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How Big Pork Screws Small Towns


Business  (tags: abuse, americans, business, consumers, corporate, corruption, dishonesty, economy, farming, food source, government, labor, law, lies, marketing, money, politics, society )

Kit
- 686 days ago - motherjones.com
I've argued often that the food system functions like an economic sieve, draining away wealth. -- Chart and graphs show where the money goes,



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Teresa W. (691)
Monday November 12, 2012, 6:33 am
thank you for sharing this
 

Kit B. (276)
Monday November 12, 2012, 6:34 am
(Photo Credit: Green Fire Productions/Flickr)

I've argued often that the food system functions like an economic sieve, draining away wealth. Imagine, say, a suburb served by a handful of fast-food chains plus a supermarket or Walmart or two. Profits from residents' food dollars go to distant shareholders; what's left behind are essentially low-skill, low-wage clerical jobs and mountains of generally low-quality, health-ruining food.

But the food system's secret scandal is that it's economically extractive in farming communities areas, too—and especially in the places where industrial agriculture is most established and intensive. I first learned about this surprising fact from the Minnesota-based community-economics expert Ken Meter, specifially this 2001 study on a farm-heavy region of Minnesota. And now Food and Water Watch, working with the University of Tennessee's Agricultural Policy Analysis Center, has come out with an excellent new report documenting the food industry's effect on several ag-intense regions, with the main spotlight on the hog-centric counties of Iowa, the nation's leading hog-producing state.

The structure of Iowa's hog farming went through a dramatic change starting in the early 1980s. As this FWW chart show, first, the number of hog farms in the state declined.
***Graph at Visit Site***

At the same time, the toal number of hogs raised in th state nearly doubled.
****Graph at Visit Site ***

Accordingly, the remaining hog farms scaled up dramatically, growing by a factor of nearly 11 between 1982 and 2007:
***** Graph at Visit Site ****

What caused this epochal change? According FWW's analysis, it was driven by the increasing consolidation of hog packing. Packers are the companies that buy hogs from farmers, slaughter them, and cut them into chops, bacon, and the like. In the 1980s, the meat-packing industry began what economists call a consolidation wave—big companies buying smaller companies and consolidating operations into bigger and bigger processing facilities. As the pork packers got bigger and bigger, they were able to use their market weight to force down the per-pound price they paid farmers for their hogs.

To assess the level of an industry's concentration, economists use a measure they call "CR4"—the percentage of a market controlled by the four biggest companies. "In most sectors of the US economy, the four largest firms control between 40 and 45 percent of the market," FWW writes. At CR4 levels above 40 or so, the reports continues, markets start to lose competitiveness—the big firms have power to dictate terms to their suppliers, in this case, farmers. Look at how CR4 has grown nationally since 1982:
**********Graph at Visit Site********

In Iowa, the situation is even more stark. CR4 levels have edged down slightly in recent years, but remain near 90 percent. That means that many hog farmers must either sell to one of the Big Four—Smithfield, Tyson, JBS, and Cargill—or exit the business altogether. As noted above, 80 percent of the farms selling hogs in Iowa in 1982 took the latter route. Most of the rest of them scaled up—and saw the prices paid them by the Big Four plunge. As the next chart shows, the real (inflation-adjusted) price farmers get for each hog fell by more than half between 1982 and 2007.
*************Graph at Visit Site****

Now here's the kicker. When you look at the state as a whole, Iowa's hog farmers were bringing in more money, in inflation-adjusted terms, in 1982, when they raised 23.8 million hogs, than they did in 2007, when they raised 47.3 million hogs.
********Graph at Visit Site ************

This is a great deal for the Big Four packers—they're getting nearly twice the pork, for less total money. For the farmers, it's a different story.

Now, Iowa's hog farming used to be widely distributed across the state—most farms raised some hogs along with corn, soy, and other crops. As farms either exited hog production altogether or scaled up dramatically, hog farming got more and more concentrated into a handful of counties.You might think that people who live in these hog-centric counties got some economic benefit from the vast scaling up of hog production. At least you'd hope so—as I learned on a 2007 trip through one of those counties, Hardin (report here), it's no fun to live in industrial-hog country. Such areas are marked by clusters of bleak hog houses, each containing as many as 2,400 animals—as well as fetid, foul-smelling manure cesspools (known as "lagoons") and horrific periodic spraying of nearby fields with liquid shit rife with antibiotic-resistant bacteria. A recent study from University of North Carolina researcher Steve Wing showed that people who live within smelling distance of industrial-scale hog farms have higher incidences of high blood pressure.

Well, Food and Water Watch found that hog-heavy Iowa counties don't do better economically than other counties—the opposite, in fact. The next chart compares real median annual household incomes in hog-heavy counties (based on the total number of hogs sold each year) with the statewide average.

Note that in '82, hog-heavy counties had slightly higher-than-average median incomes. After 25 years of scaling up, that reversed itself. Overall, the state's average median income rose by 14.5 percent over the time period, while median incomes in the state's hog-intense counties grew by just 10 percent.

Food and Water Watch also finds evidence of growing inequality in the hog counties—while real median incomes grew by 10 percent between '82 and '07, average incomes jumped by about a third. "The rise in real per capita income alongside a less robust increase in median household income suggests that earnings are being captured by a smaller portion of more well-off people in counties with high hog sales," FWW writes.

Why the dismal economic performance in the counties that house Iowa's booming pork industry? It costs money to run a big farm, and the larger the farm, the less of those farm expenditures go to local business, FWW found. Large farms buy about a third less per hog worth of goods from local businesses than small farms, the report shows. And that's a third less money circulating through local economies, building wealth and creating jobs. The study found that for the average Iowa county, the average number of non-farm local businesses grew by about 30 percent between 1982 and 2007. For the hog-heavy counties, though, the average number of such establishments fell by more than 10 percent.

Not surprisingly, while the average Iowa county saw robust growth in total jobs over that period, for hog-heavy counties, total jobs dropped.

I would be remiss if I didn't mention the economic story for meatpacking and processing workers—the people who slaughter, cut, and package Iowa's vast annual hog crop. As Ted Genoways' blockbuster 2011 Mother Jones piece shows n graphic detail, conditions have grown quite grom on the slaughterhouse floor. The following chart looks at real annual earnings for packers (workers who slaughter live animals) and processing workers (people who turn carcasses into sellable products). This is a story of full-on immiseration—what were once middle-class jobs now pay poverty-level wages.

Here's how FWW sums the situation up:


Counties with more hog sales and larger farms tend to have lower total incomes, slower income growth, fewer Main Street businesses and less retail activity. General employment levels have suffered, wages in meatpacking have declined and farm job opportunities are more difficult to find. In spite of what Big Pork boosters have said, there is little evidence that the trends in Iowa hog production have been good for Iowa’s rural economies.

Now, in their defense, the meatpacking giants often counter that the changes described here are necessary for the provision of cheap food. To deliver you a bountiful supply of pork chops, farmers and workers must be squeezed. But here, too, FWW brings a cold slap of reality. The report finds that when hog prices rise, the pork packers tend to pass on the increase to consumers "completely and immediately"; but when they fall, as they have for much of the past 25 years, the companies tend to pocket much of the difference as profit, passing only some on to consumers.

So, in addition to all the environmental damage associated with factory-scale hog farming, it's an economic disaster, too—unless you happen to be a shareholder in one of the Big Four pork packers.

********Charts/Graphs for full article at Visit Site ************

by Tom Philpott -- Food and Ag Blogger | Mother Jones Magazine
 

Winn Adams (192)
Monday November 12, 2012, 11:46 am
Thanks
 

Christeen Anderson (500)
Monday November 12, 2012, 12:32 pm
Thank you for this very informative article.
 

Marie Therese Hanulak (30)
Monday November 12, 2012, 3:39 pm
Those animals do not deserve to be food for human consumption. Everyone involved in the process is evil.
 

Mary Donnelly (47)
Monday November 12, 2012, 5:58 pm
Thanks Kit.

This post is one of the best I've read detailing the evils of excessive concentration in an industry. This example comes from the USA, the richest nation on the planet. Similar problems are occurring elsewhere, e.g. Australia. I shudder to think what happens in "less developed" countries.

Something not mentioned in that post was the spillover social impact,.In that 50 years ago most city dwellers had friends and relations living "on the land";, with whom thy took vacations, today they do not. Consequently many Australians have no idea where their food comes from, who controls it, or what processes are required to get it to their tables. Frequently when you are "on the land", to get milk for your coffe you go out and milk a cow, not run to the supermarket 25 miles away to buy a carton of it.

Increasing urbanisation has its costs.
 

JL A. (275)
Monday November 12, 2012, 6:29 pm
In the 1980's in CA news articles were expressing concerns of how much of valley agricultural land was becoming owned by the Japanese, concurrent with the start of this story in IA. Related stories are water wars and ground water depletion with the competition for human consumption. Last year there were petitions to USDA over requesting price fixing investigations--I think on beef, but it may have been poultry--where the big four were unwilling to pay the smaller farmers even close to what it took to raise it.

Bigger is not necessarily better and consolidation has its costs for sure.
 

Anne K. (129)
Monday November 12, 2012, 6:55 pm
Read this in Mother Jones this morning. Thanks for posting, Kit. One of the most shocking and disturbing graphs in the article is the one that shows how much humans are paid to murder pigs! Why not have convicted murderers serving life terms kill the pigs for free, instead of paying people to slit the throats of pigs -and they are paid better salaries than a lot of us earn! Better yet, stop factory farming and killing innocent beings for the pleasure of human taste buds!
 

Kit B. (276)
Monday November 12, 2012, 7:05 pm

Thanks, for some excellent comments. I doubt that we are suddenly going to become a vegetarian country, intellectually I accept that. Still, the more we learn about our food industry, the more informed we are as a global community about how our food is processed, what our food is and how it is grown, the better chance we have of changing this. This is neither just a question of economics, nor an emotional one of what we eat.

In 1905 we began a journey of awareness with Upton Sinclair in "The Jungle".... now we have completed a circle and are back to lack of information, regulation and understanding of this complex industry. We must learn about our food sources.
 

Carole K. (200)
Monday November 12, 2012, 7:24 pm
"A cold slap of reality" is that the state where I was born, educated & came of age has become "a fetid, foul-smelling manure cesspool" thanks to factory farming. The whole state reeks of it & local officials often take a blind eye to the fact that feedlot run-off makes it's way into residential drinking water. Some of my childhood acquaintances remain on the farm & delude themselves by calling what they do "family farming" (after all, "this land has been in the family for 100 yrs., we are a centuryfarm"). The difference between a family farm & a factory farm is today non-existent. For the most part ,the same deplorable conditions & despicable methods are employed whether the farm is family owned or corporately owned. The idealic farm of my childhood has faded away into oblivion & few mourn the loss as our family does. Excellent article, Kit!
 

Anne K. (129)
Monday November 12, 2012, 7:42 pm
Kit - "I doubt that we are suddenly going to become a vegetarian country, intellectually I accept that."

This is still very much a country of racism, bigotry, xenophobia, ignorance, and "generic hatred". I don't expect Americans to become vegetarians any more than I expect the majority to care about soldiers in Afghanistan going postal and shooting women and children in their homes in the middle of the night.
 

Arthur Riding (32)
Monday November 12, 2012, 9:33 pm
Good article Kit, an excellent share and a concise and very instructive case study of how big food companies have taken over much of the country, indeed many if not most countries in the Western world. Of course it is not just pig farming and not just Iowa, this situation represents a trend across all sectors of the food industry. What makes it worse is that not only are the local communities suffering whilst the big food companies live high on the hog (pun intended) but the average consumer is also getting shafted. People think, cheap food, must be good, well, no way is it good news especially when it is at the cost of our health. The food might be sometimes cheaper but the total cost to us rises tremendously with increasing medical costs due to extremely unhealthy intensive farming methods and processes - including the seeming ever increasing rise of cancer, of different sorts. It is bad even for vegetarians as many crops suffer the same problems, especially crops like corn and soya. For many cancers, it is modern farming methods, including over-use of pesticides, chemicals, antibiotics etc, which cause the majority of our illnesses. It often seems like most people have a 'death wish' because of what they insist on eating and drinking but until people learn to ignore, or refute, the propaganda from the food and drink industries, we will continue to die comparatively young. A very sorry state of affairs.
 

Jennifer C. (172)
Monday November 12, 2012, 11:13 pm
Thanks for this article.
 

Ruth S. (304)
Tuesday November 13, 2012, 6:45 am
Animals are our friends not food!
 

Susanne R. (249)
Tuesday November 13, 2012, 7:43 am
It was difficult for me to process the information in this article because I once viewed a video of pigs being slaughtered that was posted here on Care2. I'm not surprised that an industry with so little conscience and so much greed would treat its employees and the environment so poorly.
 

Kit B. (276)
Tuesday November 13, 2012, 10:26 am

Unfortunately Ann is correct as are others, we turn away from the truth, something we don't want to have to think about. It's unpleasant to know that animals are slaughtered and badly abused. It's some how unpatriotic to discuss the war of drone attacks with more slaughter of innocents. Look we must, if we expect to change any thing, Washington only moves when we push, and push.

Thanks again for interesting comments. I have said before about the seal slaughters, it's time to find a new line of work, once seals we needed for food and even clothing for warmth. Those needs are in the past, we need to re-think every thing as we move into this new century.
 

Jaime A. (32)
Tuesday November 13, 2012, 1:28 pm
Thanks for this article.!!
 

Tal H. (8)
Tuesday November 13, 2012, 5:20 pm
Free range all the way...the rest are inhumane!
 

Gloria picchetti (291)
Tuesday November 13, 2012, 6:09 pm
I think I will have eggs & bacon this week. There is a restaurant in the neighborhod that make all kind of fake meat out of soy. So it won't be real bacon. It will look like it & taste like it!
 

Lois Jordan (56)
Wednesday November 14, 2012, 3:28 pm
Noted. Thanks, Kit. It seems that smaller farms are better for everyone: consumers, animals, the environment...everyone but the profit driven owner. I'm just sick of those who constantly demand "more"---somehow we must relearn that "less is more" and to regard people over profits.
 

Sergio Padilla (62)
Thursday November 15, 2012, 12:48 pm
Thanks for posting
 

Nia M. (55)
Saturday November 17, 2012, 6:49 pm
Well written article, very sad.
 
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