Making Pork Chops Flow Uphill
Posted on February 18, 2022
For more than 40 years my father farmed within a mile of where the Kaskaskia River met the Mississippi deep in southern Illinois. That meant he had two, lifetime partners: the river and the U.S. Army Corps of Engineers, landlords of the levees that guarded our wedge of the Great American Bottoms.
Dad never argued with the river but he never stopped arguing with the Corps. “Those engineers,” he’d say whenever the Corps’ management of the levees was discussed, “not only will tell you water can run uphill, they’ll pull out their pencils and prove it.”
I’m starting to feel the same towards many ag economists, our pocket-protected servants of calculus and convention.
That revelation arrived in two recent reports–one commissioned in Aug. 2020 by the House Ag Committee, the other sponsored by the National Pork Producers Council (NPPC)–that defend the market power gained by U.S. meatpackers in the last 30 years.
The studies are a prelude to threatened federal action to trim the power packers have in cattle, hog, and poultry markets. Both analyses rely heavily on the soft ivy of academia–theory, math, and intellectual certitude–and a lubricating, almost patronizing “you-don’t-want-to-hear-this-but” tone as each explains why packers dominate.
The first is a 10-chapter, 201-page book of “proceedings” conducted by the U.S. Department of Agriculture’s Office of the Chief Economist. It hired ag “policy research centers” to address “current issues in cattle markets, including the structure of the industry, price discovery, purchasing mandates, and barriers to entry…”
Conveniently, the Texas A&M ag economists who rode shotgun on the project capsulize its major findings in its preface: “While we offer these findings – which can largely be characterized as urging caution before changing a system that has resulted in cattle producers capturing significant value over the last three decades – we acknowledge the palpable frustration of many producers throughout the country.”
“In many cases,” it continues, “their frustration seemingly stems from feeling like they aren’t receiving the prices they think they should and the fact that economists often simply urge caution instead of offering finite answers.”
Well… that’s interesting. Cattle producers just feel like they “aren’t receiving the prices [they] think [they] should” despite having captured “significant value” in the last 30 years. It could be because–and we’re just spitballin’ here–we “economists often simply urge caution instead of offering finite answers.”
On second thought, not really, because we “economists are generally quite comfortable saying that price discovery is still quite robust… [even though] we can’t pinpoint the point at which that would cease to be the case.”
So, just to clarify: You’re comfortable until you’re not comfortable but you can’t “pinpoint the point” where that discomfort begins.
That’s the level of blinding insight that encouraged me to leave ag econ for ag journalism.
The NPPC’s report is the shorter, pork side of a similar analysis constructed on years-old data, comparisons to other concentrated industries like breweries and cat food, and a chart of pork chop prices around the world. Combined, all hope to build a case that meatpacker “concentration has not significantly increased over the past 15 years.”
But neither report examines the enormous impact meatpackers’ rising clout has had on rural America over the last 30 years. That impact has been unmistakable: Independent, cash-based livestock and poultry markets, a key element to promote competition and ensure farmers and ranchers received a fair price, were virtually wiped out.
When farmers and ranchers asked their farm, political, and university leaders–all of whom have seen their ties to Big Ag deepen over the same period–for answers, most were told that these new “efficiencies” were common to “maturing markets.”
And, according to ag economists, efficiency in this ballgame is the whole ballgame, right down to the last penny-per-pound you may have to concede to the transnational meatpacker for it to stay in the game even if it kills you.
But don’t worry. According to the NPPC’s meatpacker study, you’ll still get a pork chop almost twice as cheap as any Australian.
Or, as my father might add, at least until the levee breaks.
© 2022 ag comm