Livestock and poultry producers now have a new, more convenient way to report anticompetitive practices, and can even choose to do so anonymously, using a recently released online tool from the U.S. Department of Agriculture and Department of Justice.
Farmers and ranchers can use the tool to submit a complaint that will then be reviewed by the USDA Packers and Stockyard Division and DOJ staff. If a complaint raises sufficient concern, further investigation will then take place.
Harvey James, professor of agricultural and applied economics at MU, said the motivations for this tool are “pretty straightforward.”
“There are large sectors of the agricultural industry that are very consolidated,” James said. “And so the question naturally arises ‘Is this competitive? Are the prices that are coming out consistent with what they ought to be?’”
One of the consolidated industries targeted by the tool is beef, in which four companies now control 85% of the U.S. market. The same number of companies control 70% of the pork and 54% of the poultry markets.
This is a sharp increase from the late ’70s, when these numbers hovered more in the 25% to 35% range depending on the market.
And as consolidation has increased in meatpacking, farmers’ share of the value of their products has decreased. For example, according to the USDA, ranchers received more than 60 cents of every dollar a consumer spent on beef 50 years ago, compared to approximately 39 cents today.
“That’s considered extreme concentration within markets,” said Tim Gibbons from the Missouri Rural Crisis Center, a statewide farm and rural membership organization. “And that’s been negatively impacting family farmers, rural communities, rural economies and also negatively impacting consumers.”
As industries have become more consolidated, the number of producers has gone down, both state- and nationwide. Gibbons pointed to the Missouri hog industry as a particularly poignant example: According to USDA Census data, the number of hog farms has decreased statewide from around 23,000 hog farms in 1982 to just under 2,700 in 2017.
“That’s not because producers don’t want to raise hogs; producers do want to raise hogs,” Gibbons said. But “corporate control and vertical integration of the hog industry has put nearly 90% of Missouri hog producers out of business.”
New approach is ‘more convenient,’ but efficacy uncertain
James said that while there have always been ways to report anticompetitive practices to the government, like hotlines or emails, the new tool makes it easier for producers to do so.
“What’s really interesting about (this tool) is the simplicity and the anonymity,” he said. “I think it’s just a little more convenient for people who may be concerned about making a phone call or sending a letter.”
A producer might decide to make an anonymous tip out of fear of retaliation from larger companies. To make an anonymous report, the complainant would fill out the Farmer Fairness form but leave the spaces for name and contact information blank. While this means there’s no way to follow up on the complaint, it does give the federal government background on certain companies and flag them as potential violators.
In cases where the complaint is not made anonymously, the person who submits the tip would only be contacted if additional information was needed and in compliance with national privacy laws.
While the motivations and convenience of the tool are clear, however, James said it will be a while before it can be determined if the tool is having a significant impact.
“Whether there’s meaningful change that comes from this, frankly, I think that’s anyone’s guess,” he said. “It’s really too soon to tell.”
Gibbons echoed that it would take time to determine the tool’s efficacy and that he didn’t think it would accomplish everything on its own.
Instead, he said it would have to be complemented by other actions such as the strengthening of antitrust laws and increased enforcement, among other efforts.
“This is a step in the right direction,” Gibbons said. But, “this is one step in a necessary multiple steps that need to happen from our federal government in order to address (the issue).”