On October 17, 2017, the American Dream, the hope of every American for a fair share of America’s prosperity, died for America’s family farmers and rural farming communities when USDA Secretary Sonny Perdue announced he would withdraw the Grain Inspection, Packers & Stockyards Administration’s Interim Final Rule (known as the GIPSA rule).
At issue is whether or not independent family farmers have a legal leg to stand on when the largest agriculture monopolies bully them in the marketplace using predatory and retaliatory practices to either keep farmers in line or to drive them out of business.
A handful of large agricultural corporations with monopoly power control an excessive amount of the market, allowing them to dictate prices farmers receive and the terms of any contractual business relationship between them. Secretary Perdue killed the rule that would have removed some of the enormous hurdles that prevent family farmers from seeking justice by taking legal action against agriculture monopolies when they engage in predatory and retaliatory practices.
This sort of egregious and anticompetitive behavior takes place because of today’s unprecedented vertical integration and monopsony power in agricultural markets – in other words, a large percentage of family farmers only have one buyer for their products. That means that these enormous companies not only dictate the terms of business to squeeze family farmers to the max, but also have the power to put them out of business overnight if they complain or speak out – a power that they threaten to use liberally. And now Perdue’s decision not to enforce the law all but ensures there is nothing that family farmers can do about it.
In the late 1990s, ranchers raised the issue of predatory and unfair pricing in the cattle market. An Organization for Competitive Markets (OCM) board member and colleague of mine, Mike Callicrate, and others filed litigation, only to have the meat packer monopoly take action against Mike, refusing to buy any of his cattle. With no market, Mike was forced out of the cattle feeding business.
Another OCM board member, poultry contract grower Jonathan Buttram, felt the sting of corporate retaliatory action when he spoke out against the injustices of the poultry industry. He told us that his poultry processor then refused to deliver any more flocks to his family’s farm. With only one poultry processor contracting in the area, the Buttrams have effectively been forced out of the poultry business.
These are but two examples of the prevalent practices of the large corporate monopolies. Predatory and retaliatory actions, such as these, cause many farmers to either suck it up and succumb to the power of corporate monopolies, or get out, leaving their homes and farms behind.
The GIPSA rule isn’t just about restoring fairness and quality of life for America’s independent farmers. It’s also about revitalizing the struggling rural communities that have long been anchored by family farms.
To be sure, increasing concentration and control in agricultural markets by a handful of giant corporations have played a large part in the dramatic decline in both the number and well-being of America’s family farmers. Over the last 40 years, more than a million family farmers have quit the business. Incomes have plummeted; a 2001 study found more than 7-in-10 poultry farmers, for example, live beneath the poverty line, and are often effectively forced into unsustainable debt to meet the terms of their contracts. But these harmful effects go beyond independent farmers themselves, spilling over into rural areas that suffer both economically and culturally when these anchors of the community are lost.
When Secretary Perdue scuttled the rule, what was most appalling was his basis for rejecting these basic marketplace safeguards that could help keep the American Dream alive for family farmers. He acknowledged that powerful agricultural processors are supposed to “treat one another fairly and not in a predatory fashion,” yet when it comes to ensuring that they do, he added that “these are moral actions that I don’t know or believe that regulation and litigation actually solve.”
In other words, Secretary Perdue’s plan to support independent farmers and rural communities is to ask enormous multinational corporations to play nice. He then made clear that if they don’t, well, perhaps they shouldn’t sleep well at night.
If this is the Trump administration’s answer to making rural America great again, then God save the American Dream, because the Trump administration’s current plan will turn it into a nightmare for America’s family farmers and the rural communities they call home.
Joe Maxwell is an American family farmer and an advocate for economic justice through anti-monopoly reform. He is the executive director of the Organization for Competitive Markets and a founding member of Family Farm Action.