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I Know Concentration

Market concentration is a term we use a lot at Farmers Union. “Market concentration” is part of the Farmers Union two-word culture, along with terms such as “safety net,” “risk management” and “renewable energy.” To me, the definition of “market concentration” is simple: Too few have too much power, and they exercise that power to tilt the level playing field of a competitive market system for themselves.

My first experience with agricultural market concentration was in the 1980s. Like many other small family farmers, we fed cattle. My dad began his farming career in the late 1930s by partnering with my grandfather and their landlord on a cattle feeding venture. I believe he told me they paid 8 cents a pound for their first loads of cattle.

This arrangement continued until 1944. Then my dad and my grandfather purchased a farm, and they fed cattle on their own until my grandfather retired from feeding in the late 1950s. Dad fed on his own until the late 1970s, when he brought me into the business. Of course Dad had ups and downs, but overall the cattle business was our bread and butter and it worked.

Dad had an excellent reputation for finishing high quality cattle and was blessed with top-notch commission people who bought and sold his cattle. Packers were numerous, and he sold cattle to independent packers such as Litvack Packing, Pepper Packing, Flavorland Packing (to name just a few). Life was good and there was a bright future in the cattle feeding industry for young people such as myself – and then came the 1980s.

The last load of fat cattle we sold was in 1986. We sold the cattle to IBP because they were the last packer buying big steers. Believe me, IBP couldn’t have cared less about buying our cattle. What happened to us happened to thousands of small feeders all over the U.S. and the attrition continues today. We were feeding up to 500 cattle a year. A friend who fed a couple thousand a year told us we needed to feed bigger and market more often. A few years later, he was out of the business.
A few years after that, our biggest cattle-feeding neighbor, feeding 20,000 a year, quit, for the same reason the rest of us did. He was one of the last of the true cattle feeders in Colorado. It was amazing to me; in ten short years, the cattle feeding industry that had kept our local economy strong and vibrant was gone! But it wasn’t a total surprise. I still remember hearing Ken Monfort speaking on how to make it in the cattle business in 1983, and he said if you aren’t running 50,000 head in 2000, you will be gone.

The reason for this decimation of private, farmer-owned cattle feeding is easy to track. This attrition began in the 1980s. The government decided it was not in the best interests of the American people to enforce the rules set forth by the Packers and Stockyards Act, and the administration began to ignore the anti-trust laws that kept our playing field reasonably level. Under the new unregulated economy big corporations were thriving, and they in turn vertically integrated. It effectively ran everyone else out of the business. And worst of all, we see the industry continue to consolidate today.

Market concentration is the issue that led me to be active in Rocky Mountain Farmers Union. Farmers Union was the only ag organization that had the foresight to see what a danger market concentration was to our way of life. We have led the fight against concentration for a hundred years, all the way back to Teddy Roosevelt. Most farm organizations have viewed concentration as just part of a free, fair and open market system. You know, the old adage of only the best and the most efficient should survive.
The simple truth is, in a true free competitive market system, the guy with the most money wins. If you and I are competing against each other in a business, no matter how dedicated I am, or how hard I work, or how smart I think I am, if you have enough money to wage a price war on me, you are going to win. After I am gone, you can set your price where you want and get back your losses. You can make massive profits with no competition… until someone comes along with more money than you and decides to run you out of business. And who pays for this “free market”? Consumers, eventually.

The American people have been sold a bill of goods on what a fair market really is. As citizens of this country we need to be vigilant and constantly monitor what’s happening in our market places. The American people have to take the leadership role and exercise their vote. That’s the way to take our country back from the huge multi-national corporations that have so much power today. We need to tell big business that it’s not a “free market” if they can buy it. We need a level playing field in the marketplace.

If we continue to ignore market concentration and consolidation, our nation will become a country of corporate slaves. Main street businesses will cease to exist, and the entrepreneurial spirit that made America great will be lost. We will end up living Tennessee Ernie Ford’s old song: “Saint Peter don’t you call me cause I can’t go, I owe my soul to the company store!”

That’s why Rocky Mountain Farmers Union will be at the table when the USDA and the Department of Justice are ready to talk about market concentration. We will always be there for the independent producer.

We’re ready to fight that fight again, because it’s a good fight and we are going to win it.