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Pressure On USDA From The Left

07/14/2022

The Farm Action and Open Markets Institute, a think tank with a decidedly socialistic orietation, recently graded Federal Departments with respect to competition and antitrust activity.  The Department of Justice and the Federal Trade Commission were assigned B- scores but USDA received a D+.

 

The Institute used the Administration Executive Order on competition as the criterion noting that both the DOJ and the FTC have been aggressive in questioning mergers and advancing farmer-friendly rules, including “The Right to Repair” and “Made in the USA Labeling” as examples of progressive action. The Department of Agriculture was criticized for inactivity in a number of what the Institute regards as critical areas for apparent lack of finality in issuing rules under the Packers and Stockyards Act to protect alleged exploitation and to oppose consolidation through mergers.

 

The USDA has indicated that it intends to eliminate the tournament system widely used in the broiler industry.  Joe Maxwell, President of Farm Action, maintains that even if the contemplated rule is issued, it will be essentially cosmetic in that contractors will simply be provided with more information. The proposed rule will not impart any significant bargaining power to individual farmers.  The USDA has yet to restore the organizational structure of the Department to the form that existed before and during the Obama Administration.  Secretary of Agriculture, Dr. Sonny Perdue, effected a number of changes combining the Agricultural Marketing Service with the Grain Inspection, Packers and Stockyards Administration (GIPSA), diluting the effectiveness of the Agency.

 

It is apparent that activists from the left are pressuring the USDA and specifically a compliant Secretary of Agriculture to make changes that would have profound and unintended consequences.  A high level of efficiency in the U.S. livestock industry is exemplified by traditionally low prices to consumers.  Economies of scale, application of the mechanization and logistics in live bird production and processing have allowed egg, broiler and turkey producers to minimize cost of production and to market products in a competitive environment. 

 

Market forces have driven consolidation and integration to the ultimate benefit of consumers over the past five decades.  Proponents of a socialistic system abhor intensification and large-scale enterprises.  They hanker for a reversion to some form of 19th century multipurpose family-farm system selling products at farmers’ markets and grocery stores. This denies the reality of the population shift from rural areas that was evident from the First World War onwards.  In 2021 less than two percent of the U.S. population were classified as ‘farmers’ by the Census Bureau. This complement together with paid farm and plant workers feeds the U.S. and makes possible an extensive export market. Intensification can only be achieved through capital investment in advanced technology and the planning and execution that achieves high levels of productivity.

 

The USDA is expending public funds to create alternatives to existing red meat and poultry production that has evolved through a logical expansion in scale.  Dispersing grants and loans in small amounts will do little to increase production.  There may be some local benefits in establishing small-scale, labor-intensive meat and poultry plants, but in reality, these enterprises would not come into existence without government support.  It is questioned whether the USDA has either the responsibility or the justification to oppose economic realities and expend taxpayer funds to attempt to turn back the clock by a century.

 

If there are inequities in egg, broiler or turkey production, then the individual circumstances should be examined, and appropriate remediation applied.  At this time, the number of aspirant broiler contractors and applicants for expansion of their production facilities far exceeds those who are retiring or relinquishing contracts.

 

In their period of tenure extending to January 2025, the Administrators of the USDA will not be able to accomplish any material changes in the structure of intensive livestock production, since they will be attempting to resist economic realities. The USDA and Comrade Vilsack would be well advised to find ways to support livestock agriculture instead of attempting to restructure production according to an outdated and un-American model.  A review of E.U. agriculture illustrates the effect of hyper-regulation, government intervention and economic distortion.

 

It isn’t broken, so please don’t try and fix it to suit your political inclinations.