Leah Douglas: Mr. President, will you help US ranchers?
Mr. President, will you help US ranchers?
By Leah Douglas
Updated 3:25 PM ET, Tue January 24, 2017
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- Leah Douglas: For all his talk about the little guy, Trump hasn’t done much for ranchers
- In his first 100 days, Trump could offer ranchers protections and help against monopolists, she writes
Leah Douglas is a reporter and policy analyst with the Open Markets program at New America. She is the editor of Food & Power, a resource on consolidation in the food system. Follow her @leahjdouglas. The views expressed are her own.
(CNN)While President Donald Trump won praise as president-elect for his efforts to protect manufacturing workers against imports and off-shoring, and even though one of his first actions in office was to withdraw the United States from the Trans-Pacific Partnership, he has thus far largely ignored the plight of America’s ranchers and farmers. In his first 100 days, he should take action to confront this year’s crisis in the beef industry. And that means addressing the growing power of the meat monopolists whose control of both domestic slaughterhouses and imports are driving American ranchers and farmers out of business.
The most immediate threat posed to our farm economy is not China or Mexico, but Brazilian companies that have captured control over much of the US cattle slaughter business. Those same companies also enjoy a fast-growing dominance over beef imports.
In 2016, US cattle prices collapsed to record lows. Where ranchers were last year receiving $2.50 per pound of beef, prices now hover around $1.10. That means as much as a $1,000 loss per head of cattle. Prices bottomed out in October, but the market has seen little improvement in the months since. A growing number of ranchers report they have shut down operations, or plan to soon.
One factor that is driving down the price for US grown beef is high levels of consolidation. The top four beef companies in the United States — JBS, Cargill, Tyson and National Beef — control around 85% of the industry.
In many regions of the country, independent ranchers must sell into a market with only one buyer. Even in regions where two meatpackers show up to beef auctions, ranchers report that those major players often won’t compete against one another. The result is that independent ranchers must increasingly take whatever price is offered to them.
Of the large players, the Brazilian company JBS has become uniquely powerful in recent years. JBS is the largest beef producer and poultry producer in both the United States and the world as a whole. The company has enjoyed the strong support of the Brazilian government, which lent the company nearly $400 million when it went public in 2007.
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Since then, JBS has built its power in the meat industry by buying Pilgrim’s Pride, a dominant US chicken company, and Swift Foods, a beef and pork processor. Today, the Brazilian state bank BNDES still owns 20% of JBS.
Even as US ranchers have struggled, the Department of Agriculture recently allowed JBS to begin importing beef from Brazil. Imports from that country had been banned for 13 years due to fears of hoof and mouth disease. The Food Safety and Inspection Service in August cleared imports to resume. Brazilian authorities estimate they will export 60,000 tons of beef to the United States this year.
Trump’s trade policy proposals have so far centered on making it more expensive to import industrial goods from places like China and Mexico. But American ranchers and farmers have been harmed by the same trade deals and would benefit from the same protections the President is considering for manufacturers.
Ranchers say the Trump administration could also help farmers by taking strong antitrust action against the domestic meat monopolists who are pushing American ranchers out of business.
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A third, and immediate, way Trump could rein in the power of giant meatpackers like JBS is to halt the federal beef checkoff. The checkoff program is functionally a tax on beef producers, who must pay $1 per head of cattle sold into a federal promotion and marketing fund. Checkoff money is ostensibly used to advertise all beef products. But many independent producers say the funds are actually used to promote the products and political agenda of the biggest processors.
The checkoff fund is administered by the Cattlemen’s Beef Board. The National Cattlemen’s Beef Association, the industry’s biggest membership organization and the largest contractor of beef checkoff dollars, contracts with the CBB to conduct specific checkoff programs. JBS is a member of the NCBA.
Trump has said little about food and farming during his campaign and since being elected, apart from promising to "end the EPA intrusion" into family farms. But his appointee picks reveal his priorities. The recent appointee to serve as ambassador to China, for instance, Iowa Gov. Terry Branstad, is a strong proponent of large-scale, corporate agricultural companies. His biggest donor is a major pork and ethanol producer that also owns cropland in Brazil. And with the very late appointment of Sonny Perdue, his nominee to be secretary of agriculture (who once as governor of Georgia appointed his cousin, then-Dollar General CEO David Perdue, to a state position), Trump continues to send a message that the priorities of rural and small-business-owning Americans, many of whom voted him into office, are unimportant.
If Trump wants to be believed in his claims that he supports American working citizens, he must address the powers driving America’s ranchers and farmers off their lands.
Note: an earlier version of this article failed to identify the Cattlemen’s Beef Board as the administrator of the checkoff program or the National Cattlemen’s Beef Association as their largest contractor. The article has been corrected to reflect this relationship.