Competition Hearings: Who Cares?
Dec 17, 2010
I had an interesting conversation Thursday morning with a blogger from the Huffington Post. Regina Weiss is a policy analyst, writer, gardener who lives in Brooklyn, NY, a very insightful person who is taking a real interest in the recently completed Department of Justice and USDA joint hearings on competition in the ag industry.
What I said in a nutshell is that most farmers were aware of the hearings, but they really didn’t care. The hearings were likely viewed as a ballyhooing by a bunch of politicians and in the end nothing is likely to come from them.
The groups clamoring for more competition like to bring up facts like, as Weiss did in her article, the U.S. has lost 90% of its pork producers since 1980. Or, that "1.9 million of the 2.2 million U.S. farmers left today are either losing money or making an average of about $6,400 in a "good year." Or, that 1% of producers produce 85% of our food.
All true. But let’s look at some of the facts and, more importantly, the reasoning behind these facts.
In 1980, U.S. per capita pork consumption was at 52.9 lbs., its second highest level since 1970. Farm country was also on the eve of the farm crisis, which would drive thousands of farmers out of business. Meanwhile, since that spike in 1980, per capita pork consumption has remained relatively stable.
What is rarely asked is how much consumer demand has played into this concentration of pork producers. Consumers, restaurants, and yes, packers, wanted a consistent product…a standard-sized pork chop to put in a package. Can you get that by buying truckloads of 10 hogs per load from 100 different producers. Or, did consumers and restaurant chefs get a more consistent product from packers who get pork from producers who can deliver 100,000 head with like genetics and identical feeding programs for the entire lot?
Is that the packer’s fault? Yes, I guess it is, if you ignore the fact that they have a customer who is ultimately the pork producer’s customer…the consumer. Where would pork consumption be today if grocery stores continued to package a 5 inch pork chop with a 2 inch pork chop?
As for the fact that only about 300,000 farms actually make enough money to support a family, or dare I say, operate as a true business today, that’s true. Collin Peterson, current House Ag Committee Chairman, told me during the height of the 2009 Farm Bill debate that the only reason the 2.2 million farmer number is thrown around is that it still gives agriculture some power on Capitol Hill.
"Let’s face it," he said. "The number of real farmers is actually about 350,000." Granted, I wasn’t a statistics major, but that’s a pretty close number to the 300,000 who are making real money today.
So, is that a result of consolidation? Or is that a result of the fact that anybody with an acre of ground who sells $1,000 of production (about 10 boer goats sold per annum) in a year is a "real" farmer by USDA standards?
And finally, yes, 85% of our food does comes from 1% of the farms today. Not much I can say about that, except to roughly quote something I’ve heard often from Purdue University Economist Mike Boehlje: "The best way to stop to concentration in agriculture is to pass a law that limits horsepower on a tractor."
Until we have a politician stand up and say they are going to limit equipment manufacturers to making only 50 hp tractors, all the hearings and ballyhooing from the government won’t make a bit of difference. I’m afraid.