Economic Research Services (ERS) at USDA has released a new report about changes in the hog industry. Read it here. The Arkansas Advocate’s news story below divides the findings into four categories: (1) doubling of large farms and CAFOs, (2) fewer farrow-to-finish operations, (3) increases in production contracts, and (4) (so-called) advances that make hog production cheaper.
ERS and the new coverage miss how the changes came about, relating to what happened in the late 1990s when the bottom fell out of the hog market. In a matter of months, the price for hogs dropped from about $60 a hundredweight to about $15 to $20 or $25, depending on where producers got caught in the fast-dropping prices. To use my home state of Iowa as an example, the result was that formerly the hog production business was about 80% family farmers and 20% corporate. After the price debacle, these numbers flipped: 80% corporate with only about 20% family farmers still in the business. Consumers did not benefit from the temporarily lower prices.
I was an appointee at USDA at the time. With Secretary Dan Glickman in the lead, we struggled to find ways to either stop the dramatic fall in prices or find other ways to support struggling family farmers. But alas, there was little we could do. Family farmers were pushed out of business, while the corporate agriculture industry was positioned to take advantage of the crisis.
The “Freedom to Farm Act of 1995” farm bill had just passed. This farm bill took away most of the tools USDA previously had used to stabilize prices. Farmers learned to call the farm bill the “Freedom to Fail” bill, and they were right.
The results of “Freedom to Fail” are still being felt across all of farm country. Farms continue to get bigger and bigger and bigger. Industrial CAFOs (concentrated animal feeding operations) continue to grow and become more prolific. Local-level animal production profits are almost a thing of the past, while the real profits end up with the far-away corporate organizations that own the CAFOs. Fewer profits at the local level mean fewer small businesses can survive, and the small towns are fading away without those businesses. Public schools are forced to close, and the kids’ ride times on school buses grow longer. Parents tell their kids to go to college and get jobs in the cities because life has become too hard on the farm.
USDA’s study — “U.S. Hog Production: Rising Output and Changing Trends in Productivity Growth,” emphasizes over and over again how all these changes have resulted in lower costs for hog production. Technological innovation is cited as the driver of these changes.
These results must be questioned. A closer look at the study raises more questions, e.g.,
- CAFOs cause environmental damage, but somehow the USDA study fails to ask who pays for the damage. Generally speaking, the owners don’t pay, but rather if the contaminated water downstream gets cleaned up, it is done with public tax dollars.
- As the small and medium family farms are forced to sell out, the farms grow larger. The fence rows come down. The tractors and other farm equipment get so big that the narrow bridges on farm-to-market roads had to be widened. Who paid for those widened roads and bridges? Yes, public tax dollars.
- Another cost of those larger farms — this one hasn’t been paid for yet, is how farm chemicals have been over-used. The chemicals have leeched into water supplies, reduced the minerals and vitamins produced in the crops, and made changes in the land– changes that mean the soil doesn’t hold water like it used to and often becomes compacted too easily.
- As production contracts became the norm, hog producers – formerly owners, have become workers who are closed out of opportunities to benefit from marketplace profits.
The above list should be a lot longer, but the purpose of this Opinion is to provoke some new thinking. The USDA report does not account for the true costs of the changes in the hog production industry.
The four biggest owners in the hog production industry are:
| Name | Number of sows in 2019 | |
|---|---|---|
| 1 | Muyuan Foodstuff Co., Ltd. | 1,282,200 |
| 2 | Wens Group | 1,300,000 |
| 3 | Smithfield Foods/WH Group | 1,240,000 |
| 4 | Zhengbang Group | 500,000 |
The profits these companies generate used to be what family farmers and rural America depended upon to stay in business, but not anymore. The profits do not stay local, and much of these profits don’t even stay inside the borders of the United States.