Crisis in U.S. Food Sector
Untenable Situation for Workers, Farmers and Ranchers
In the U.S., family farmers and ranchers are losing their livelihoods amid the relentless concentration of social wealth and power in fewer hands. As a result, the U.S. food sector is beset with problems that on the surface appear intractable. The crisis is affecting the working class and others with rapidly rising prices to the extent that food insecurity is reaching unprecedented levels. The price of beef alone at the consumer level has risen by one-fifth over the past year. COVID-19 infections are rampant among food sector workers, in particular in the meatpacking plants where death from the pandemic has been a common sad occurrence.
Meatpacking Sector
The beef cattle industry in the U.S. has an average annual gross income of $66 billion. Four corporate oligopolies alone control 85 per cent of the beef sector, according to the U.S. Department of Agriculture. Those are Tyson Foods, Cargill, National Beef Packing Company and the biggest, JBS. They have built enormous slaughterhouses while closing thousands of smaller ones. They dominate the industry throughout the U.S. and other countries including Canada.
Wesley and Joesley Batista own and control JBS, the world’s largest meat processor. Originally rooted in Brazil, JBS has become an oligopoly which forms cartels and coalitions on a global basis. The two brothers possess social wealth estimated by Bloomberg News at $5.8 billion. Four years ago the brothers pled guilty to participation in a Brazilian bribery ring that illegally secured loans from government-owned banks to expand their private operations. Despite their admission of a criminal conspiracy in Brazil, JBS was allowed to go on a $20-billion international acquisition spree gaining control of one-fourth of U.S. capacity for slaughtering beef.
During the pandemic, while ranchers have been suffering huge losses, JBS increased its gross income during the third quarter of 2021 to $18-billion, up 32 percent compared with the same quarter in 2020.
Price Manipulation to Exploit Both Ends of the Sector
The dominance of the four meatpacking oligopolies allows them to extinguish competition and manipulate prices to serve their narrow private interests both when they sell meat to grocery stores and restaurants and when they buy cattle for slaughter. They are the main purchasers of cattle from feed lots where cattle are finished with grain. They have greatly eliminated the “sale barns” of old where auctions were held to determine the prices ranchers received for their cattle before being shipped to feed lots. The big four meatpackers now demand low prices from feed lots, which in turn want similar low prices directly from ranchers without any determination of prices through auctions in sale barns.
Not long ago cattle ranchers claimed over half of what consumers paid for meat at the grocery store or restaurants. Last year according to U.S. federal data, cattle ranchers received only 37 cents on every dollar spent on beef.
Speaking of this to the New York Times for a recent article titled “Record Beef Prices, but Ranchers Aren’t Cashing In” Bill Bullard, a former rancher who now heads an advocacy group, the Ranchers-Cattlemen Action Legal Fund, says, “You’re having consumers exploited on one end of the supply chain, cattle producers exploited on the other. The meatpackers are making all-time record profits.”
Fewer but larger slaughterhouses limit where feed lots, and ultimately ranchers, can sell their cattle. This gives the oligopolies an advantage, which they have seized with a vengeance. Quoted in the same NYT article, Marion Nestle, a professor of food studies and public health at New York University says, “[The big four meatpackers’] goal is to control the market so that they can control the price. The pandemic exposed the consequences of the consolidation of the meat industry.”
Ranchers insist the game is rigged with the big meatpackers in control. The ranchers generally raise calves that feed on the grasslands of Texas, Nebraska, Kansas, Colorado, Montana and elsewhere until large enough to sell to feed lots that bring them to slaughtering fitness and weight through grain feed.
The feed lots contend they face pressure from the packers for lower prices forcing them to cut the prices they pay to ranchers. The NYT article quotes Jeanie Alderson, a rancher in Montana, who says, “A lot of people don’t understand how trapped ranchers are in this really broken system. We don’t have a market.”
Another rancher, Annika Charter-Williams, explains how she and others were astounded to see as the pandemic began that it was exposing “a full-on market failure.” She says, “You could see a cow across the road, and you couldn’t find ground beef in Billings, Montana.”
According to the NYT‘s article, “As [her family] made arrangements to sell about 120 head of cattle in March 2020, they reached out to a friend who owns a feed lot that sells animals to a JBS plant in Utah.
“Mr. Charter [her father] was taken aback by the terms for the first load: The slaughterhouse demanded that he commit to delivering his cattle, with the price to be dictated by JBS. ‘I wanted to tell him to go to hell,’ Mr. Charter says. ‘But what choice did I have?’
“His break-even point was $1.30 a pound. ‘Without any consulting or any dealing, they just decided that they were going to pay me $1 a pound,’ he said.
“According to industry experts, this system allows packers to lock up the overwhelming supply of cattle at prices they impose, under terms hidden from public view. Given the market dominance of the four largest packers in their regions, feed lots lack alternative places to sell their animals once they reach slaughtering weight.
“‘There’s no competition,’ said Ty Thompson, an auctioneer at the public auction yards in Billings, Mont., who also operates his own feed lots. ‘We have so much supply and so little capacity, that there’s no negotiation whatsoever. You’re feeding America and going broke doing it,’ he said. ‘It doesn’t pencil out to raise cattle in this country anymore.'”
This reflects the basic contradiction in the economy from which problems emerge and intensify. The economy is socialized in forms of industrial mass production but control is in the hands of a handful of private owners, whose aim is maximum profit for themselves at the expense of all others and the whole, including the millions who do the work. The oligarchs use their already existing wealth, privilege, social connections and political power to buy out or even destroy other facilities, manipulate prices, drive down wages and working conditions, and eliminate any regulations from anti-trust legislation such as the Packers & Stockyards Act of 1921, which through court challenges and rulings, neo-liberal legislative changes and lack of means to enforce the Act, no longer functions to any extent, as the reality itself reveals.
Ranchers and farmers should take heart from the recent historic victory of farmers in India who through mass action defeated the central government’s three proposed anti-farmer laws designed to serve the power and privilege of the oligarchs. This victory shows that working people are capable of settling scores with the ruling corporate elite on issues of importance such as the prices they receive for their capacity to work and what they produce such as in the case of ranchers and farmers. These victories are crucial in gaining experience and knowledge of how to organize and mobilize working people to defend their claims and rights. These struggles open a path forward towards overcoming the crisis in the food and other sectors and in gaining social consciousness and understanding through practice of the necessity to solve the basic contradiction in the modern economy between the socialized nature of the productive forces and their private ownership and control by a small clique of oligarchs.
(Workers’ Forum, posted January 18, 2022)