Small ranchers say Biden letting them get squeezed

America's independent cattle ranchers say major corporations in the beef industry are squeezing them out - and that the Biden administration is letting it happen.

President Biden issued a sweeping executive order in July directing federal agencies to address anti-competitive behavior by big meatpacking companies.

But farmers say Biden hasn't gone far enough to rein in larger meatpacking companies, a handful of which control the bulk of the hog, cattle and chicken markets.

Unless regulators break those companies up, farmers say, the administration's current reforms won't have much long-term effect.

"We want to bring some semblance of competition back to cattle market," said Tim Gibbons of the Missouri Rural Crisis Center, which represents 5,600 farming families.

"Missouri has 50,000 cattle producers, but 80 percent of beef packing is controlled by four companies," Gibbons said, adding that while Biden has spoken out on some of the biggest issues, "nothing has changed."

In particular, ranchers point to an Obama-era legal reform that allowed meatpackers to label any beef product - regardless of where the cattle were raised - as "Product of USA" if it was processed in the country.

That allowed big meatpacking companies to bury smaller entities under an avalanche of cheap, foreign-raised beef while labeling it American-made, said Missouri rancher Darvin Bentlage.

"That pound of ground beef may say 'Made in the USA,' but it could be from five or six countries," Bentlage said.

And while Biden's order contained language to close the foreign-raised beef loophole, small ranchers say they have a hard time trusting federal regulators to carry it out.

"The industry, because of its economic power, is using political power to chip away at regulations. All they want is time to drive the independent cattleman out of business," said Austin Frerick, deputy director of Yale's Thurman Arnold Project, which focuses on antitrust enforcement.

The American beef and poultry industry has a long history of shake-ups, with the farm foreclosure crisis and a consolidation in the meatpacking industry in the 1980s ushering in an era of regional meat monopolies, according to Frerick.

Over the 1990s and 2000s, these conglomerates set up a model in which farmers became contractors, raising company-owned animals on company-owned feeds in enormous sheds built with government-backed loans.

This structure first came to chicken processors such as Tyson in the Southeast and then pork processors such as Smithfield. It went "on steroids" in 2002 when the U.S. Department of Agriculture (USDA) opened up the Environmental Quality Incentives Program to pay for the waste pits of hog farms, Bentlage said.

That implicitly subsidized a glut of cheap protein that forced small producers out of business, Frerick said.

"It wasn't like hog farmers going bankrupt all of a sudden," he said. "You just see margins shrink and shrink and shrink."

A similar process happened in neighboring Missouri, which had 23,000 hog producers in 1985. Three decades later, that number was at 2,600.

"And that wasn't because 20,000 people decided to get out," said Gibbons. "Corporations took over the marketplace, production and processing and put all those family farmers out of business."

By 2012, the main meatpacking companies - Tyson, Cargill, Smithfield and JBS - had maneuvered the nation's chicken, pork and dairy farmers into a relationship "worse in certain respects than sharecropping," as Lina Khan, now the Biden-appointed chair of the Federal Trade Commission, wrote in an article in Washington Monthly that year.

During the Obama presidency, the meat industry lobbied hard against two specific initiatives aimed at bringing more competition to meat markets: one that would have empowered the USDA to fight unfair or deceptive practices by packers and another mandating country-of-origin labeling.

"In a time of down cattle markets, the last thing USDA needs to do is limit opportunity," National Cattlemen's Beef Association President Tracy Brunner argued in a statement at the time. "The fact of the matter is: We don't trust the government to meddle in the marketplace."

The North American Meat Institute, which represents large meatpackers, tends to argue that consolidation means better prices and quality for consumers and helps the environment.

"The notion that smaller scale operations are more environmentally friendly and sustainable than larger scale is not supported by the data which suggests that efficiency is the most important factor," reads one of the North American Meat Institute's "Media Mythcrushers."

In 2015, after the World Trade Organization sided with Canada and Mexico in their own campaign against country-of-origin labels, Congress repealed them in a spending bill.

Tom Vilsack, Biden's Agriculture secretary who also led the USDA at the time under Obama, told the agency to immediately stand down.

For cattle farmer Bentlage, the climbing prices he had seen the previous four years collapsed, and they have never recovered.

In 2014, Bentlage said he made $518 a head for his cows. Now, it's somewhere between $80 and $125.

"That means a hundred cows would make you $51,000 in 2014. This year, they're projecting it will be maybe $12,500," Bentlage said.

"That's still at the poverty level," he added.

Biden highlighted soaring meat prices for consumers in a speech earlier this month. Beef prices rose 20 percent between October 2020 and October 2021, according to federal data.

"Capitalism without competition" is "exploitation," Biden said, turning the table over to a cattle rancher who complained of "take it or leave it" prices from meatpackers.

On Capitol Hill, a number of bills have been introduced to target what many small meat farmers see as the worst features of corporate control.

Sens. Jon Tester (D-Mont.) and Chuck Grassley (R-Iowa) introduced a bill that would force cattle processors to buy at least 50 percent of their cows on open "spot" markets rather than the off-market deals that account for 90 percent of their purchases now.

A progressive-backed bill sponsored by Sen. Cory Booker (D-N.J.) and Rep. Ro Khanna (D-Calif.) also seeks to crack down on meat monopolies and place a moratorium on consolidated factory farms.

And in September, Tester and Booker joined South Dakota's two GOP senators, John Thune and Mike Rounds, to introduce the American Beef Labeling Act, which would reinstate certificate-of-origin labeling.

"Montana ranchers raise the best cattle in the world, and it's time American families are guaranteed the right to know whether their beef is from Broadus or Brazil," Tester said in a statement.

Ranchers have welcomed many elements of Biden's order, including subsidies for new slaughterhouses and reforms to labeling laws.

But Gibbons and others consider the measures insufficient without a long-term solution to break up what he called the "meat cartels."

Some ideas include prohibiting those who own livestock from slaughtering it themselves or limiting meatpackers to one line of protein such as chicken or beef.

For Bentlage, 66, he's eyeing the generations to come and the future of his own ranch in Missouri.

He said he's trying to help a young neighbor purchase his property. Otherwise, he worries, it's likely to be "sucked up by big corporate farmers."