Appropriately, the evening began with a picnic featuring local cheese and ended with an ice cream social under a yellow moon. In between, dairy farmers, consumer advocates, professors, labor union representatives, faith communities, antihunger advocates, an aspiring cheesemaker, and even a Certified Public Accountant spoke out forcefully about the widespread injustices in the dairy industry.

The main event was a Dairy Town Hall Forum in Madison, Wisconsin, sponsored by Family Farm Defenders, National Family Farm Coalition, and Food and Water Watch, and timed to coincide with Friday’s Department of Justice and USDA workshop examining corporate concentration in the dairy industry. The workshop today is part of the ongoing investigation (which I reported on here) by the two departments to determine whether food and agriculture companies have become too concentrated.

The dairy industry is one of the most consolidated in the country, with just one company controlling 40% of the US milk supply. Prices for farmers have fallen so low in the past three years that many dairy farmers were losing as much as $200 per cow every month in 2009. Meanwhile, even though the price farmers were paid for milk fell by almost 50% from 2007 to 2009, the retail price dropped by less than 25%. Someone’s profiting, but it’s not farmers or consumers.

In these conditions, last night’s attendees do not need a year-long governmental investigation to learn if agribusiness is too powerful; that discrepancy between farmer price and consumer price affects their lives everyday. Dairy farmers shared stories of family and neighbors forced to sell their farms. One man wondered what his middle-aged sister and her kids will do now that she’s had to sell her farm, still has debt to pay, and has no off-farm skills. Her 12-year-old daughter hopes to go to college one day, but the woman isn’t sure how they will get through the next year. These stories have ripple effects, the man concluded, pointing out that his sister and her family “now have socioeconomic cost to everyone else.”

Charlotte Williams, of the Center for New Community, made critical connections between the struggles faced by rural farmers and low income urban residents, particularly those that live in so-called “food deserts” and would like to have access to high-quality dairy products. Corporate decisions (like where to open or close a supermarket) often help to create food desert conditions. “Anyway you look at it,” Williams said, “it’s a social justice issue when so little of the consumer’s dollar goes to the producer.”

Social justice and fairness were recurring themes of the evening — and are issues that the Justice Department has a real opportunity to address as a result of this investigation. At today’s official workshop, they will also be hearing many perspectives that don’t take justice into consideration; they need to continue to hear from all of us who do. You can still send a comment, sign the petition, and call your Congressional representatives to say that you support the DOJ/USDA agribusiness antitrust investigation and you hope that it will result in strong action.

Here are some voices from the Town Hall in Madison:

Last week, the Department of Justice announced the panel for the second public workshop on regulation and competition issues in agriculture, which will take place this Friday, May 21 in Normal, Alabama. The workshop will focus on production contracts, concentration and buyer power in the poultry industry, in which four of the top producers — Pilgrim’s Pride, Tyson, Perdue, and Sanderson Farms — controlled 58.5% of the poultry market as of January 2007. U.S. Attorney General Eric Holder, USDA Secretary Tom Vilsack and Assistant Attorney General for the Justice Department’s Antitrust Division Christine Varney will be at Friday’s workshop, which is important because it gives producers, consumers and advocates a chance to speak on record about how the practices of these companies affect them.

In the last forty years there has been a shift towards the use of poultry contracts between companies and farmers, which now represents 90% of the industry. The Campaign for Contract Agriculture Reform‘s legislative coordinator Steven D. Etka will be speaking on the panel this Friday. He explains in his letter [PDF] to the DOJ that in contract-based agriculture, farmers are paid not for their product, but for their services, as the corporate entity owns the product. This means that rather than being simply an issue of price, the contract terms, payments and relationship between the grower and the corporation becomes the main source of anti-competitive behavior.

According to Farm Aid, some of these practices include dropping a contract without fair warning, providing ill or weak chicks that die within days of delivery, halting or delaying the delivery of new birds, and requiring farmers to make expensive upgrades to their facilities without adequate compensation. Etka’s letter highlights the fact that while the USDA’s Grain Inspection, Packers and Stockyards Agency (GIPSA) has the authority to regulate the livestock industry through the 1921 Packers and Stockyards Act, poultry falls into a loophole, and thus, “From the poultry company’s perspective, breaking the law and increasing company profits through fraudulent or deceptive practices carries little financial or legal risk.”

Another speaker on the panel will be Carole Morison, whose Perdue-contracted poultry operation was featured in the film Food, Inc. last year. In the film, Morison explains why many farmers are too intimidated to speak up about anti-competitive practices. “The companies keep the farmers under their thumb because of the debt that the farmers have,” she says. “To build one poultry house is anywhere from $280,000-$300,000 per house. And once you make your initial investment, the companies constantly come back with demands for upgrades for new equipment and the grower has no choice. They have to do it or you are threatened with the loss of a contract… to have no say in your business, it’s degrading.”

Here is the clip from Food, Inc., which shows Morison in her poultry facility, a fairly typical mid-size poultry operation:

You can also read this recent interview with Morison on Civil Eats by Twilight Greenaway. Morison’s letter [PDF] to the DOJ gives more details about what went on at her farm. The other panelists’ letters make for interesting reading too; note that the National Chicken Council is the only one supporting business as usual.

Future workshops will be on competition in the dairy industry in Madison, Wisconsin on June 25th, competition in the livestock industry in Fort Collins, Colorado on August 27th, and on the discrepancy in prices between what farmers receive and what consumers pay on December 8th in Washington, DC.

The Department of Justice requested comments on competition issues last year, and were flooded with over 15,000 so far, which can be read here. The DOJ continues to accept comments at agriculturalworkshops@usdoj.gov.

You can also hear what some of the farmers had to say at the first public workshop in Ankeny, Iowa in December by watching this video:

With concentration at record levels in agriculture today, well past levels that encourage or even allow fair prices or competition, the Obama administration’s call for public workshops is an historic event. While agribusiness continues to deny any problem, a simple look at the facts shows that the playing field for family farmers and American consumers is distorted beyond anything resembling a free or competitive market.

Even though these statistics have been widely published lately, I will include them here again just to illustrate the point: 1 company (Monsanto) controls the genetics of 93% of soybeans and 80% of the corn grown in the U.S; 4 companies (Tyson, Cargill, Swift & National Beef Packing Co.) control 85% of the beef packing industry; 4 companies (Smithfield, Tyson, Swift & Cargill) control 66% of the pork packing industry.

For farmers trying to get a fair price for seeds or livestock, such concentration places a crushing burden on their bottom line.

This past Friday nearly 800 individuals from across the country gathered in a small community college auditorium to hear top officials in the Obama administration, including cabinet members Secretary of Agriculture Tom Vilsack  (former governor of Iowa) and Attorney General Eric Holder, address the issue of how such excessive market concentration and food monopolies have negatively impacted the lives and livelihoods of family farmers, consumers and rural America. Over the course of eight hours, the audience, made up mostly of farmers, labor workers and farm advocates, some of whom traveled from as far as Montana, Texas, Arkansas and North Carolina, listened as academics, economists, agribusiness representatives, commodity groups and a few farmers detailed specific areas of concern regarding the lack of competition in agricultural markets or, in the case of a several industry reps, denied outright the existence of any problem.

The gravity of this meeting and its outcome could be felt by all attendees as Vilsack, Holder, DOJ antitrust chief Christine Varney, Iowa Senator Chuck Grassley and others took the stage for the first panel. A sense of anticipation and restlessness filled the crowd as the panel was announced, which included Iowa’s attorney general, Tom Miller, Congressman Leonard Boswell, Lt. Governor Patty Judge and Secretary of Agriculture Bill Northey. The inclusion of the last three panelists, while expected, caused some dismay by longtime Iowa farm activists. Having two Democrats (Boswell and Judge) and a Republican (Northey) at the podium with a long history of supporting industrial agriculture was not what many had hoped for when the workshops were first announced.

Workshop #1 Begins: Vilsack, Holder and Varney

After a round of pleasantries, saying he was glad to be back in Iowa, Secretary Vilsack opened the hearing sharing his concern about the loss of family farmers over his lifetime and the shrinking of rural communities, which he has seen as a small town lawyer, mayor, state senator, governor in Iowa and now as Secretary of Agriculture.

“Looking at the statistics regarding rural America and farms, I have a lot of concern,” said Secretary Vilsack.

He then went on to detail how the rising age of the average farmer, now 57 as reported in the 2007 Ag census, the higher and more prolonged rates of unemployment in rural America and the loss of economic opportunity in rural areas across the country were all issues that he planned to address by improving programs at the USDA.

No matter what one believes about Vilsack’s agricultural biases, favoring biotech, ethanol and exports while still increasing opportunities for beginning farmers, organics and nutrition programs like farm to school, it was evident that he realizes that agriculture and rural America are at a serious crossroads under his watch.

“This is not just about farmers and ranchers,” Vilsack said. “It’s really about the survival of rural America.”

In a USDA press release issued later that day, Vilsack drove that point home even further.

“In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like,” said Vilsack. “These issues are difficult and complex, which is why this workshop today is so important and long overdue.”

Attorney General Holder called the public workshop “a milestone” event.

Many in the audience, especially family farmers concerned that the workshop would be another dog and pony show that promises change, but only returns agribusiness as usual, were encouraged by Holder’s attendance, which was only announced late last week.

For leading industrial ag companies, Holder’s appearance in Ankeny was a sign of how serious the Obama administration is taking the issue.

During his opening statement, Holder said that the DOJ was committed to vigorous protection of competition, noting how “reckless deregulation has restricted competition in agriculture.”

Holder went on to say, “We all know that one of the greatest threats to our economy is the erosion of free competition in our markets.  And we’ve learned the hard way that recessions and long periods of reckless deregulation can foster practices that are anti-competitive and even illegal.”

These were stern warnings for the agribusiness’s minions in the audience.

Closing out the first panel was DOJ antitrust chief, Christine Varney, who was widely recognized as the driving force behind the antitrust hearings. Speaking about the realities of U.S. antitrust law and real enforcement expectations, Varney promised a tough stance from her office and a clear signal that a new sheriff is in town.

“Big companies aren’t necessarily bad,” Varney said. “But they have a responsibility to act responsibly. Patents have in the past been used to maintain or extend monopolies — and that’s illegal.”

For those family farmers and proponents of sustainable agriculture who have long seen Monsanto as the 800-pound agribusiness bully in the room, Varney’s comments were applauded.

Farmers Unite: Call on Obama to “Bust up Big Ag”

Even so, while issues of lack of competition and enforcement of antitrust laws have been on the agenda for family farmers and rural advocates for decades, the rest of the day’s lineup did not live up to what many had hoped for. When originally announced, the first workshop had been proposed to focus on seed concentration, only to get watered down to include hogs, livestock, transparency and buyer power.

For weeks leading up to the workshop, farm groups and rural advocates had been quietly pushing the USDA to find more inclusive voices and more progressive farmers, those who had been most negatively impacted by excessive ag concentration, to be included on the panels.

The resistance that DOJ and USDA officials met from family farm groups led to a delay by several days of the official farmer panel lineup being released publicly and led Sectary Vilsack to allow more farmer comment during the lunch break.

As a result of the delay, leading farm, labor and consumer groups held a townhall meeting the evening before to make sure that real farmer voices were heard on these important issues.

On the eve of what may have been the most historic day in agriculture in the 21^st century, more than 250 farmers, their friends and families, union workers and farm advocates gathered in a hotel in Ankeny, just down the road from the official DOJ/USDA event to bring attention to their plight and call for the administration to “Bust up Big Ag.”

During the open forum period, when more than 40 individuals from the audience had one minute to address the crowd, the sense of urgency for farmers and rural Americans was palpable.

Jerry Harvey, a 4^th generation southern Iowa dairy farmer described the recent plight of America’s dairy farmers, who have experienced a record crisis this past year as prices have dropped more than 50% at times from 2008 levels, stranding farmers with thousands of dollars of debt to carry each month for more than a year.

“What turned out to be the American dream, turned out to be the American nightmare for the past 15 months,” Harvey said, detailing his interactions with Iowa’s political leaders, including Senator Harkin and Grassley and Congressman Boswell’s offices to find some solution to the current dairy crisis.

After Harvey, fellow Iowa dairyman, Scott Cruise addressed the crowd, telling them that he was afraid that he wouldn’t be able to pass on his farm to his 15 year old son, who desperately wanted to become the 5^th generation to farm and milk cows in Iowa.

Unfortunately for the audience, the story was all too familiar.

For many dairy farmers, like the chicken farmers and hog farmers before them, who have all been forced out of production because of the false efficiencies of excessive concentration, the Obama administration’s announcement of an antitrust lawsuit against Dean Foods, which controls more than 40% of the fluid milk market in the U.S., it may be too late.

Even as farmers in the audience the next day clapped when Varney mentioned the DOJ’s antitrust lawsuit against Dean Foods, many realized the debt levels these family dairy farmers have been forced to endure the past year has reached a crisis point.

While many have waited a lifetime to hear government officials address lack of competition in agriculture and enforce antitrust laws, the only question that remains is: how fast will the wheels of justice turn?

The first of the much anticipated agricultural competition workshops began last Friday in Iowa. Hosted jointly by the USDA and the Department of Justice, the workshops aim to explore the question of consolidation in agribusiness. The workshops themselves have already come under scrutiny for initially excluding actual farmers on the panels–and have come in for continued criticism that the farmers who have been put on are more representatives of corporations than real farmers.

It’s hard not to be somewhat cynical about our government’s claim that they’re shocked, shocked to discover there’s anti-competitive behavior in agriculture. On the other hand, for the last twenty or so years, consolidation has been–in Washington at least–the crime that dare not speak its name. So the fact that it’s the USDA and DOJ running these workshops is nothing short of astonishing.

And while the whole of the industry will get attention, much of the focus so far has been on Monsanto, which thanks to its aggressive practices–along with support from the USDA–now controls up to 90% of the seed business in some markets. It’s to the point that in many parts of the country non-Monsanto (and thus non genetically engineered seed) are simply unavailable to farmers.

The Justice Department is already investigating the company and it will undoubtedly get a lot of attention during these workshops. But knowing the Obama administration’s support for biotechnology generally and reading between the lines in this NY Times article on the issues involved with Monsanto, I’m starting to get concerned.

The way the article characterizes the debate, the goal appears to be to broaden access to Monsanto’s intellectual property, i.e. the herbicide-tolerant genetic traits in its seeds, rather than to broaden access to conventional seeds:

Monsanto sells its own branded seed varieties, like Dekalb in corn and Asgrow in soybeans, to farmers. But it has expanded its influence and profits by licensing those traits to hundreds of small seed companies, allowing them to incorporate the traits in the seeds they sell. It has also granted licenses to the other large trait developers, allowing them to create combinations of engineered traits in a process known as stacking.

Monsanto says that its licensing shows it is the opposite of a monopolist, encouraging rather than hampering competition.

But critics say the licenses give Monsanto excessive control. Seed company executives said the licenses were sometimes worded in a way that compelled them to sell Monsanto traits over those of its competitors. Mr. Quarles denied that, saying the contracts contain sales incentives typical of the industry.

The rest of the article focuses on the legal battles between Monsanto and Dupont, another biotech giant, over access to Monsanto’s patents. It may very well be that the anti-competitive behavior the government punishes is that which prevents even greater adoption of biotech seeds — the opposite of what many progressives want out of anti-trust enforcement.

Until we can displace agricultural productivity as the only measure of success of government policy, even this new attention to anti-competitive practices is unlikely to lead to meaningful reform. To me the focus must be on finding ways to increase farmers’ share of consumers’ spending without threatening significant increases in food prices — there is, after all, no government that likes to champion policies that increase the cost of food. Nothing puts a damper on electoral prospects like bread riots.

Keep in mind that a mere 7 cents of the consumer’s food dollar gets to the farmer, while 73 cents goes to distribution costs. The only way we can get to a win-win — and not be forced to choose between higher farmer income or higher retail prices — is to let the middleman, i.e. the processors and yes, the retailers — take the hit. Sadly, I don’t think Walmart, Safeway or Whole Foods are on the agenda at the moment, even though some experts believe the real squeeze on farmers comes from them.

It’s when we start having discussions like that and start recognizing that a relentless focus on agricultural production simply is not consistent with helping rural economies that I’ll believe we might just be getting somewhere.

Originally published at Beyond Green

I recently had the honor of presenting for our nation’s top producing farmers in Chicago at the Top Producer Seminar, sponsored by Cargill and Pioneer. I was scheduled to present with Monsanto’s VP of Sustainable Yield, but a few days before the presentation was told that he had moved to China and that there was no one to take his place. I then had the privilege of spending the afternoon in an incredibly insightful discussion with the farmers, many of whom are Monsanto’s customers, who are remarkable fathers, grandfathers, and businessmen.

As I walked into the room for that presentation, I was greeted with “Welcome to the Lions’ Den.” As I found the courage to take the stage, I shared that according to the USDA, farm income was down 35% in 2009. I then shared that Monsanto is reporting, in forward looking statements to Wall Street analysts based on projected sales that they have asked for from the farmers, that Monsanto is expecting gross margins in Q2 2010 of 62% and that they are expecting to drive up the price mix of their products, corn and soy, by 8-10%. I also shared that according to these forward looking statements, Monsanto expects to expand their glyphosate revenue to an estimated $1 billion in gross profit by 2012, further enabling Monsanto to drive R&D into seeds and to price those seeds at a premium – further driving price increases on the farm.

And then I listened.

What I learned from these remarkable men and women is simply jaw dropping.

Due to Monsanto’s contracts with seed companies, farmers are now bound by the threat of a lawsuit if they speak out regarding farm practices. As third and fourth generation farmers, inheriting their grandfathers’ lands, their corn crops are no longer regulated by the FDA but by the EPA due to the insecticidal proteins they now contain, and they are subject to rising, unregulated costs never before seen in farming – contractual fees, trait fees, licensing fees and royalty fees and germ plasm fees associated with a technology that has been engineered into seeds designed to enhance Monsanto’s bottom line.

As I listened to the farmers and learned about their trade practices, I could not help but think of AT&T and the Bell System which for years functioned as a regulated monopoly until an antitrust investigation resulted in its break-up, as the practices employed by Monsanto on the farm, rival the fee structure that the phone company once had in place.

As our dialogue grew, we learned that together, we could affect remarkable change.

So in collaboration with our nation’s leading farmers to address the patents, licenses and royalties fees now being engineered into our food supply designed to enhance the profitability of the world’s largest agrichemical corporation , here are 8 steps that the USDA and the Department of Justice could take to address the financial impact that these practices are having on the farm:

1. As was done with AT&T, re-establish Monsanto and its subsidiaries into separate companies; separating the germ plasm and technology divisions into independent entities
2. Establish precedence that these newly established entities do not collect trait fees, royalty fees, licensing fees or other forms of income from each other, then they should not be allowed to collect these tech fees from the independent companies
3. Have Monsanto refund the money collected from the independent seed companies as retribution for the fact that the same fees were not charged to their partners and subsidiaries.
4. Require that all companies (Monsanto, DuPont, Syngenta etc.) supply genetically treated and untreated seeds and technology to the public in order to give the farmers a free market from which to choose how much the farmer wants to spend on a bag of corn or beans given that the current practice involves the blending of the best genetics into melting stock corns, so the companies can harvest more profit.
5. Establish an oversight committee with one term limits made up of independent seed companies and with multi nationals in an effort to prevent monopolistic price increases in the cost of corn and soy production that will impact food price inflation at the retail level.
6. Structure federal subsidies so that taxpayer dollars are used to subsidize and provide marketing and insurance programs for the growth of commodities (corn and soybean crops) that are grown without the use of synthetically engineered chemical ingredients
7. Reduce the fees charged to farmers growing crops without synthetic, chemical and genetically engineered ingredients that they must pay in order to certify that their crops are free of these ingredients (fees are paid to certifiers, not to the USDA National Organic Program).
8. Provide the same level of marketing assistance and crop insurance programs to farmers growing crops free of synthetic and chemical ingredients.

In a world in which food security is as much of an issue as nutrition, the establishment of a level playing field on the farm is vital to the health of our food system. And while the lack of federal oversight and regulation of trade practices on the farm has enhanced Monsanto’s profitability drivng shareholder value, its costs are being externalized not only onto our nation’s farmers but also onto the 300 million American eaters.

We are all stakeholders in our food supply and together, we can affect remarkable change for farmers, families and food.

This means that farmers are unable to make decisions about what they grow, and also that they grow more to make ends meet, pushing more corn and soy on the market to be processed into a proliferation of packaged foods — making up most of what is available to eat. This report details the history of seed consolidation (including excellent visuals mapping larger chemical companies’ acquisitions of smaller seed companies), provides recommendations, and importantly, gives a voice to some of the affected farmers from all over the United States.

It will be useful reading for the Department of Justice (DoJ) because as we wrote back in August, the DoJ is investigating Monsanto and other agribusiness companies for antitrust activity. In addition, the DoJ and the USDA will hold workshops all over the nation beginning in Iowa on March 12th, 2010, where farmers have been invited to discuss the issues of concern to them. In addition, the DoJ is taking public comments on the issue: you can email agriculturalworkshops@usdoj.gov to add you thoughts to the investigation before December 31st.

This report comes in the wake of other striking information, including an investigation by AP into confidential contracts that showed how the agribusiness giant is “squeezing competitors, controlling smaller seed companies and protecting its dominance over the multibillion-dollar market for genetically altered crops.” We also reported a few weeks ago on new research revealing that the use of GM corn, soy and cotton seed raised pesticide use 318 million pounds in 13 years, increasing the prevalence of ‘superweeds’ resistant to herbicides. Another report by the Organic Center also confirms that seed prices have been rising sharply.

As Tom Philpott reported over at Grist, Monsanto is taking this investigation seriously. In fact, the company has already hired a lawyer named Jerry Crawford, who happens to be a friend and financial supporter (to the tune of $150,000) of the USDA Secretary of Agriculture, Tom Vilsack.

Seeds used to be a widely available public resource. Since the Bayh-Dole act of 1980, universities have been able to patent plant genetics, and thus make them unavailable to the public domain. The DoJ investigations should not be about paving the way for corporate giants Syngenta and DuPont to compete with their own GM seeds — but focus on what is of interest to farmers and eaters: biodiversity.

Since the 1980s, American agriculture has become increasingly concentrated. Today, less than 2 percent of farms account for half of all agricultural sales. The new antitrust division of President Obama’s Justice Department has said that scrutinizing monopolies in agriculture is a top priority.

That shift is giving hope to independent farmers, who have complained for years that agriculture giants are shrinking the marketplace and paying farmers less for their products.

Naturally, this got me right out of bed, as I have been reporting on the role competition plays in agriculture of late here on Civil Eats, and because the media barely batted an eyelash when the Department of Justice (DOJ) sent out a press release a week ago about the public workshops that will be held all over the US beginning in early 2010 to find out from farmers about possible anti-competitive behavior in agricultural markets.

Just a day following the release, Phillip Weiser, the deputy assistant attorney general and point person on competition issues in Big Ag, gave a speech at the Organization for Competitive Markets meeting in St. Louis — the headquarters of seed and chemical giant Monsanto, which many have argued controls too much of the market. (Here is Daily Yonder blog’s take on the event.)

The Organization for Competitive Markets does get funding from DuPont, Monsanto’s biggest rival — though DuPont did not fund this meeting. The two companies have been digging their claws into each other of late and it keeps getting uglier — but lets hope the DOJ doesn’t see their job as simply making way for DuPonts and Monsantos of the world to be able to produce GM seeds. Policy making should first and foremost focus on what is best for the farmers and consumers, who are at the mercy of these large corporations. Weiser says that the DOJ will look specifically at seeds, as well as dairy and livestock consolidation. I would add processing (ethnol/corn syrup giant Cargill might be a good place to start), and supermarkets (especially Wal-mart) to that list.

Mad Money host Jim Cramer was one of the few who picked up on the story in the mainstream media, spending a little over eight minutes going into detail about his speculation that Monsanto will be the first on the chopping block at the DOJ. He even throws in a plug for the movie Food, Inc., saying:

I could see Justice, with a capital J, pursuing a restraining order against Monsanto based on the accusations in [Food, Inc.], cause they are so darn inflammatory and this anti-trust division wants to make a name for itself…

Here is the whole segment with Cramer, well worth watching:

h/t to Katherine Goldstein for bringing the Mad Money clip to my attention