the company here, or to drive down the road and sell to the same company there.
Feed grain producers are in a similar predicament. One farmer noted recently that his options were to:
•deliver to a feed mill owned by one large company;
•drive up the road to sell his feed grain to a feedlot owned by the same company;
•feed the grain to his own cattle, which would then be sold to a slaughter plant owned by the same company; or
•get into the business of feeding turkeys, and sell the birds to a processing plant owned by…you guessed it…the same company.
Federal policymakers need to recognize the reality of the marketplace as they begin drafting the next farm bill to replace the farm-bill-to-end-all-farm-bills. In addition, lawmakers need to recognize that society today expects a lot from producers: open space preservation, wildlife habitat protection, air and water stewardship, and much more. Most farmers willingly provide those benefits to society, as long as they can afford to stay in business.
The new farm bill must first of all strengthen and stabilize the marketplace for agricultural commodities. A true safety net can create a floor for commodity prices in a manner that costs far fewer tax dollars than the current farm policy. The farm bill can also reward producers for practices such as conserving fragile lands and providing wildlife habitat.
Meanwhile, it is time the Justice Department applies the same zeal with which they tackled Microsoft to the food processing and retailing industry. Market dominance by a handful of companies is no justifiable substitute for a truly competitive playing field.
Finally, producers must roll up their sleeves to create new cooperatives and other marketing alternatives necessary to reintroduce competition into the agricultural marketplace. Otherwise, we may be forced to wait for the giant corporations to share with us the wealth they are earning in the new global marketplace.