CLEAR LAKE, Iowa — Chris Petersen, a
third-generation hog farmer who says "I bleed rural" and tears up at
the fate of family and friends, has found a way to keep his small holding
going, and avoid the exodus that so many are making. His grown son and daughter
have, too.
But meanwhile, Petersen is at war with the big
companies that he says are destroying the culture of smaller places like Clear
Lake.
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- "We
are going down the same road as the Russians with the collective
farm system," he told me yesterday. "There, the government
controlled it. Here, it's the corporations."
The big picture: While his is a dramatic
rendering of the state of American agriculture, Petersen has a point: across
industries, the U.S. has become a country of monopolies.
- Three
companies control about 80% of mobile
telecoms. Three have 95% of credit cards. Four have 70% of airline flights
within the U.S. Google handles 60% of search. The list goes on. (h/t The Economist)
- In
agriculture, four companies control
66% of U.S. hogs slaughtered in 2015, 85% of the steer, and half the
chickens, according to the
Department of Agriculture. (h/t Open Markets Institute)
- Simlarly,
just four companies control 85% of U.S. corn seed
sales, up from 60% in 2000, and 75% of soy bean seed, a jump from about
half, the Agriculture
Department says. Far larger than anyone — the American
companies DowDuPont and Monsanto.
As we
have reported, some economists say this concentration of market power is
gumming up the economy, and is largely to blame for decades of flat wages and
weak productivity growth.
- The
issue has become a higher-profile plank of both
political parties — and could move to the center of the 2020 debate.
Farmers like Petersen are on the receiving end of
all this concentration. Just in the five years from 2007 to 2012, the number of
U.S. hog farms declined by 25%, the Agriculture Department
says.
Joe Peiffer, a bankruptcy
lawyer in
the Iowa city of Hiawatha, told me that the current wave of consolidation shows
no sign of reversing.
- The
culprit he sees is cheap food: In 1960,
Americans spent 17% of
their disposable income on food; the figure now is just 6.4%,
according to U.S. government figures. The tight margins ran out everyone
but the big dogs.
- Whatever
the reason, you can see the outcome outside
of Des Moines. "A lot of towns are ghost towns because the farmers
are gone. Schools are consolidating. My high school graduated 86 kids in
1974. It was 50 last year."
The heyday, in Petersen's
memory, was
the 1970s, when "rural America was ungodly vibrant." Sixty cents per
pound of hog gave farmers a healthy profit, he said.
- The
nearby city of Swaledale had just 220 people, yet when
you added in everyone in the surrounding, smaller towns, there was sufficient
business for a bank, grocery and hardware stores, a gas station, and two
bars with restaurants.
- Now,
Swaledale is about 150, and the businesses have shuttered: "It's
all gone. That's what they've done to rural America."
When Petersen says
"they," he means Big Ag, which in his view is plain greedy. It is
trying "to run us out," he says, banging the table with his fist.
- In
a statement, Bayer, which owns Monsanto, said: “Agriculture
is a complex and highly competitive industry, and there are hundreds of
companies driving innovation and competing for farmers’ business. After a
robust global regulatory review process, we brought together two talented
teams and a robust portfolio to offer more choices for farmers. Working
with our customers and partners around the world, we are focused on
developing smarter ways to grow healthy crops that are more
environmentally and economically sustainable.”
- DowDuPont
did not respond to an email.
In 2001, Petersen went
bankrupt. After
that, he changed his business model and began to raise a premium hog known as a
Berkshire, a breed whose meat he compares with Kobe beef. They fetch twice the
price of the standard hog.
- The
whole sequence is outside the packers
system. He said he earns more from the 500 Berkshires he raises every year
than from the 2,500 ordinary hogs he used to produce.
- "It's
capitalism at its best. You get a price, not a
fee," Petersen said.
Petersen's daughter Becky
and son Matt live
nearby. How have they managed to stay? Becky's husband Curtis and Matt both
work as conductors for Union Pacific Railroad, he says.
- Petersen
doesn't want to say what they earn but
says it's "ungodly wages." Both have acreage and raise cattle
and chickens.
"In this wicked
world," he says, "they're adjusted and are doing well."
https://www.axios.com/iowa-country-of-monopolies-7de113b7-2860-4fa2-83ea-32c5b6766c15.html
