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Feuding farmers; other news

(Friday, Sept. 30, 2005 -- CropChoice news) --

1. Bill means Feds will inspect grains
2. DTN five-part series: Feuding farmers
3. Johanns signals U.S. subsidies must change in new farm bill
4. The end of cheap oil
5. Woodbury County Iowa offers tax breaks to organic farmers, first in U.S.
6. Cargill's dominance a concern

1. Bill means Feds will inspect grains

Jerry Hagstrom DTN Political Correspondent, 09/28/05

WASHINGTON (DTN) -- The House Wednesday passed a 10-year reauthorization of the 1916 U.S. Grain Standards Act that empowers the Federal Grain Inspection Service to establish and maintain official grades for the nation's crop production.

According to the bill, which was identical to the bill passed last week by the Senate, the FGIS will promote the uniform application of official grades, provide for the official weighing and grading at export locations, provide federal oversight of weighing and grading done by states and investigate complaints or discrepancies reported by importers.

Since the House and Senate bills are identical, they will not require a conference and the measure can be sent to President Bush to be signed into law.

The House Agriculture Committee had passed a bill July 27 that would have allowed private companies to conduct inspections at export locations. That bill was pulled from floor consideration and revised after Senate Agriculture Committee ranking member Tom Harkin, D-Iowa, announced he would oppose privatization and the Senate passed a bill that did not allow it.

The American Corn Growers Association, the National Farmers Union, labor unions and some importers of U.S. grain said that they feared foreign countries would not accept privately inspected U.S. grain.

Harkin, who praised the House action, said as a House member, he played a role in amending the act in 1976 to require that USDA personnel inspect grain exports.

Revelations that private inspection companies were misrepresenting the weight and quality of grain sold to foreign customers had resulted in 60 federal indictments and unknown losses of export business for American farmers and businesses, Harkin said.

House Agriculture Committee Chairman Bob Goodlatte, R-Va., and House Agriculture General Farm Commodities and Risk Management Subcommittee Chairman Jerry Moran, R-Kansas, said they were pleased the bill had passed.

2. Feuding Farmers 1: Overview

DTN, 09/26/05

Why has the discord among agricultural producers and the groups representing them become so much more discordant in recent years? And are these increasingly cantankerous conflicts a good thing for agriculture, or a bad thing? This week DTN tackles these questions in a five-part series. This first story provides an overview of the problem.

By Tony Dreibus DTN Feature Editor

WASHINGTON (DTN) -- When the Central American Free Trade Agreement came before Congress earlier this year, the nation's two largest cattle groups took diametrically opposed positions on it. The National Cattlemen's Beef Association called it a "great deal for the U.S. cattle industry." R-CALF USA termed it a "bad deal for U.S. cattle producers."

For as long as there have been coffee shops, maybe longer, ranchers and farmers have argued. They have divided into camps, factions and interest groups and disagreed about politics, prices, trade, government support, big corporations, you name it. Disagreements in farm country are nothing new.

What is new is the degree of divisiveness and animosity among farmers and ranchers and the groups that represent them. On a number of key issues, including trade liberalization and the proper roles in agriculture of corporations and government, producers are divided into bitterly warring camps that can be counted on to wage battle after battle in the courts, the Congress and the op-ed pages.

"The camps, if you will, are much more combative and contentious than they were 10 or 15 years ago," said Clayton Yeutter, an agriculture and trade lawyer with the Washington firm of Hogan & Hartson who served in the 1980s and early '90s as U.S. Trade Representative and Secretary of Agriculture.

On one level, this contentiousness is natural and healthy, a simple matter of people with different views exercising their rights of free speech and association -- and in the process advancing the pursuit of truth and serving as part of the American system of checks and balances.

On another level, however, the clamor could undermine the political clout of American agriculture, already weakened by the dramatic decline in producers' numbers in recent decades. When producers speak with one voice and are effective in forming coalitions with other interests, they still wield considerable influence. When they're divided, their cause is weakened, and with such important policy issues as the debate over the 2007 farm bill looming, that weakness puts the countryside at risk.

It's that risk that has led DTN to spend the next several days examining the growing divisiveness, along with its causes and its implications for the future. In this first of five stories, we will provide an overview of the problem. The second, third and fourth stories, which will run tomorrow, Wednesday and Thursday, will deal with the wars between NCBA and R-Calf, the American Farm Bureau Federation and the National Farmers' Union, and the National Corn Growers Association and the American Corn Growers Association. In the final article on Friday, we will examine some of the efforts groups are making to find common ground.

Foreign trade is perhaps the most important fault line dividing farmers and the groups that represent them, with one side seeing trade liberalization as the problem and the other seeing it as the solution. But trade isn't the only point of division. Some producers want strict limits on the role of corporations, including meat packers, in agriculture, while others do not. Some think government farm programs should be aimed more at supporting commodity prices whereas others accept the trend toward supporting farmers' incomes instead. Some want mandatory country-of-origin labeling on key food products while others prefer voluntary COOL.

These differing views are rooted in deeper, philosophical divisions. Producers are split over such basic questions as how much government intervention is needed in agriculture and how much can be left to the workings of the free market, over whether farming is more of a way of life that society must protect or more of a business, with winners and losers decided by the marketplace.

Experts pondering the reasons for the growing polarization say agriculture is part of a broader trend. "The level of acrimony is clearly higher today for everybody, not just agriculture groups, but for all segments of the American economy than it was 15 or 20 years ago," Yeutter told DTN. "Congress itself is more polarized, the country is more polarized than it was in those days, there is less bipartisanship than there was then and inevitably the commodity groups get labeled as being in one camp or another."

Convulsive changes in agriculture itself no doubt also help explain the splits. In recent decades producers have had to adjust to increasing consolidation and specialization; rapidly rising costs of land, energy and equipment; and, perhaps most notably, the convulsive consequences of a major switch in government farm policy in the 1970s. To vastly oversimplify this switch: From the New Deal through the second term of President Richard Nixon, the government's emphasis was on supporting farmers by preventing overproduction or dealing with its consequences. After the "Great Grain Robbery" -- the initial, stealthy wheat purchases by the Soviet Union in the early 1970s that led to a sharp rise in U.S. food prices -- government policy changed to emphasize maximum farm production: "fence-row-to-fence-row-planting," as Secretary of Agriculture Earl Butz put it. The idea was to have low food prices at home for consumers, sell any crop surpluses overseas (hence the increased emphasis on trade) and if farmers still needed support, give it to them through direct subsidies, not by propping up market prices.

Initially, this policy switch united farm country. Indeed, the time when we came closest to having producers on the same wavelength, Yeutter said, "was in the '70s when the Russian markets opened up and when our ag exports began to expand in a major way." These were, he said, the "glory years of American agriculture," with both exports and prices rising.

But in the 1980s farm prices fell and many overleveraged producers went under. Opening overseas markets to U.S. farm products and keeping them open proved more difficult for U.S. trade negotiators than trade proponents had anticipated. The Europeans and Japanese, among others, fought to keep agricultural trade out of the broad multinational trade deals overseen by the General Agreement on Trade and Tariffs and its successor, the World Trade Organization; it has only been in the latest, Doha Round of talks that agriculture has been front and center. Meanwhile, some American farmers became disillusioned with regional arrangements like the North American Free Trade Agreement.

"What we find amongst the membership of ACGA, and I know it's true, is farmers haven't seen any benefits," said David Senter, director of legislative affairs for the American Corn Growers Association. Unlike the larger National Corn Growers Association, ACGA has opposed regional trade deals and fought unsuccessfully against conferring normal trade status on China, which ACGA sees as a competitor rather than a potential market.

Disillusionment with trade liberalization and frustration with foreign competition led to the founding of one new group that has proved especially potent, R-Calf United Stockgrowers of America. Most recently R-Calf filed a lawsuit that kept the border closed to Canadian cattle for several months before an appeals court intervened. Agriculture Secretary Mike Johanns, the defendant in that lawsuit, may have paid R-Calf an inadvertent compliment (i.e., the group has gotten his attention) in an interview with DTN, saying R-Calf's only missions are "to raise money and file lawsuits." Whatever its missions, the group clearly is on the secretary's radar screen.

R-Calf repays the favor, with R-Calf chief executive officer Bill Bullard saying the group's dealings with the secretary can only be described as "plain frustration." The U.S. Trade Representative's office is much more willing to listen to R-Calf, Bullard said.

While swiping at R-Calf, Johanns also said giving growers a choice is healthy for the American agricultural landscape. "A diversity of interests is not a bad thing," he said. "I welcome that. People should have a right to oppose what we do at the federal, state, city level."

And despite the philosophical differences and fighting and name-calling, the groups do occasionally find common ground, ACGA's Senter said. "For instance both corn groups support ethanol, biodiesel, renewable energy, so there are areas where everybody comes together to speak as one. When there's a drought everybody gets together and supports government action. But when you get down to commodity programs (and) trade, there is a difference. And there should be a choice for farmers and there should be a debate."

The danger is that a divided industry has less influence over public policy. Yeutter saw that as agriculture secretary during the negotiations over the 1990 farm bill. "We worked closely with the Senate Ag Committee at that time and there were instances in which the divisiveness of the groups simply caused the agriculture committee to punt on the issue, if you will. Their view being, 'Look, if the industry can't agree, why should we take that burden on our shoulders? Let's just move that issue, whatever it may be to the back burner.'"

Added Yeutter, "The tendency is to say until you folks get your act together we're not going to spend time on this. I've operated on that basis as trade negotiator when the industry didn't have solid position. I've gone back and said we've got so many trade issues on our agenda we can't take time to sort out differences within the industry. Once you achieve something approaching a consensus we'll pick up an issue and do battle for you."

Agriculture Secretary Mike Johanns will probably take that approach as negotiations for the 2007 farm bill start, Yeutter said; agriculture groups need to be on the same page before the World Trade Organization talks wrap up in Hong Kong this December.

Feuding Farmers 2: NCBA vs. R-CALF 09/27 09:00

Why has the discourse among agricultural producers and the groups representing them become so much more discordant in recent years? And are these increasingly cantankerous conflicts a good thing for agriculture, or a bad thing? This week DTN tackles these questions in a five-part series. This second story covers the divide between NCBA and R-CALF USA.

By Mike McGinnis DTN Staff Reporter

DES MOINES (DTN) -- The cattle industry's two largest producer groups are starting to realize that their bitter battles are undermining cattlemen's political clout.

But their approaches to issues such as trade and the role of meat packers are so different -- and each side's belief in its own approach so passionate -- that narrowing the differences isn't proving easy.

The best the National Cattlemen's Beef Association and R-CALF USA have been able to do is to appear on the same platform in three public debates and to soften their rhetoric a bit in talking about each other.

"We (NCBA and R-CALF leaders) hope events like these debates can end the divisiveness," said NCBA President Jim McAdams.

"As long as we're fragmented it's unlikely we will be able to change the course of our industry," said R-CALF Chief Executive Officer Bill Bullard.

That the two groups are even looking for common ground is remarkable, given their history of brawling. Indeed, few feuds in farmland have been as clear-cut, as consequential or as caustic as the one between R-CALF and NCBA.

The two group's differences are many and varied, but at bottom they boil down to two issues -- trade and the role of meat packers.

NCBA believes the key to cattlemen's prosperity is to increase consumer demand for beef, in the U.S. and overseas, and in that battle NCBA sees the meat packer as an ally. R-CALF believes the packer is the enemy and the key to cattlemen's prosperity is opposing trade liberalization.

These philosophical differences shone through in recent DTN interviews with NCBA's McAdams and R-CALF's Bullard, as well as with producer members of both organizations.

"The future of this industry relies on our ability to grow (beef) demand to the point where we can produce more and sell it for ever-increasing prices, both here at home and abroad," McAdams said. "And our biggest competition is poultry, not foreign trade."

As for packers, McAdams said "We needed to have a better relationship with the end users and retailers, and the packers were the filterers to our end users."

NCBA was born in 1996, the result of a merger of the National Cattlemen's Association and the Federation of State Beef Councils. The aim of the merger was to create a forum where the industry could come together in support of common solutions; in effect, NCBA was formed in hopes of gaining a better relationship with meatpacking companies.

NCBA has 25,000 dues-paying members. Two of these are big meatpackers, Cargill and Tyson, both represented on NCBA's board. There are another 20 companies that participate in the checkoff program NCBA administers, and those 20 include packers, processors, retailers and food-service companies. In addition, groups affiliated with NCBA that represent both cattle producers and meat packers have 235,000 members.

R-CALF USA is an acronym for Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America. It was founded in 1998 for the purpose of bringing anti-dumping trade cases against Canada and Mexico and a countervailing-duty case against Canada. It morphed into a membership organization in 1999 and now has 18,000 members.

None are meatpackers; R-CALF is proud to be the group representing live-cattle producers exclusively: "That is the void R-CALF has filled," Bullard said, adding: "Let's just put it this way, we've never had a meatpacking company call and ask to be a member."

As for trade, Leo McDonnell, one of R-CALF's founders, declared: "The most important thing to the future of the cattle industry is how we address trade liberalization. Demand and even COOL [mandatory country-of-origin labeling] won't protect us from damaging international trade practices."

All the other differences between the groups flow from these key beliefs on trade and packers.

R-CALF fights to keep the border closed to Canadian cattle, citing the threat of bovine spongiform encephalopathy. NCBA wants the border open, seeing North America as having one, integrated beef industry.

R-CALF favors mandatory country-of-origin labeling for beef, hoping that U.S. consumers will "buy American" if they know which beef is American. NCBA doubts consumers care and sees mandatory COOL labeling as adding to the industry's costs.

R-CALF has fought in both the courts and Congress to ban packer ownership of cattle, winning some battles along the way but so far, at least, losing the war. NCBA, with its view that the packer is an ally in the all-important quest for the hearts and minds of consumers, opposes such a ban.

The one point of common ground is their support of the beef checkoff, which uses government-mandated contributions from cattlemen for beef research and promotion. NCBA's Beef Board administers the checkoff. R-CALF, while preferring more producer say over the contributions, supports the checkoff's research efforts.

"We all need to work together to produce a safe product and that is one area where the checkoff has done a great job of bringing all the segments of the industry together," McDonnell said.

Yet if the leaders of the two groups sound at times like they're mellowing, the same cannot be said of many of the grass-roots members.

"They (NCBA) haven't done diddly-do for us," said Edmund Danzer, a western Iowa producer and former NCBA member turned R-CALF member. R-CALF, on the other hand, pushed to close the Canadian border, and "my cattle were worth more when R-CALF kept the Canadian border closed," Danzer said.

Danzer and his son raise and pasture a purebred Charolais herd and feed 1,000 head of cattle; the younger Danzer also custom-feeds 3,000 head. They not only dislike NCBA's stance on trade, but especially dislike its ties with meatpackers and its having former USDA officials on its board.

"Who do you think they (NCBA) are going to help? It's the American Meat Institute, which represents the meatpackers," Danzer said. The only time packers buy early in the week is "when they can steal them (cattle) from us. This just shows the meatpackers, USDA and NCBA are in bed together."

NCBA members are not quite as vitriolic in assessing R-CALF but their disdain is evident.

Harry Knobbe, a longtime NCBA member, cattle feeder and farmer from West Point, Neb., said R-CALF just doesn't have the resources to represent cattle producers.

NCBA, with a Washington staff of 18, "has a voice in Washington, D.C., on estate-tax relief, health-care deductions, property rights, capital-gains reform and on and on," Knobbe said. "How many people does R-CALF have there? One, maybe more, but not many. How do you address all of the Congressmen and Senators with one or two people?"

There are, of course, members of both groups with more moderate views.

One is Phil Trowbridge, an NCBA member and well respected operator of 175 purebred Angus cows in Ghent, N.Y.

"At times I'm not sure either side is right," Trowbridge said. "I feel bad closing the Canadian border because we know from Japan closing their border to us what that does. However, opening the border brings more cattle in. We all need to adjust and get along better."

Nancy Larraine Hoffman is a northeast New York NCBA member who served for 20 years as a Democratic state senator. She praises NCBA for being articulate about raising cattle as a lifestyle, but as the owner of a 35-50 head cow herd emphasizing natural beef, she favors mandatory COOL.

"The NCBA has moderated on the COOL issue, they don't support it but I have testified strongly that we should have a good COOL program," Hoffman said. "I think NCBA is coming to an understanding they need to consider for small-scale operators that rely on a niche market."

At least one young cow-calf operator came away from the recent NCBA-R-CALF debate in New York unsure which group to join.

"I believe just as the steelworkers' union and United Auto Workers we need to come together as a beef industry and work together," Kyle Lowery said. "With agriculture making up only 2 percent of the population, oftentimes politicians forget who we are and this industry can't afford that."

And while the groups are never likely to see eye to eye on some critical issues, the debates are showing the groups' leaders they have more in common than they thought. "He's the kind of guy you would want for your neighbor," McDonnell said of McAdams at a post-debate beef barbecue.

Feuding Farmers 3: NFU, AFBF

09/28 09:35

Why has the discourse among agricultural producers and the groups representing them become so much more discordant in recent years? And are these increasingly cantankerous conflicts a good thing for agriculture, or a bad thing? This week DTN tackles these questions in a five-part series. This third story covers the divide between AFBF and NFU.

By Todd Neeley DTN Staff Reporter

OMAHA (DTN) -- The statement of beliefs on the website of the National Farmers Union uses the words "community" or "communities" four times.

The comparable statement on the website of the American Farm Bureau Federation uses the words "freedom" or "free" eight times.

As if to emphasize these points of departure, AFBF's site doesn't mention community and NFU's doesn't mention freedom.

Of all the divisions in agriculture, the ABFB-NFU split is not only the oldest but one of the most deeply philosophically rooted.

"We believe in the free-enterprise system of having the opportunity to succeed and the opportunity to fail," said Daykin, Neb., farmer and longtime AFBF member Dave Endorf. A government safety net is OK by the AFBF, but not if it distorts the market, said Wellesley College political scientist Robert Paarlberg, who has studied both groups.

NFU members, by contrast, believe "the government program totally determines what my income is going to be," in the words of John Dittrich, a Tilden, Neb., farmer and NFU member. That's because, in his view, the laws of supply and demand don't work. "With agriculture, in response to low prices, farmers don't reduce production," Dittrich said "People don't eat more because prices are low."

Considering these philosophical differences, it's not surprising that AFBF nine years ago favored the so-called Freedom to Farm law, which gave farmers more planting flexibility and ended some supply controls, while NFU opposed it. Nor is it surprising that AFBF backed the Central American Free Trade Agreement while NFU opposed it.

And while there are plenty of Democrats who belong to AFBF and plenty of Republicans who are members of NFU, former agriculture secretary Dan Glickman said it was his experience that NFU tends to support the Democratic Party and AFBF falls on the Republican side.

Wellesley's Paarlberg said smaller farmers who typically run "higher-cost, less-efficient" farms tend to support NFU, while the large, corporate farm operators usually align themselves with AFBF.

"The policies endorsed by Farm Bureau are something corporate entities are fairly comfortable with," Paarlberg said. "Those policies that Farmers Union supports sound good to liberal activist groups that are trying to preserve the rural tradition in America."

AFBF and NFU do have some things in common. Both groups have been around for decades: NFU was founded in 1902, AFBF in 1919. Both represent the whole range of agricultural producers, not producers of specific commodities. Reflecting this breadth, both have large memberships: AFBF claims 5.6 million members, 1.8 million of whom are producers. NFU claims 300,000.

And the two groups do work together from time to time, including on the recent energy bill.

"We have to have good working relationships with farm bureau lobbyists," said Tom Buis, a Washington lobbyist for NFU. "I think everyone shares the same goal of improving life in rural America."

Mark Maslyn, executive director of AFBF's public policy team in Washington, said Washington politics are too ferocious not to form partnerships. "We do have differences in public policy issues. I think it's to agriculture's advantage to have a broad perspective on issues, but nothing gets done in this town without coalitions."

But when they disagree, the disagreements can be sharp. At a public meeting in Omaha recently, John Hansen, president of the Nebraska Farmers Union, called the passage of the Central American Free Trade Agreement and recent suggestions to cut farm subsidies, "the legalized looting of rural America."

NFU lobbyist Buis said, "There were no benefits from passing CAFTA. Those countries have very little spendable money and low average wages."

AFBF says CAFTA gives producers a competitive advantage in exports to CAFTA nations over South America, the European Union and Canada, it eliminates all tariffs and U.S. farmers stand to gain $1.5 billion in additional exports by the time CAFTA expires.

Maslyn said AFBF believes it's important to find more overseas markets for farmers and to work through any trade inequities, instead of not pursuing agreements at all.

"It is such a competitive world out there, and you see that in our positions on trade," he said. "You can't ignore that. You can't just pretend that doesn't exist. One of the reasons we're so focused on markets overseas is that the world is becoming smaller and more connected. You have to engage those countries in negotiations to maintain a level playing field."

There are also stylistic differences, starting with the inclusion of non-producer members under AFBF's broad tent. Indeed, AFBF's membership of 5.6 million is more than double the number of farms in the country.

"I wish more that all organizations truly were devoted to representing producers and not to try to wear multiple hats where they're representing interests of non-producers," said Nebraska farmer and NFU member Dittrich. "If actual producers were all fighting out our philosophical differences and that was it that would be better for agriculture. But to have these players in the system when a lot of times farmers don't know they're in the system, that's not right."

According to a July/August 2000 article in Multinational Monitor, AFBF national, state and county farm bureaus control more than 50 insurance companies that produce annual revenue of about $6.5 billion and cooperatives producing some $12 billion in revenue.

Richard Oswald, an NFU member in Rock Port, Mo., put it this way: "Farm Bureau is an insurance company with farm roots. Farmers Union is farm roots."

AFBF spokesperson Tracy Grondine said many of the non-producer members are customers of insurance operations by state Farm Bureaus. She said AFBF does have a small stake in a reinsurance company but does not own cooperatives.

Moreover, Grondine said, "Only farmers and ranchers, who go through a credentialing process, can make policy for Farm Bureau. Only farmers and ranchers have a vote on Farm Bureau policy ... AFBF is truly a grassroots organization where our policy is shaped from the bottom up by farmers and ranchers."

Some AFBF members, for their part, dislike what they see as the negativism of NFU.

Nebraska farmer and AFBF member Endorf said he believes NFU has a "negative" view of the state of the industry and often asks "what can the government do for me?" He's particularly turned off by Nebraska Farmers Union President Hansen, who he says does nothing but criticize.

AFBF, on the other hand, is "a proactive organization," Endorf said. "It's a group of positive, forward thinkers. Farmers Union people seem to think, 'ah, the world's just going to the dogs in a hand basket.' They just think everything's bad about agriculture and the world's going to come to an end and agriculture's going to cease to exist as we know it in 10 years. I just don't take that attitude at all. I don't buy it."

Told of the comment, Hansen responded: "Organizations like Farmers Bureau say we're negative because we point out the flaws with the policies they support." He said NFU may often sound negative because the group likes to "say it like it is" and point out the problems with agriculture, as an important step toward positive change.

Despite Dittrich's and Endorf's many differences, they also resemble each other in many ways.

Both operate successful farms that have been in their families for decades, both returned to farming after earning college degrees, both are politically and charitably active in their communities and are forward-thinking in the way they approach agriculture production. Neither claims a monopoly on virtue.

"I absolutely feel that people that are members of the organizations that are taking an opposite tack to Farmers Union, that a number of their members truly believe that they're fighting for the right thing," Dittrich said.

Said Endorf: "There's huge diversity in agriculture. You have to respect and understand it, especially when you're talking about the big picture. You have to recognize that everybody is not on the same page."

But deep down, their ideas differ; they even learned different things from their families.

Dittrich said his late father, Marcellus, taught him to look out for his neighbors.

"He was always concerned about those in need of help," Dittrich said. "He recognized there was a role for government in being a vehicle to help in society, that it can promote the common good."

Endorf said many generations of Endorfs learned and embraced the value of hard work in overcoming the challenges in farming, dating back to his great-grandfather who was a German immigrant.

Or as Paarlberg put it: Farm Bureau wants farmers to be free to sell their products in every possible market and has "learned to live with and promote income safety net systems." Farmers Union wants to save small family farmers but doesn't think that will happen "if you let the markets operate."

Feuding Farmers 4: Corn Groups Differ


Why has the discourse among agricultural producers and the groups representing them become so much more discordant in recent years? And are these increasingly cantankerous conflicts a good thing for agriculture, or a bad thing? This week DTN tackles these questions in a five-part series. This fourth story covers the divide between NCGA and ACGA.

By Susanne Stahl DTN Associate Editor

OMAHA (DTN) -- Ever since the 1950s, a major fault line in the farm-policy debate has been between those who want the government to support farmers' prices and those who want the government to support farmers' incomes.

Starting in the 1980s, the income-support camp has won more and more of the battles, in the process weakening and in some cases terminating price-support programs that dated back to the New Deal.

But a determined and substantial minority continues to push for price supports, and one of the most significant mouthpieces for that minority is the American Corn Growers Association.

ACGA, which claims 14,000 grower members in 35 states, was founded in 1987 in reaction to the 1985 farm bill, which significantly undermined price supports in favor of income supports. The National Corn Growers Association, which was founded in 1957 and claims 32,300 growers in 48 states, backs the trend toward income supports.

Unlike its counterpart in cattle, R-CALF USA, the American Corn Growers Association has not seen much opportunity to file lawsuits challenging policies with which it disagrees, so it has not had the visibility or impact that R-CALF has. What it has provided is intellectual leadership on a range of issues where it disagrees with NCGA, most importantly price supports but also including trade, genetically modified organisms and the role of agribusiness in producer groups.

"Our organization has been quite successful in explaining how the business of agriculture actually functions and why marketing tools and farm policy tools must be available to producers to allow them to extract a fair price out of the marketplace, aside from subsidies," said Madison County, Neb., farmer and former ACGA president Keith Dittrich.

Larry Mitchell, the ACGA's chief executive officer, wonders how much lower the price of corn will go if U.S. farm policy doesn't change drastically. "For some reason," he said, "the policy makers have determined the sole definition of being competitive for agriculture is the cheapest price. So we lower the prices; we lower the prices and we undercut everybody in the world and we devastate our people and we devastate farmers around the globe."

As far as Dittrich is concerned, "What we have isn't working. It hasn't worked for 25 years now. Many, many farmers have left the land and (we're seeing) a lot of consolidation. We're stuck with less-than-$2 corn prices today in a world that makes that just unsustainable ... and our costs are rapidly increasing. I would contend that the policy makers and think tanks that have devised the farm policy we have today have been miserable failures."

To get back at least their cost of production, and preferably a return on management, labor and investment as well, farmers need tools other than subsidies, Dittrich said. They need government price supports.

Before the 1985 farm bill growers had support mechanisms available, such as the non-recourse loan back in the days when it still set a price floor, Dittrich said.

ACGA doesn't think the loan sets a price floor today for two reasons. One is that with the advent of loan deficiency payments, or LDPs, growers are encouraged to market their grain regardless of the price -- and the market has no incentive to go up because it knows it will get the grain anyway. The other complementary reason is that there are no longer any programs to limit supply in the service of driving up price.

To oversimplify, the ACGA's ideal price-support program would begin with USDA setting a loan rate, as it does now. Let's say USDA set the rate at $2 a bushel for corn. A corn grower who didn't like the market price at harvest would borrow against his crop at $2 a bushel and store his grain, just as he does now. Also as now, the grower could forfeit his crop and keep the government's loan if the price continued below the loan rate or sell in the market if the price was higher than the loan rate. But there would be no LDPs or other opportunities to avoid forfeiture, and once the government had the grain it would dole it out to the market in such a way as to ensure the market price didn't fall below $2.

Mitchell, who worked at USDA under the Clinton administration, points out that one of the branches of the Farm Service Agency is still called price support negotiation even though they don't support any prices. "It ought to be (called) income support," he said.

Another way to look at the difference between supports and subsidies is by analogy to the minimum wage and welfare, Dittrich said. "If you increase the minimum wage, you could potentially raise people's wages enough that they would be out of the poverty level and would not need welfare. But if you lowered the minimum wage, you need more welfare -- the same thing happened (in agriculture) in the United States when they lowered ... loan rates and support prices for basic commodities (in the 1985 farm bill)."

The National Corn Growers Association, which sees salvation for corn farmers in the expansion of overseas markets through successful negotiations in the World Trade Organization, worries about the market-distorting effects of price supports. Ron Olson, a corn grower from Day County, S.D., and an NCGA corn board member, said: "We have to be very careful, I think, what we wish for," lest we run afoul of WTO rules. (WTO rules generally frown on market-distorting government programs but are so complex that it's hard to say whether a particular proposal violates WTO rules without knowing all the details of it.)

NCGA policy, according to its website, is to support a farm program that "allows market forces to determine supply rather than government decision making."

NCGA is in favor of farm-income supports because they provide a safety net when market prices are low, said Gerald Tumbleson, a Martin County, Minn., corn grower who is currently NCGA's first vice president and will assume the presidency next month. Young farmers like Tumbleson's sons Trent and Trace need a base to start from, he said, and this is where direct payments come into play. "These payments are to make sure that we farm well and keep inexpensive food in the United States," Tumbleson said.

"Inexpensive food to me is great," he said, "because if ... you were using 50 percent (of your income) for food or 40 percent, you could not buy the other things that make the economy of the United States go. So inexpensive food is good; I don't have any problem with that -- but don't make us responsible for inexpensive food without making a safety net so we can keep doing that -- and that's what the direct payment is."

In Tumbleson's view, focusing on the low market price of corn to the exclusion of broader consideration is a mistake. The broader considerations include the possibility of using the corn you raise for hog finishing, for ethanol plants in which you've invested and for other value-added uses. "You don't raise corn to make money; you raise corn for the opportunity to make money," he said.

Trade is another fault line dividing NCGA and ACGA. NCGA supports both multilateral and bilateral negotiations assuring U.S. corn and corn products full access to world markets. "My biggest competitor isn't from Brazil ... Brazil is a farmer -- they farm like I do," Tumbleson said. "I want NCGA to be all of America -- North, South, the whole works because we're farmers; we raise corn. It's not the problem of being competitive -- our problem is competition with the oil companies and those people we can replace."

ACGA opposed both NAFTA and CAFTA; it sees lots of risk and relatively little reward in free trade. "The current rules of agricultural trade embodied in the North American Free Trade Agreement and World Trade Organization have been harmful to family farm agriculture," the ACGA said on its website. "Family farmers continue to suffer from the manipulation of world trade through export dumping by trading companies, through tariff escalating and restrictive business practices such as price fixing, market dominance and transfer pricing."

In recent years Congressmen have expressed concern that the U.S. is well on its way to becoming a net importer of food for the first time since the 1950s. This comes as no surprise to Mitchell who points out that the market has only been export-driven three times in the past century -- "during WWI, WWII and when the Soviets got hungry in the early 70s.

"Over the last 25, 30 years our exports of corn and wheat are about what they were -- it's fairly static. But we've taken the prices down dramatically over that time," he said.

And while Tumbleson sees Brazilians as fellow farmers, ACGA first vice president Mike Alberts sees them as a threat. Their land costs are so low, Alberts said, that his Hamilton County, Neb., farm could never compete with them.

In ACGA's view, one of the most important things the U.S. could have done to sell more corn overseas was not rush into planting genetically modified corn. "I plant GMOs. I have for quite awhile and the technology is good," Alberts said. But "if they (the other countries) don't want to buy corn from us because we have GMOs and the price of corn around the world is set in Chicago ... the price of corn goes down. That doesn't seem like any giant leap in logic."

Alberts added: "We get so desperate for anything that might lower our cost of production out here but we should have asked more questions, taken this transition to planting GMOs a little slower. We thought the rest of the world would be as willing to accept GMOs as we were, but they weren't."

NCGA is more supportive of GMOs and is funding efforts to map the corn genome. NCGA members dream of new varieties of corn that will afford even more opportunities for the grower to add value to his product. "The industrial revolution will look small compared to what we're going to do with genomics," Tumbleson said.

Alberts questions the NCGA's ties to chemical, seed and machinery companies.

Six percent of the NCGA's revenue comes from membership dues and twice that amount comes from the industry. (The majority comes from checkoff dues.)

Alberts finds the statistics troubling. "Who do you speak for? Are you speaking for the producer or are you speaking for agribusiness? And if you get close to twice the money that you get from (agribusiness) than you do from membership dues -- who are you going to speak for? ... It's important to me that (I'm involved in a group) that says what I think needs to be said and not something else."

The NCGA doesn't feel threatened if president-to-be Tumbleson is any indication. He said he "doesn't know much about the ACGA."

NCGA board member Olson stressed that adding value to corn isn't enough. Growers must also increase efficiency -- in farming practices and in cooperating with their neighbors, Olson said. "There isn't enough room for us to be independent anymore. There has to be more cooperation ... whether it's two farmers getting together and owning one piece of machinery or something like the corn growers (association)."

Cooperation is essential in the political realm as well, Olson said. Farmers are no longer the majority -- even in his native South Dakota, he said. "If we want to legislate anything ... we have to be articulate, standing together and speaking with one voice."

That may be a point on which both NCGA and ACGA members can agree. "Farmers are going to have to be more political. If the system's not working, the system needs to be fixed. And it's not going to be fixed ... with complacency," Mitchell said.

But Olson would offer a word of caution. Though he doesn't think the groups aren't necessarily comparable, given their differing memberships and visibility, he appreciates the accountability the ACGA brings to the NCGA. Even so, speaking with one voice on major issues is of the utmost importance.

"So long as separate groups can come together on major issues, it's positive (to have two groups)," he said. "So there's times when it's positive, but then there's the next time when they talk both sides (of the issue) and then it's detrimental. So, if you didn't have different groups you can see how the accountability wouldn't be there as much as I'd like to see, but it can be a two-edged sword."

"It's just sad," Tumbleson said. "If we can't get together in agriculture, why would we expect the politicians to get together?"

Susanne.Stahl can be reached at Susanne.Stahl@dtn.com

Feuding Farmers 5: What Next? 09/30 09:50

Why has the discourse among agricultural producers and the groups representing them become so much more discordant in recent years? And are these increasingly cantankerous conflicts a good thing for agriculture, or a bad thing? This week DTN tackles these questions in a five-part series. This fifth and final story looks at efforts to find common ground.

By Tony Dreibus DTN Feature Editor

WASHINGTON (DTN) -- When agricultural producers can't agree, politicians get a free pass to do nothing.

"Members of Congress typically don't like to say 'no' to their constituents, but what they can do is back-burner the issue and escape with saying neither 'yes' nor 'no,'" said Clayton Yeutter, an agriculture and trade lawyer with the Washington firm of Hogan & Hartson who served in the 1980s and early '90s as U.S. Trade Representative and Secretary of Agriculture.

That's why producers need to find common ground whenever common ground is possible. The need is especially important considering that next year Congress will begin writing the 2007 farm bill, a piece of legislation that could fundamentally change how the government supports agriculture, in a tough budgetary environment.

Traditionally, the size of the government's monetary support for agriculture, if not its shape, has been an issue on which ag groups came together and that is likely to be true again next year. "The historic pattern is the farm groups rally together to give a broad outline of a farm bill," said David Orden, a senior fellow at the International Farm Policy Research Institute.

Once the overall budget is set, though, don't expect the farm groups to play nice. "If there's going to be reductions in farm subsidies then the question is who gets cut where, and that's a recipe for divisiveness," Yeutter said. "As the pot gets smaller there'll be a lot of fighting over who gets what share."

Complicating the debate still further, the number of players vying for the pot of gold is increasing even as the pot shrinks. Fruit and vegetable producers, who don't currently receive crop subsidies, have made clear that they will want something from the 2007 farm bill, even if it's only increased research and marketing support.

And as if that weren't enough, environmental, consumer and food-industry groups are likely to have a louder voice in next year's debate than they had with farm bills in the past, Yeutter said. "Traditional farm groups will not be able to totally dominate the debate in future farm bills as they often have been able to do in the past," he said. "These other folks will become more influential as time passes."

Farm-group leaders understand the importance of unity and are making efforts to find common ground. One of the most significant efforts is taking place along one of the sharpest fault lines, that between the National Cattlemen's Beef Association and R-CALF USA. As recounted in the second story of this series, leaders of the two groups have been going out of their way to soften their rhetoric about each other and to appear together on the same platform to debate issues.

"We (NCBA and R-CALF leaders) hope events like these debates can end the divisiveness," said NCBA President Jim McAdams.

"As long as we're fragmented it's unlikely we will be able to change the course of our industry," said R-CALF Chief Executive Officer Bill Bullard.

When producers do get together, they wield tremendous clout. "I've seen the effectiveness of ranchers and farmers," Secretary of Agriculture Mike Johanns said in an interview. "I've seen it at the state level and the national level and they can make a big difference."

And Orden, the senior fellow at the International Farm Policy Research Institute, said that cooperation could actually help farmers get more money in the 2007 farm bill.

"In theory we have budget pressure but so far the Bush administration has proven to be a good friend of its industrial allies," Orden said. "So there's some talk in the Bush administration about getting tougher on the budget this year, but it's hard for me to really imagine the administration is going to be really tough."

Perhaps as important as finding common ground, the groups need to mobilize the tens of thousands of producers who undermine the influence of agriculture by remaining on the sidelines.

"We have an industry of 775,000 beef cattle operations in the United States," R-CALF's Bullard told DTN. "Between NCBA and R-CALF together we have 42,000 (as members). So cattle producers need to get engaged and through their support of one organization or another we could immediately dispel this perception that the industry is fragmented."

Mike Alberts, first vice president of the American Corn Growers Association, echoed those sentiments. "Growers need to take a look at the farm organizations," Alberts said. "I don't care which one as long as they get involved. Let's not sit here and let them do it to us -- let's stand up and fight for what we need out here."


Inside US Trade
Date: September 23, 2005

U.S. Department of Agriculture Secretary Mike Johanns this week suggested U.S. farm programs will have to change in a future farm bill, partly in response to a successful challenge by Brazil of U.S. cotton subsidies and potential future cases against the U.S. which could be brought by members of the World Trade Organization. He noted that Uruguay is considering a possible challenge to U.S. rice subsidies and that Canada is attacking U.S. subsidies for corn.

The comments come on the eve of negotiations in Paris with the EU, which is demanding U.S. domestic subsidy reductions in exchange for reductions in EU agricultural tariffs.

"I worry that the status quo is very high risk for American farmers," Johanns told the Senate Agriculture Committee on Sept. 21. "We can support American agriculture, but we need to be creative in how we approach that," he said.

He said USDA would work with House and Senate members to develop a "forward thinking" policy that might rely more heavily on subsidies considered non-trade-distorting under WTO rules. He cited as possible examples conservation programs, crop insurance, risk management tools and direct payments. "We know we can make direct payments without running afoul of WTO rules," he said.

Appearing with Johanns, U.S. Trade Representative Rob Portman pointed out to the agriculture committee that the United States in contrast to the EU has increased its farm subsidies since 1995. He said the U.S. is "pushing close to our limit" of $19.1 billion in trade-distorting support.

He also said the U.S. "has to acknowledge" that the EU has made progress in reducing its trade-distorting agriculture subsidies through reforms of the Common Agriculture Policy.

But Portman also said the U.S. would make it clear in Paris that it would not move on domestic support unless the EU also moved on market access. He also reiterated U.S. calls for the EU to make greater reductions to its domestic subsidies because its Uruguay Round commitments allow a higher level of subsidies than the U.S. limit.

In his testimony, Johanns acknowledged the speech by President Bush to the United Nations last week in which he said the U.S. is willing to eliminate all subsidies, including agricultural subsidies, as well as all tariffs that impede the free flow of goods and services if other nations do the same. According to Deputy National Security Advisor Faryar Shirzad, this means the U.S. ambition in the Doha round is only limited by the concessions that other countries want to make.

In a Sept. 20 speech, Portman said President Bush's commitment to eliminate all subsidies and tariffs means he will continue to "push" negotiators, including USTR, to pursue ambitious goals. Portman also pointed out that free trade could do more increasingly for developing countries than "aid could ever do."

One informed source said the Bush speech will likely give Portman and Johanns more flexibility in their mandate to offer cuts on domestic subsidies in the Doha round.

Senate Agriculture Committee Chairman Saxby Chambliss (R-GA) offered a low-key reaction to President Bush's remarks. He said the U.S. must be careful in cutting farm subsidies "while also providing a stable and secure safety net for America's farmers and ranchers." He said the U.S. must be "mindful of what future programs will replace the ones we are eliminating," and stressed the importance of having grass roots support from U.S. farmers for changes.

In response to a question by Chambliss on whether there is grass-roots support among American farmers for radical changes to the existing farm bill, Johanns replied that he has heard a number of complaints about the existing policies in the so-called USDA listening sessions he has held on a new farm bill. He disputed reports that most of this feedback suggests farmers like the 2002 farm bill.

Separately, House Agriculture Committee members reiterated demands that the U.S. negotiate market access gains in the Doha round during a Sept. 21 executive session with Portman and Johanns, Chairman Bob Goodlatte (R-VA) said in a press conference. Goodlatte also emphasized that the EU and Japan subsidize their farmers more than the U.S., and that as a result they should make deeper commitments.

The strongest message from members of the committee was lodged on food aid, with several criticizing EU demands for cash-only food aid. Ranking Member Tom Harkin (D-IA) and Sen. Pat Roberts (R-KS) both defended U.S. food aid programs, in which commodities produced by U.S. farmers are purchased by the government and sent abroad, often through U.S. non-governmental organizations.

Harkin and Roberts both said EU Agriculture Commissioner Marianne Fischer Boel had brought up the subject of food aid during meetings with her last week in Washington. Both called on the U.S. to strongly resist EU proposals to convert food aid to cash-only assistance.

"While I agree that there may be some room for disciplines on food aid, the EU's proposal is unnecessarily draconian," Harkin said in a prepared statement. He said the demands would be a "sore point" for most members of the committee and many others in the Senate.

Roberts, who chairs the Senate Intelligence Committee, disputed EU charges that the U.S. uses food aid to dump surplus commodities in third markets, and even argued that U.S. food aid potentially could reduce terrorism by providing nourishment to people in developing countries.

Portman said he agreed that cash provided to third countries for purchases of food is often used for other purposes by corrupt governments and as a result commodity-based food aid is preferable. He said it is "outrageous" for the EU to argue for cash-only food aid since this could result in less food going to countries with emergency situations.

The EU has argued that cash-only food aid is preferable not only because of its charges that U.S. commodity-based food aid is used to dump U.S. surpluses, but because cash payments can be used be recipient countries to make purchases from nearby markets, saving transportation costs in the process.

Portman also met on Sept. 20 with House Ways and Means members as part of an intensive week of consultations with members of Congress in preparation for his meetings in Paris.

4. The end of cheap oil

By David Bacon
Prairie Writers Circle

At the end of the 18th century, Thomas Malthus predicted population growth would outpace food production, resulting in widespread starvation. But within 50 years the industrial revolution was in full swing in England, powered by coal-fired steam engines. In 1866, in Clarion County, Pa., the first oil wells started production and the industrial age truly began.

Malthus' dreary view seemed overblown.

The astounding differences in daily life between Malthus' time and ours all result from the availability and use of cheap energy. The pace of technological advancement is so rapid that the average citizen can't keep up. This wizardry -- coupled with the mid-20th century "green revolution" in food production -- leads many people, unfortunately including many political leaders, to assume that we can invent, exploit and develop our way out of almost any problem.

If we can, it is time to start.

Continued prosperity in the developed countries and any hope of significant advancement in undeveloped countries depend on availability of inexpensive energy. In the United States, about 40 percent of energy comes from oil. And we're running out. Not out of oil per se. There's lots of oil in Canadian tar sands and Colorado shale. We're running out of oil we can pump from the ground and market for under $60 a barrel. Most people alive today will see the end of cheap oil.

Consider the production and distribution of food without that oil. The tractors that till the soil and harvest the crops across the modern world run on oil. The energy that transforms raw farm products into neatly wrapped items on supermarket shelves derives, in part, from oil. The trucks that transport the raw and finished products run on oil.

How much of what the average American uses daily, particularly perishable foodstuffs, has to be inexpensively transported over significant distance? I live in Colorado and I can buy a 5-pound bag of Florida oranges for less than $5. Absent the current distribution system, it is not unreasonable to think that I would never have tasted a fresh orange had I lived all my life here.

How much of what is readily available today will be priced out of reach if transportation costs double? Triple? Quadruple?

There are alternative energy sources, but none that can now serve transportation needs. Oil and oil-based fuels are so useful because of their easy portability and relative safety. It is not difficult to convert engines to use natural gas, but it has to be liquified. Liquified natural gas in large quantity is dangerous to store, and the expense of refitting fuel stations nationwide to sell it would add significantly to its cost. What's more, natural gas will become more scarce and costly, perhaps within two decades after oil.

Hydrogen is often proposed as a safe, non-polluting alternative, but making it in usable form takes more energy than the hydrogen can provide as fuel. This means an inexpensive, environmentally acceptable and widely available energy source will be required to produce the hydrogen. No such energy source now exists. Developing one and building a hydrogen economy will be a huge task. Coal and nuclear power are sometimes suggested, but nuclear plants are expensive and the environmental problems of coal use and nuclear waste storage are daunting.

Representatives of the oil industry and the Department of Energy say there's no immediate problem, that discovery of new oil fields, coupled with improved recovery from existing fields, will provide the time we need to find solutions. But independent petroleum geologists point out that really huge fields, because of their size, are easy to find and no new ones have been found for over a decade. The world burns oil faster than new oil is discovered -- four times faster, according to some reports.

Recovery from existing fields is improving, but it's still expensive, and money matters. The end of cheap oil, followed by the end of cheap natural gas, threatens to cripple strong economies and devastate weak ones.

This is a looming crisis and we must work harder to figure a way out. Otherwise, the Rev. Malthus and his unhappy vision may yet prove right.


David Bacon, a physician and retired Army colonel living in Denver, has had a long interest in the world's energy picture. He wrote this for the Land Institute's Prairie Writers Circle, Salina, Kan.

5. Woodbury County Iowa offers tax breaks to organic farmers, first in U.S.

Associated Press, July 2005

SIOUX CITY, Iowa (AP) - Woodbury County is offering tax incentives to farmers who switch from conventional production to organic.

Woodbury County Supervisors voted June 28 to provide property tax rebates for those who convert from conventional to organic farming practices. That action will grant $50,000 a year for five years to those who make the conversion.

Bob Scowcroft, executive director of the Organic Farming Research Foundation in Santa Cruz, Calif., said Woodbury County may be the first local government to offer such incentives to farmers" "Frankly, I don't know of any other activity that local government has taken to encourage organic farming,'' he said.

Marqusee said the goal of the program would be to build on local agriculture to spark economic development.

The program would help build a thriving organic farming industry that would attract organic food processors and other businesses to the area, he said. ``I studied the economic benefits of organic farming. It just seemed to fit,'' he said. ``We're looking at being part of a movement that is gaining ground.'' Marqusee said studies done by Iowa State University show organic farming can produce higher profit margins per acre than conventional farming, and on fewer acres.

Organic farming might save smaller family farms by offering lower startup costs and encouraging potential young farmers to stay in farming instead of leaving for higher paying jobs.

Marqusee said the organic market is growing with more grocery stores, such as Hy-Vee, dedicating space to organic products. ``We think domestic (organic) food manufacturers are going to want a reliable domestic supply,'' Marqusee said. ``We know that people are making money. It might as well be us, too.'' Holly Givens, a spokeswoman for the Massachusetts-based Organic Trade Association, said her group doesn't track local governments programs, but she believes incentives for farmers who switch to organic production are unusual. ``I haven't really heard of that before,'' she said.

5. Cargill's dominance a concern

OPINION, Western Producer September 8, 2004 Wendy R. Holm, P.Ag.

In the early 1980s, before the Bureau of Competition policy moved from Consumer and Corporate Affairs to Industry Canada and before the repeal of both the Combines Investigation Act and the Foreign Investment Review Act, Cargill's takeover of Better Beef would have been viewed differently by Ottawa.

Of course, back then, the industry itself was different. Ranchers produced for a domestic market and regional packers put Canadian beef in Canadian stores.

But with the signing of the Free Trade Agreement and mounting pressures for globalization, many sectors underwent rapid change, including agriculture. Within a few years, cheap offshore boxed beef, much of it coming in on supplemental permits, flooded the domestic market, displacing Canadian beef and driving down profit margins to packers. With the arrival of Cargill in 1989 and Iowa Beef Processors/Tyson in 1994, most of Canada's small meat packers disappeared.

Today, Cargill in High River, Alta., and Tyson in Brooks, Alta., control 65 percent of fed cattle slaughter in Canada. When Better Beef in Guelph, Ont., and XL Foods in Moose Jaw and Calgary are included, these four packers control 85 percent of Canadian fed cattle slaughter.

And hold on to your hat. Things are about to get more concentrated.

Last week, Canada's federal Competition Bureau approved Cargill's purchase of Better Beef, giving Cargill a 48 percent share of the Canadian fed cattle slaughter market and an 80 to 85 percent share of the Ontario market. Put another way, 80 percent of Canadian slaughter capacity now rests with two American firms: Cargill and Tyson.

Wasn't it only a month ago that Wayne Easter, parliamentary secretary to the minister of agriculture, warned Ottawa that economic concentration in the farm supply and processing sectors has turned Canada's farmers into price takers?

Making direct reference to Cargill's market dominance, Easter noted in his recent report that Iowa regulations prohibit packers from owning, controlling or operating feedlots and Nebraska laws prohibit packers from taking direct or indirect ownership of livestock more than five days before slaughter.

Clearly, the Competition Bureau officers did not read or chose to ignore Easter's report.

What avenues did the bureau have open to it? Legally, it can challenge a proposed merger before the competition tribunal. Practically, mergers are more often "negotiated" through the imposition of conditions intended to lessen the effects of market dominance.

While the Easter report provided solid resonance for such negotiations, there is no indication that the bureau gave any consideration to imposing conditions to the merger to mitigate Cargill's market dominance in Western Canada.

Politically, of course, other factors come into play. If the industry itself supports a merger, it becomes more difficult for Ottawa to rule against it.

In this case, the Ontario cattle industry supported Cargill's takeover because Better Beef, with an 80 percent share of the Ontario fed-cattle slaughter market, was considered a "bad player" that dealt with suppliers in a heavy-handed and arbitrary manner. Ontario cattle producers supported the merger because they figured Cargill couldn't be worse.

In the West, ranchers already living with the effects of a Cargill's market dominance are worried. The Canadian Cattlemen's Association took no position on the merger, sending a clear signal to Ottawa.

Last week, the bureau stepped back and will allow the acquisition to proceed. In its announcement, it cited four reasons for approving the merger:

  • Because the two main packing plants are physically distant - High River and Guelph - they don't compete now in the purchase of cattle and hence the merger is not likely to "depress prices paid to ranchers to a level that is below the competitive price for a significant period of time" and result in a "substantial prevention or lessening of competition" in the purchase of cattle.
  • July's opening of the U.S. border to cattle younger than 30 months enhances competitive options for Canadian producers, mitigating the effect of Cargill's 50 percent market share.
  • Even if the border closes again, "the effects would not be significant enough to result in a substantial lessening of prevention of competition" because of the physical distance between the plants.
  • Canadian retailers have told the bureau that Cargill's significant dominance in the case-ready beef market will not reduce competition because they can always import boxed beef and/or reinstate in-store butchering.

Controlling fully 50 percent of the fed-cattle slaughter capacity in Canada and 80 to 85 percent in Ontario, Cargill now has us all in a nose twitch.

If, in future industry negotiations, Cargill threatens to pull up stakes and leave, who will fill its place? The implications suggest what Cargill wants, Cargill will get.

Already, the lion's share of U.S. farm subsidies goes to concentrated agri-business players, not farmers. Cargill is a past master at it. Look what has already happened with BSE support. The farming of farm subsidies by large multinationals has implications for Canadian farmers, Canadian taxpayers and Canadian communities.

With Cargill and Tyson now controlling the packing sector in both Canada and the United States, the negative effects of market dominance on farmers and the communities they serve can only escalate.

Two American-based multinationals don't need written memos and recorded phone conversations to divide the pie. As long as they each pay next-to-nothing for the product, both are ahead.

Farmers keep expecting so much more of government and keep getting so much less.

Wendy Holm, P.Ag.