Federal Policy Update

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BEST FRIENDS FOREVER

The USDA and Big Ag are “best friends forever,” but Congress and the courts might be seeing the light.

The last six months have opened many people’s eyes to the fragility of the conventional food system. Grocery store shelves went empty, first due to transportation and distribution prob­lems, and then due to the closure of some of the largest meatpackers in the country whose un­sanitary operations are blamed for widespread Covid outbreaks among their workers. And while some family farmers are facing hardship from the loss of sales to restaurants and schools, or cancelled on-farm events, record-breaking numbers of consumers are seeking out locally-raised food.

The conventional system broke, while the local food system showed its resilience and flex­ibility. Hopefully this experience will help lead to significant changes in our laws, regulations and government policies. But government insti­tutions are slow to change, and the signs from Congress are mixed—while the signals from USDA show an agency as firmly entrenched with big agribusiness as ever.

USDA PUSHING MANDATORY ELECTRONIC ANIMAL ID. . . AGAIN

We’ll start with the bad news on electronic animal ID. Right now independent family farm­ers are facing bankruptcy while consumers are facing record high meat prices, all due to the highly consolidated meat industry, which is controlled by a handful of large meatpacking corporations. But rather than support small farmers, USDA is again pushing a plan that was written by and for the benefit of agribusiness, and in particular the same big meatpackers.

This summer USDA announced that it in­tends to mandate electronic identification tags for cattle that cross state lines. And since many state animal ID programs are connected to the federal one, in practical terms many farmers will be forced to use these Radio Frequency Identification Devices (RFID) tags even for in-state movements. This is an attempt to push through a piece of the National Animal Iden­tification System (NAIS)—a plan that USDA withdrew a decade ago under a storm of protest from both farmers and consumers.

This expensive, intrusive and unreliable ID system benefits two groups: the large meatpack­ing corporations and the technology companies that produce the electronic tags, readers and software.

USDA and the meatpackers argue that traceability is about addressing animal disease and food safety. But the vast majority of food-borne illnesses in meat are the result of practices at the slaughterhouse and afterwards in the processing and handling. Millions of pounds of meat have been recalled due to unsanitary conditions and a lack of proper oversight at huge slaughterhouses. Yet the animal ID program ends at the slaughterhouse door. RFID tags on cattle won’t do anything to increase food safety.

Nor will RFID tags make our animals healthier. USDA continues to allow imports of livestock from countries with known disease problems. In fact, this electronic ID plan is pri­marily designed to maximize corporate profits by promoting exports and imports of animals and meat—further increasing the risk of intro­ducing and spreading diseases.

And while the large companies that export and import meat will benefit, the cost will be borne by the farmers and ranchers. Traditional metal ear tags cost about ten cents each, and the USDA provides them to farmers for free. The agency estimates the cost to farmers for RFID tags will be $2-$2.60 per head. That doesn’t seem like much, but that translates to sales for the tag manufacturers of tens of millions of dol

lars each year and corresponding expenses for farmers. Even more money will be spent by both farmers and small businesses such as livestock auction barns on the readers, databases and other infrastructure needed for the program.

All you needs do is look at who served on the working groups that developed this lat­est version of the plan. There were few actual cattle producers, and the chairs and co-chairs were dominated by representatives of corpora­tions that manufacture electronic tags and the equipment necessary to apply, read and track data from the tags, together with the organiza­tions that promote the corporations that already control huge swaths of our livestock and meat industries.

What it’s really about is furthering corpo­rate control of the meat industry by creating yet more regulations that promote international trade for the big meatpackers, are cheap for large-scale operations and burden family farm­ers.

If USDA wanted to address food safety and animal disease, it would increase oversight and testing at the large meat processing plants, and stop boxed meat and live cattle imports from countries with known disease problems. These two steps would do far more to promote a safe, secure food supply than sticking RFID tags in cows’ ears.

MORE PANDERING

Animal ID is not the only area where USDA is doubling down on its support for the huge meatpackers. Last month, USDA announced ten new appointments to the National Advisory Committee on Meat and Poultry Inspection—and both seats for meat processors went to large meatpackers.

First there is a representative from JBS, the American subsidiary of a Brazilian-owned com­pany, JBS SA. In Brazil, principals of JBS SA are under investigation for bribing two thousand elected officials in order to secure government funding to fuel their company’s expansion into the United States. Joesley and Wesley Batista, the brothers who control the company, were slapped with more than three billion dollars in fines in 2017, the largest fines in the country’s history.

And the other meatpacker representative is from Pilgrim’s Pride—a subsidiary of JBS! Moreover this past summer the CEO of Pil­grim’s Pride was indicted for price-fixing. And in a blatant example of how the company puts profits over the interests of American consum­ers, while grocery store shelves in America were going empty, April saw some of the industry’s highest exports of poultry to China.

Two large-scale industrial meat trade as­sociations, the North American Meat Institute and the Southwest Meat Association, also got seats on the committee. U.S. Foods, one of the largest food service distributors, got a seat. The token non-industry association to get a seat is the Consumer Federation of America, which opposed exemptions for small farmers in the Food Safety Modernization Act and now op­poses the PRIME Act. The remaining members are a large catfish producer, academics and state government officials. There is no representation at all for small or very small processors, regen­erative meat producers or any sort of advocate for regional and local food production and dis­tribution.

Particularly coming on the heels of the blatant failures of these large industry players during Covid, the committee assignments are a slap in the face to both consumers and farmers. The USDA’s latest committee appointment an­nouncement shows that the agency’s historical “get big or get out” attitude is alive and well.

WHAT ABOUT CONGRESS?

The alliance with big industry is showing some strain in Congress, however, where elected officials have been hearing from their constitu­ents about the problems with the conventional system.

In April, as the meatpacking plants start­ing closing their doors, Senators Josh Hawley (R-Mo.) and Tammy Baldwin (D-Wis.) wrote a letter to the Federal Trade Commission (FTC), urging that agency to open an antitrust inves­tigation into the meatpacking industry and its potential to cause significant disruptions in the food supply chain.1

In May, nineteen senators from both par­ties sent a letter to Attorney General William Barr urging him to look into market manipulation in the cattle industry.2 The senators’ letter expressed concern about ongoing “market manipulation and coordinated behavior” by meatpackers during the Covid-19 national emergency. They noted that live cattle prices had dropped nearly 20 percent since February, while wholesale beef prices had increased as much as 115 percent in the same period.

The senators also asked the attorney general to consider the fact that corporate consolidation has created “an untenable power imbalance,” leaving the nation’s four largest beef packing companies in control of more than 80 percent of the cattle industry. “We remain concerned about the heightened allegations of suppressed prices for cattle, especially considering how coordinated conduct is facilitated more easily by high market concentrations,” the senators noted. (Note that economic research indicates that when four firms control more than forty percent of a market, that market becomes oligopolistic and is not competitive.)3

Then in June, six Republicans on the House of Representatives Judiciary Committee urged the USDA to ease regulations on meat proces­sors that make it harder for smaller companies to compete.4 The six lawmakers, led by the top Republican on the committee, Jim Jordan, urged Agriculture Secretary Sonny Perdue to “revisit burdensome regulations that create barriers to entry and lessen competition in the nation’s meat processing industry.”

The lawmakers requested that Perdue consider giving smaller proces­sors “more flexibility” in handling Hazard Analysis and Critical Control Point (HACCP) Plans to address food safety issues and to clarify and streamline the approval process for meat labels. They also asked Perdue to reduce the regulatory burden keeping smaller meat processors from participating in a program that allows them to sell across state lines and to find a way to reduce the expense of inspections, which falls on meat processors if an inspector works overtime. In addition to Jordan, the letter was signed by Representatives James Sensenbrenner, Ken Buck, Matt Gaetz, Kelly Armstrong and W. Gregory Steube.

Unfortunately, while more members of Congress are expressing concern about the control wielded by large meatpackers, they have yet to take legislative action either to rein in the meatpackers or support small farms and processors. For example, while the PRIME Act has gained many sponsors through the spring and summer, and now boasts an im­pressive list of fifty-five bipartisan House sponsors and nine senators, it appears to have stalled for the moment.

Support for the PRIME Act has slowed not only due to open oppo­sition to the bill from agribusiness and so-called consumer advocates, but because opponents have redirected the focus to another bill, called the RAMP UP Act. That bill would provide grants to help small-scale processors become USDA-inspected—yet it does nothing to address the scale-inappropriate USDA regulations, the bias of many USDA inspectors against small-scale operations or the shortage of inspectors. And so while the RAMP UP Act would help a few small-scale processors, it is unlikely to increase significantly the number of small-scale slaughterhouses avail­able for farmers who wish to sell their meat.

WAPF has never used an auto-email system for sending messages to legislators because they don’t work to influence legislators (although they do work well to get people onto email lists, which can then be used for fundraising). Instead, we provide talking points and encourage people to place calls or send personalized emails using those talking points as a framework; such calls and emails have a far greater impact than form letters ever can. And now we need to use even more effective tactics. The only thing likely to change the minds of the legislators who have not yet signed on to the PRIME Act are truly personal stories that provide a simple, clear statement of why this issue is important to the constituent contacting them.

Please take a moment to write a from-scratch letter of your own about why the PRIME Act matters to you. It doesn’t have to be long, just entirely in your own words. Be as specific as possible about how the lack of accessible, afford­able slaughterhouses affects you, your family or your business. An easy way to send the message is using fiscalnote.com/find-your-legislator, which will allow you to send the same message to all your federally elected officials (but with no pre-written form letter). We must keep up the fight to get this important bill passed.

CHECKOFF LAWSUIT

What about the third branch of our govern­ment, the judiciary? There are possible signs of progress on that front as well, in a lawsuit brought against the Beef Checkoff by R-CALF USA.

The “Checkoffs” are programs established by federal statute under which producers must pay a fee for each unit of production – essen­tially, a tax on farmers’ and ranchers’ produc­tion. There are currently 21 federal Checkoffs, the best known of which are the beef, pork, and dairy Checkoffs. Past Wise Traditions journal articles have discussed some of the abuses of the Dairy Checkoff, which forces raw milk farmers to pay this tax, and then uses its funds to dispar­age raw milk’s safety through its website, radio ads and educational programs for dieticians.

In the case of beef, producers pay a dollar per head when a cow is sold. In 2019, the Beef Checkoff’s assessments totaled nearly 43 mil­lion dollars. Where does all that money go? The first purpose is generic marketing, such as the “Beef: It’s What’s For Dinner” advertisements. Much of the money also goes into the pockets of private entities who supposedly use it to do promotion and research.

Why does this matter to WAPF farmers who are raising grass-fed beef and the consumers who buy from them? Many of our farmers don’t pay the Checkoff tax because they fly under the radar; but the Checkoff is still a major problem for us all. First, the way these programs are structured means that tens of millions of dollars per year are used to promote the belief that all meat (or milk or eggs) is alike and it doesn’t matter how it is raised, undermining both consumers’ health and farmers’ profit margins. Second, millions of dollars each year flow into the pockets of entities who actively work to support the interest of multinational meatpackers at the expense of family farmers. More on both these issues below.

R-CALF’s lawsuit challenged the Beef Checkoff in Montana on First Amendment grounds. The core argument was that although the federal government mandates all ranchers pay the tax, the government fails to regulate properly how that money is spent. In Montana, the government turns over half the money collected to the private Montana Beef Council. This private entity favors multinational corporations over independent ranchers. For example, the Montana Beef Council has used the Checkoff money to advertise for the fast-food chain Wendy’s, which does not com­mit to buying meat from Montana or even U.S. ranchers. The lawsuit thus contended that the Checkoff is a form of compelled speech. R-CALF won the first round in trial court in 2018. The court recog­nized that the movement of Checkoff funds amounts to a “shell game” in which producers’ money is moved from one account to another, then another, where it ultimately is used at the discretion of unaccountable private parties. R-CALF expanded the lawsuit to seek a halt to Checkoff funds in more than a dozen other states. USDA then sought to sidestep responsibility for its mishandling of the program by entering into “Memo­randums of Understanding” with the private state beef councils. This stratagem worked, and the trial court dismissed R-CALF’s case; it is now on appeal to the Ninth Circuit based on the inadequacy of the MOUs. R-CALF has also filed a new lawsuit directly challenging the MOUs on the grounds that they changed the legal framework for the Checkoff without going through the proper administrative procedures.

Returning to why the Checkoff is a problem and this lawsuit is important: generic advertising misleads consumers and hurts specialty producers. Reduced product differentiation convinces consumers that “beef is beef” and one producer’s cattle are substantially the same as any others. This can harm higher-quality producers while benefiting lower-quality ones.

Not only is generic marketing problematic in general, but the Beef Checkoff’s messaging is particularly harmful. The Checkoff seeks to convince American consumers that all beef products offer the same, consistent set of qualities and benefits. The National Cattlemens Beef

Association’s (NCBA’s) use of the Checkoff funds includes “placing positive stories about how beef is raised, beef safety, quality, nutrition, [and] sustainability,” including “industry information” about how all beef provides higher quality attributes such as improved animal care.

The Checkoff messages encourage consumers to perceive all beef products sold in the U.S. as equal. For example, all beef is equally sustain­able because “[t]he beef production system works in harmony to produce the most sustainable product.” Thus, Checkoff-funded marketing would have consumers believe that beef is “the most sustainable product,” whether it comes from an independent rancher in Montana raising 100% grass-fed, antibiotic-free cattle, or from a producer in another country who regularly feeds antibiotics to his grain-fed cattle on a dirt and manure-covered feedlot. The Checkoff ads also use terms like “from pasture to plate” that paints a misleading image of all beef being pasture-raised, undermining those producers who invest the extra time and resources required to produce truly pasture-raised cattle. While some consumers will not be fooled by this advertising, many more will be – reducing the potential growth of the grass-fed beef market and creating pressure to keep the prices closer to conventional beef prices.

And then there’s the second problem, namely placing more power in the hands of a few powerful companies. Consider what has happened since Congress established the major livestock Checkoff programs. Every U.S. livestock sector has become significantly more consolidated. USDA statistics show that between 1987 and 2012, the average number of animals on feedlot cattle operations has increased by 119 percent, the number of broiler chickens has increased by 127 percent, the number of milk cows by 1,025 percent, and the number of hogs by 3,233 percent. This extreme growth by some operations has corresponded with a dramatic loss in small and mid-sized independent farms in every sector. “Licensed U.S. dairy herds fell by more than half between 2002 and 2019, with an accelerat­ing rate of decline in 2018 and 2019, even as milk production continued to grow.” And even with the growth in the local food market, the total number of farmers raising cattle has continued to decline, despite total sales significantly increasing.

While the Checkoffs are not the sole cause of this consolidation, their generic marketing has certainly played a role. Moreover, the Checkoff funds go into the pockets of entities who push policies that support this consolidation at the expense of independent farmers and ranchers. Much of the money from the Beef Checkoff goes into the pocket of the NCBA, an industry trade group that purports to represent cattle ranchers – but also represents feedlots and meatpackers. NCBA supports mandatory electronic animal ID, opposes country of origin labeling, and opposes the PRIME Act, to name just a few of its problematic policy positions.

The Checkoffs are a government tax taken from farmers to promote conventional agribusiness and support the trade organizations that have helped build the fragile, flawed food system we see today. We hope the initial success in this lawsuit will continue and create the platform for ultimately ending all of these programs.

REFERENCES

1. Gangitano A. Bipartisan pair of senators request antitrust probe into meatpacking industry. The Hill, April 29, 2020. https://thehill.com/homenews/senate/495197-hawley-baldwin-request-antitrust-investigation-into-meatpacking-industry

2. https://www.fischer.senate.gov/public/_cache/files/bf8cd596-d4f3-4903-b39b-9a8008d72881/5.12.20-senate-letter-to-doj-packers-investigation-request-final-w-all-signatures.pdf

3. Hendrickson M, Howard PH, Constance D. Power, food and agriculture: implications for farmers, consumers and communities. University of Missouri, College of Agriculture, Food & Natural Resources, November 1, 2017. https://papers.ssrn.com/sol3/papers.cfm?abstract_ id=3066005

4. https://republicans-judiciary.house.gov/wp-content/uploads/2020/06/2020-06-09-HJC-GOP-to-USDA-re-Meat-Processing-Competition.pdf

5. See R-CALF v. Perdue, 2020 WL 1486051, at *8 (D. Mont. Mar. 27, 2020).

6. See generally: Chakravarti A and Janiszewski C. The influence of generic advertising on brand preferences. Journal of Consumer Research. 2004;30(4):487-502.

7. Crespi JM. Generic advertising and product differentia­tion revisited. Journal of Agricultural & Food Industrial Organization. 2007;5(1):1153-1153. (At 14-15, citing studies finding correlation between generic advertising and decrease in product differentiation.)

8. Beef Checkoff, Consumer Education. https://www.beef­board.org/checkoff/beef-checkoff-programs/consumer-information-program/ (retrieved September 1, 2020).

9. Beef Sustainability: Environmental, Social & Eco­nomic Impacts. https://www.beefitswhatsfordinner.com/raising-beef/beef-sustainability (retrieved September 1, 2020).

10. See, for example: Texas Beef Council. Texas chefs expe­rience beef industry from pasture to plate. July 27, 2018. https://www.texasbeefcheckoff.com/checkoff-news/texas-chefs-experience-beef-industry-from-pasture-to-plate/ (retrieved September 3, 2020).

11. MacDonald JM, Law J, Mosheim R. Consolidation in U.S. Dairy Farming. USDA Economic Research Report No. (ERR-274), July 2020, at i. https://www.ers.usda.gov/publications/pub-details/?pubid=98900

12. For finding of a 5.2% decrease in the number of farms and a 24.8% increase in sales from just 2007 to 2012, see: USDA National Agriculture Statistics Service. 2012 Census of Agriculture: Highlights. ACH12-20, February 2015. https://www.nass.usda.gov/Publications/High­lights/2015/Cattle_Highlights.pdf (retrieved August 28, 2020).

This article appeared in Wise Traditions in Food, Farming and the Healing Arts, the quarterly journal of the Weston A. Price Foundation, Fall 2020

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