Hope's Edge: The Next Diet for a Small Planet (11 page)

While nationally four beef packers control about a third of the market for cattle, what’s worrying cattle feeders is how few corporations are
in their vicinity
to bid for their herd; for, regionally, control is even more tightly concentrated. Just three packers, for example, now purchase 70 percent of the feedlot cattle in a major Southwest beef producing area.
¹⁴
Cattlemen are sure that such concentrated power depresses the prices they can get for their cattle.

Cattle-feeding, meatpacking, and grain-trading operations used to be owned by separate interests. But today 13 of the 25 biggest feedlot operations are owned or controlled by either meatpacking or grain-trading corporations.
¹⁵
Their interest is in keeping the price of feedlot cattle down. Conveniently, these “integrated” firms also control a critically large share of the cattle futures market (trading in contracts for delivery of feedlot cattle), which they can use to depress the price of cattle, helping to drive out of business the smaller feedlots not connected to beef packers. Officers of packing, meat-processing, grain-trading, and feedlot companies also use their insider knowledge to reap incredible personal gain. A 1980 Congressional study revealed that over a 16-month period in 1978 and 1979, those who came out on top in cattle futures trading were a handful of officers in these companies who each profited by an average of $2.5
million.
¹⁶

Such concentration of economic power is what
I
had learned to associate with third world economies.

I
MAGES OF THE
T
HIRD
W
ORLD

Miles and miles of coffee or banana trees. Endless fields of sugar cane. Dependency on raw-material production—and dependency on only one or two crops for export. The marketing of these exports through corporations with no accountability, no loyalty to the well-being of the people of the country.

Since these are my images of third world agriculture, you can imagine my alarm as
I
learned about the parallels in U. S. agriculture.

I began to study the U. S. government’s big farm-export push, which began in the early 1970s. Some have called the massive increase in agricultural exports the greatest shock to hit American agriculture since the tractor, and they may be right. In just ten years farm export volume doubled, and in the Corn Belt states almost 30 percent more land came under cultivation—much of it marginal land, highly susceptible to erosion.

Directly related to the export push are two other trends—a reduction in the number of crops produced and the increasing dependence of farmers on foreign markets. In fact, that dependence doubled in only ten years, so that by 1980 almost one-third of farmers’ sales went overseas.

What is the significance of these trends for fanners? And for all of us?

Dependence on foreign markets immediately resulted in more volatile commodity prices. The variation in prices farmers received after 1972 was five times greater than during the late 1960s. Boom and bust was the result. While farmers’ incomes hit record highs in 1973-74, by 1978 an average farm family’s real purchasing power was no greater than it was in the early 1960s. These great income swings hit the moderate-sized family farm the hardest, especially those with big mortgages still to pay off. It favored those farm operators with investments outside farming, those with incomes large enough to weather the price dips, and those with large equity in their land.

T
HE
W
INNERS
: T
HE
G
RAIN
T
RADERS

If we are right, and the farm export boom has helped only a small minority of farmers, who
has
benefited? We have found that a disproportionate share of the benefits flow to the five major grain-trading companies—Cargill, Continental, Louis Dreyfus, Bunge and Borne, and Andre—that account for an incredible 70 to 80 percent of all U. S. grain trade. What is wrong with that? you may ask.

First, grain traders are able to capture wealth which should rightfully accrue to the farmers
. In their role as transporters of farm commodities, traders guarantee themselves a profit because they can add on to their selling price the costs they incur at every transport link in the marketing chain. Because they can pass on costs, grain traders end up profiting while the income of farmers stagnates. Compare the fate of the two: the real income of farmers was about the same at the end of the 1970s as it was in the early 1960s. But the income of the largest trader, the Minneapolis-based Cargill Corporation, has gone up a whopping 441 percent since the late ’60s.
¹⁷
(And that is
after
adjusting for inflation.)

Second, the interests of the grain traders conflict with the interests of the vast majority of the American people
. What consumers and farmers want are stable prices; but traders profit from market
instability
. For grain traders, profit lies in the price
spread;
whether the price goes up or down is less important. Thus, knowledge of price differentials, between locations or between markets, is all that the major firms need to make money.

Third, even though the major grain traders are largely dependent on U.S. producers and U.S. resources, they are virtually unaccountable to the interests of our farm producers or the U.S. government
. The grain traders operate in great secrecy and have made themselves immune to many U. S. laws.

Again, take Cargill, the largest. Cargill’s major trading arm is Tradax, chartered in Panama and based in Geneva. Cargill calls it an “independent subsidiary,” but it is actually 70 percent owned by Cargill and 30 percent owned by the Salevia Foundation—a trust whose beneficiaries are all members of the Cargill and MacMillan families, owners of Cargill.
¹⁸
The Panamanian charter gives Tradax (Cargill) significant tax advantages. Based in Geneva, Tradax is protected by Swiss secrecy laws. (Cargill refused to provide some significant information in 1976 Senate hearings, on the grounds that it would be illegal under Swiss law.
¹⁹
) Transactions run through Tradax need not all be reported, either to the USDA or to the IRS for tax purposes. This secrecy is both a tax advantage and a trading advantage.

Most major grain-trading firms export grain from every major exporting country in the world. Thus, they have no loyalty to the interests of U. S. producers, and even help to pit foreign producers against U. S. producers.

Fourth, the enormous wealth of the major grain-trading firms gives them power to influence U.S. government policy and to gain access to tax support
. The incredible influence of the grain trade came home to us when a high government official confided to us that if he were to question the all-out-for-export strategy, the grain companies would have him out of a job immediately.

Influence helps buy government assistance, too, such as the services of the Foreign Agriculture Service of USDA and even more direct help. Cargill Korea, for example, was started with 95 percent of its financing from the U.S. government. Public assistance has also helped Cargill expand domestically. The Indiana Port Commission, for example, raised $18 million through tax-free revenue bonds for a Cargill-controlled elevator.
²⁰

Fifth, the size of the major grain traders enables them to prevent competitors—such as farm cooperatives—from entering the export sales market
. While farm cooperatives handle 40 percent of domestic grain sales, they have so far garnered less than 10 percent of the export market. Greater export sales by farm cooperatives might allow more of the money from sales to go to producers.

Sixth, the size of the major grain traders, and the wealth they are accruing as export sales mount, allow them to expand into virtually every aspect of the food industry
.

Cargill has used its export bonanza to acquire even more
ships
and
elevator space
at major ports (Cargill and Continental already control half the space);
²¹
to expand its
poultry operations
(Cargill already ranks fourth in the U. S.);
²²
to expand its
animal feed operations
(Cargill is already the nation’s second largest producer);
²³
and to enlarge its
soybean and sunflower processing operations
(Cargill may already be the largest soybean crusher in the world).

Cargill is also the number one
cattle feeder
in the country.
²⁴
Cargill’s new export profits allowed it to purchase the giant
meatpacking firm
Missouri Beef Packers (MBPXL) in 1978. (At that time MBPXL itself ranked 213th of the Fortune 500.) With Cargill’s huge assets behind it, it took only one year for MBPXL to push past Swift to become the country’s second largest meat packer, just behind Iowa Beef Processors—which itself was just bought by one of the country’s biggest oil companies, Occidental, as I just noted. These top two producers are now wiping out smaller competitors. Some investigators suspect that concentration in the meat industry is responsible for a significant chunk of the meat-price increases over the last ten years.
²⁵

Such increasing vertical integration means that profits, picked up at every stage from raw commodity to sales, accrue to fewer and fewer firms. Not only does this process lead to the concentration of wealth, but it also allows for more market manipulation.

   Since our nation was founded, Americans have resisted such economic concentration, believing that mammoth, unaccountable economic units operating behind closed doors are antithetical to democracy. Nevertheless, economic concentration has been quickening and, in the 1980s, it is gaining speed in a “merger mania” blessed by the Reagan administration and fueled by the oil companies’ burgeoning profits.

The concentration of economic power, the dependence on unstable international markets, the unaccountability of the most powerful economic forces—all these are characteristics I learned to associate with misery in the third world. But there is a fourth important parallel that we must face—less visible but equally threatening. It is the mining of agricultural resources for short-term gain. In
Part II
of this book I describe this threat to our food security.

   My path has taken me from years of desperation in the 1960s (desperation because I did not understand the root causes of needless suffering) to a study of the roots of third world hunger in the 1970s and, finally, a return home in the 1980s to face the crises in our own food and agriculture system—shockingly similar to systems I have seen in the third world. In this twelve-year process I began to see patterns in what before had been an overwhelming jumble. A framework for understanding began to emerge. Using this framework, I have struggled to identify paths of action that are both meaningful and satisfying. Knowing we can’t take on the whole system, where do we begin?

First let me make very clear that I am not suggesting everyone become a “food activist.” Yes, I do feel that food problems have a special ability to open doors of understanding—everyone eats and everyone likes to talk about food! But I also believe that most of the gravest problems facing our society today have common roots. Whether the issues be education, health, the legal system, or energy policy, the underlying cause is the distribution of power and wealth which determines how decisions are made and for whose benefit.

In 1980 the Institute published
What Can We Do? Food and Hunger: How You Can Make a Difference
. For this book we interviewed many friends actively involved in transforming our food system into a more democratic and sustainable one. We wanted to know how they kept going in the face of such huge and complex problems. Some of their answers are included in
Part IV
of this book, “Lessons for the Long Haul.”

Power and Responsibility: Changing Ourselves

The first struggle for me and for so many of my friends has been to reconcile our vision of the future with the compromises we must make every day just to survive in our society. If we attempt to be totally “consistent,” eschewing all links between ourselves and the exploitative aspects of our culture, we drive ourselves—and those close to us—nuts! I still remember my annoyance as a friend, sitting with me in a restaurant in the late 1960s, scornfully picked the tiny bits of ham out of her omelet.

Who wants to be around someone so righteous that they make you feel guilty all the time? But while self-righteousness is not very effective in influencing people, this does not mean we should not try to make our personal choices consistent with our political vision. Indeed, this is exactly where we have to begin.

If the solution to needless hunger lies in the redistribution of decision-making power, we must become part of that redistribution. That means exercising to the fullest our power to make choices in our daily life. It means working with other people to force the few who have more power to share it with the majority. It also means preparing ourselves to share responsibility with others in areas that we now leave to unaccountable “experts” and politicians.