Harvesting Destruction

In the book’s introduction, Stockton notes that according to the U.S. Department of Agriculture in 2019, “209,007 farms produced 78.7% of commodity sales. The other 21.7% is shared by 1,820,192 small family farms.” In the following excerpt, he looks back at the neoliberal policies that have plagued agriculture since the 1970s, allowing monopolies to take over food production and squeeze out family farmers and ranchers.

You can read Barn Raiser’s interview with Stockton here. 

Plant Fencerow to Fencerow

Shortly after I took over the ranch from my parents in 1975, I, along with several local farmers and ranchers, was invited to a dinner and seminar on the future of agriculture. The keynote speaker was the president and CEO of the Chicago Mercantile Exchange, Clayton Yeutter. In 1985, President Ronald Reagan appointed him US Trade Representative, and in 1989, President George H. W. Bush appointed him Secretary of Agriculture. In 1991, Yeutter became chairman of the Republican National Committee.

In the early 1970s, Russia, for the first time, purchased a lot of wheat from the United States. This purchase caught the market off guard, causing prices to spike, opening the idea that the United States could be exporting a lot of the grain that was building up in all the storage bins across the nation. 

Yeutter’s message was that we would become the world leader in the export of grains—we would feed the world. Farms would be able to grow in size until they were “efficient,” and because of export demand, the “market” would take care of us. He encouraged us to buy more land and plant fencerow to fencerow. According to Yeutter, American farmers would dominate the international markets as long as we kept the price of wheat, corn and soybeans so low that other countries could not compete, forcing the world to buy grain from the United States. 

The room exploded with cheering farmers and ranchers. Yeutter was a dynamic speaker, and I learned that day that farmers and ranchers can be a gullible audience. After the speech, I was talking with an older rancher whose opinion I respected and asked him what he thought. He said that Yeutter had just told everyone exactly how he was going to put them out of business, and everyone had just thanked him. 

Sure enough, that’s what happened. Banks were already pushing easy money, farmers bought land at inflated prices, and by 1980, it all crashed in a cascade of events. Inflation was soaring across the nation, causing the Federal Reserve to increase interest rates. High interest rates had the effect of keeping the value of the dollar high on the world market, just the opposite of what you want if your goal is to export corn, soybeans, and wheat. Farmers who had borrowed heavily found themselves paying 15–18% interest rates. Finally, as if inflation was not enough, exports to Russia were banned because the Russians invaded Afghanistan. 

The first half of the 1980s were tough, tough times on farmers. Bankers who had been your best buddies turned into vindictive holders of bad debt. Everyone blamed farmers for making bad decisions even though those decisions were based on what the experts and bankers themselves had advised. It was, if you appreciate the irony, the same scenario that this country went through recently with the housing bubble and the resulting Great Recession of 2007–2009. Both economic crises were caused by bad advice from experts and bankers who threw caution to the wind. It was fiduciary malpractice on a massive scale. 

The financial crisis of the early 1980s weighed heavily on rural America. Farm foreclosures and suicides were constant. Farmers and ranchers tended to blame themselves as failures; they had not worked hard enough, made bad financial decisions and let their families down. By the time the farm crisis of the eighties was over, the era of the independent family farm was also over. 

But the policy of exporting our way to profitability through marketing cheap grains was not over, and it continues to this day. In the words of sociologist Harwood Schaffer and Daryll Ray, professor emeritus at the University of Tennessee’s Institute of Agriculture:

In ag policy, the zombie idea is that lowering the US price will increase or at least maintain export market share. We saw this with the 1985 Farm Bill where we lowered the loan rate in order to “recapture ‘our’ export markets.” The lower rates were continued in the 1990 Farm Bill with tweaking on providing extra income to farmers. 

These changes did not work so we doubled down and adopted the 1996 Farm Bill. … Even with these results, many ag economists and politicians continue to repeat the zombie idea that lower crop prices will allow US farmers to increase (or at least maintain) their share of U.S. corn, soybean complex, and wheat markets.

Here we were in 2020, relying on China to buy corn, soybeans, pork, chicken and beef even though we’d declared a trade war on them. China, however, has other options because the thing that the policymakers and experts back in 1980 failed to consider is that most countries of the world value food sovereignty, because they had all experienced food shortages and famine. China, India and Southeast Asia used the high-tech agricultural tools pioneered by the United States and Europe to increase the yields of their farm sector. This Green Revolution was led by agronomist Norman Borlaug, who received the Nobel Prize for his efforts. These countries now regularly export food. Meanwhile, the oligarchs in Brazil partnered with global agribusiness to steal land from Indigenous people and clear the Amazon rain forest to raise corn, soybeans and cattle—on a massive scale. All for export.

The 1996 Farm Bill, dubbed the Freedom to Farm Act, (and, by farmers, Freedom to Fail) was lauded as a way to eliminate the need for subsidies. Up until then, subsidies were based on a supply- management system that allocated how many acres of each crop farmers were allowed to plant. The Freedom to Farm Act opted for what they termed flexibility, the assumption being that if farmers were allowed the flexibility to plant the crops they wanted—not just corn, soybeans or wheat—farm subsidies would no longer be needed.

Instead of receiving checks directly from the government, farmers were required to buy crop insurance to cover losses due to weather. After all, the thinking went, what could be more market efficient than insurance. The premium for the crop insurance is, however, heavily subsidized by the government and the costs for the taxpayers have gone up steadily. One reason for this increase in farm subsidy costs is that private insurance companies are now able to siphon off a stream of taxpayers’ money for administering the program, money supposedly meant to support rural America.

The lie in all of this is that the larger farms are not, in fact, more efficient, because the concept of economies of scale is an illusion. Small farmers have yields that match or exceed those of the large. The real problem is the excess production capacity, along with the corporate appropriation of the market infrastructure. 

American family farmers have been left holding the bag from the anti–family farm policies of the last 60 years. The American public is also on the hook, because these failed farm policies cost taxpayers more and more. So in 2020, between payments to farmers to compensate for Donald Trump’s “trade war” with China and the regular stream of subsidies, including crop insurance, U.S. taxpayers will be out $53 billion.

Is It Neoliberalism or Nouveau Fascism?

As was mentioned earlier, the policies of the 1970s set the stage for the economic conditions for family farms to worsen. The plan to “remove human resources from agriculture,” endorsed by university economists and policymakers alike, had nearly met its goals. The policy to dominate world agricultural exports by “planting fencerow to fencerow” was gaining traction. But also hatched was a policy to stop antitrust oversight and regulation of corporate mergers. 

This latter policy was not confined to agriculture, making the 1970s the beginning of an assault on democracy itself. As dangerous as Richard Nixon was for America, American economist and statistician Milton Friedman (and former solicitor general of the United States Robert Bork) proved to be far worse. In 1976, Friedman received the Nobel Prize in Economics for his theories on neoliberalism, which, according to the Encyclopedia Britannica, “is most commonly associated with laissez-faire economics. In particular, neoliberalism is often characterized in terms of its belief in sustained economic growth as the means to achieve human progress, its confidence in free markets as the most-efficient allocation of resources, its emphasis on minimal state intervention in economic, and social affairs and its commitment to the freedom of trade and capital.”

This concept is economic doublespeak, meaning that government should not interfere in the monopolistic tendencies of corporations if it can be argued that consumers were somehow benefiting. Government’s role in the economy should be confined to preventing inflation by managing the money supply and preventing wages from increasing. For neoliberals, the “invisible hand of the market” would take care of everything else. 

Barry Lynn, researcher, author, and executive director of the Open Markets Institute, points out that as a result of neoliberalism, our government changed from representing us as citizens to considering us to be consumers. He goes on to observe that we “as citizens” also abdicated our responsibilities to actively ensure that government works for our benefit, and accepted instead the passive comforts of being a consumer. The door was open for the corporations to infiltrate the government and appropriate the economy. He likens that process to a coup d’etat.

What Friedman and Bork espoused began to be implemented by the Reagan administration. Paul Volcker was the chairman of the Federal Reserve Board while Clayton Yeutter, whose seminar I had attended, managed trade and agriculture policy. Their time in power was used to free corporations from oversight and regulations. Reagan proclaimed government to be the problem, and many Americans found this inspirational. The goal became to starve government to the point that it could be drowned in a bathtub. Not only would there be no “new” taxes, but there would also be no “old” taxes for the wealthy at least. As for the rest of us, if we wanted roads and schools, we could either pay for them on the local level or do without. 

For the wealthiest Americans, taxes were cut again and again as the policies fostering economic equality coming out of World War II were abandoned in a bipartisan assault. In 2010, the US Supreme Court ruled, in the Citizens United v. Federal Election Commission case, that there could be no limit on the freedom of speech—in the form of campaign financing—of corporations. The Citizens United decision effectively transferred power from American citizens to global corporations. The coup was completed. 

If you look in dictionaries, “fascism” has a complex set of definitions; prominent among them is an authoritarian state exploiting extreme nationalism. But embedded within the definitions is the fact that under fascist regimes, there is a very close relationship between the financial elite and the fascist government. Their interests merge. So do you really need an authoritarian head of state mobilizing the forces of the state against a “hated minority” to have a fascist government? Or can you have a “soft” form of fascism—a “nouveau fascism?” 

Former president Donald Trump seems to have made a determined effort to be a fascist, authoritarian head of state. He and his partisans proclaimed immigrants to be the “hated minority,” and as the 2020 election heated up, socialists—defined as everyone not wearing a MAGA cap—were added to the list. He had already in numerous public rallies declared the press as an “enemy of the people.” Perhaps Trump spent too much time playing golf to pull off full-blown fascism, but clearly many of his followers would willingly replace the Constitution with an authoritarian state. However, according to a 2020 CNBC report, Wall Street massively funded the Democratic opposition to Trump. Trump may have caused Wall Street too much turmoil and unpredictability. Perhaps the nouveau fascists understand they do not need an authoritarian fascist state in order to maintain control of the government and the economy. 

The original rationale that neoliberal policies were meant to benefit the consumer did not work out very well at all. The Congressional Budget Office reported that, based on 2019 dollars, the average wage for the bottom 90% in the nation rose from $30,880 in 1979 to $38,923 in 2019. In contrast, the income of the top 1% rose from $291,329 to $758,434 during the same time period. According to the report, the top 1% possess 19.5 times more wealth than the bottom 90%. The top 0.1%, totaling 330,000 individuals, own as much wealth as the bottom 90%, which totals 297,000,000 individuals.

Monopolies and the Neoliberal

“Farmers buy retail and sell wholesale” pretty much sums up the economic reality farmers face. Since 1980, when the US Department of Justice stopped enforcing the Sherman Antitrust Act, investigations of collusion between competing agricultural firms have just about stopped. The Clayton Act, which governs the merger of competing firms, also stopped being enforced. To my knowledge, all mergers concerning competing agri-corporate firms have been allowed. The Packers and Stockyards Act, which regulates competition in livestock markets and is overseen by the USDA, has also been ignored.

The result is that, as of 2020, farmers have very limited alternatives for all major purchased inputs and for the marketing of their produce. In the case of the cartel that controls the meat protein market (poultry, hogs and fat cattle), they have succeeded in almost completely eliminating the transparent public market.

On the input side are the things that farmers must purchase in order to successfully plant and harvest a crop. This ranges from machinery, fertilizer, and chemicals to the technologies vital for the future of agriculture. Farmers are facing oligopolies for all of these essential inputs: 

• Farm equipment: John Deere, CNH Industrial and AGCO.
• Fertilizer: Nutrien (a merger of Potash Corporation of Saskatchewan and Agrium) and Mosaic (formerly co-owned by Cargill).
• Seeds: Corteva, Syngenta (Chinese owned) and Bayer—together they monopolize 60% of the US market.
• Herbicides/pesticides: Corteva, Syngenta and Bayer—they also have 60% of the US market.
• Precision agriculture and other emerging technology: Corteva, Syngenta and Bayer.

As we see above, the market for seeds and chemicals is dominated by the same three companies. Corteva is the result of a 2017 merger of the chemical giants Dow Chemical and DuPont. Bayer and Monsanto merged in 2018 and kept the name of the German chemical giant Bayer. Syngenta was a Swiss company bought in 2016 by the Chinese government through the China National Chemical Corporation. Between them, these three global giants control 60% of the US market, including all of what is termed the genetically modified organism (GMO) seed technology.

These three corporations are also poised to control the future of industrial agricultural production through domination of “precision agriculture,” or “precision ag.” This concept includes a grouping of high-tech innovations using satellite and drone surveillance to accurately map soils and monitor plant growth across fields. Instead of treating a field as a single unit, seed, fertilizer, herbicide and pesticide placement is calibrated to the needs of different areas of the field, such as variations in soil types. The promise is to target seed, fertilizer, herbicide and pesticide requirements just to where they are most needed, reducing the overall amounts required.

Added to this concept is the increased utilization of robotized machinery. Self-driving tractors, seeders and sprayers are increasingly controlled by the surveillance data. In addition, harvesters automatically monitor the yields in real time to verify the results of the precision ag. It seems a bit dubious that companies that are in the business of selling seeds, herbicides and pesticides will be advising farmers on how little of each to use. 

Presumably, precision ag technology and services will be proprietary systems, so that farmers will have to choose which company to align themselves with. This will result in even less independence and will put farmers further down the path to complete vertical integration, where they are increasingly reliant on a single corporation for inputs, technology and marketing of production—in which case there will be a complete loss of market independence. 

On the commodity selling side of things, farmers must sell to the following cartels:

• Corn: Archer Daniels Midland (ADM), Bunge, Cargill, Ingredion and the Louis Dreyfus Company (Dreyfus) together purchase 87% of the US crop. 
• Soybean: ADM, Bunge, Cargill, and Ag Processing together purchase 85 percent of US crop. 
• Cattle: Cargill, JBS Foods (Brazilian owned), Tyson Fresh Meats and National Beef (co-owned by Marfig Global Foods—also Brazilian) together slaughter 85% of the US fat cattle. 
• Pork: Tyson, JBS and Smithfield (Chinese owned) together control 70% of US hogs. 
• Chicken: Tyson, JBS, Sanderson Farms, Perdue—control 50% of US chickens.

An oligopoly is a cartel of firms that controls the sale of things, while an oligopsony is a cartel of firms that controls the purchase of things. In both cases, the competitiveness of the market is compromised and America’s farmers are hemmed in from both sides. In some instances, farmers are subject to both phenomena by the same corporation. This is the case with Cargill, which is dominant in both the sale of fertilizers and the purchase of corn and soybeans. Cargill goes one step further and is one of the four firms that controls beef-packing.

America’s farmers are hemmed in from Cargill, Bunge and Dreyfus are unique in that they are very old family-owned firms that, between them, control much of the international trade in grains. Cargill was founded in 1865 and is the largest privately held corporation in America. The Louis Dreyfus Company was founded in 1851 in France and accounts for about 10% of the global trade in agricultural products. Bunge Corporation started as Bunge and Born in 1818 in the Netherlands. This company is especially dominant in South America in the international soybean trade. 

These firms control the market by controlling access to the transportation of the commodities. Corn, soybeans, wheat and rice move in massive quantities by barge on the Mississippi River or by rail to ports on the Gulf, East and West Coasts. By owning the facilities that load the barges and railcars, along with the facilities that transfer the cargo to ships, Cargill, Bunge and Dreyfus effectively control the international market for these commodities. 

The news often reports that American farmers have made a major export sale, which is not true at all, because farmers do not sell anything to any foreign buyer. Cargill et al. makes the sale and, more often than not, presells the crop, because their global information network allows them to understand both the supply and the demand better than any farmer or government could ever hope to. 

Earlier in this essay, I made the observation that only 209,007 farms produce 78.7% of sales. One reason for this fact is that the agri-cartels find it more convenient to deal in large quantities of production. For instance, procuring chickens a few dozen at a time from hundreds of chicken farmers is, for them, more inconvenient than sending a semitrailer to pick up thousands of chickens from a factory farm. Ultimately, what we as citizens and consumers need to consider is whether this efficiency in scale warrants the environmental risks, the social dislocations and the vulnerabilities to the supply chain.

Used by permission of the University of New Mexico Press (https://www.unmpress.com/).

Gilles Stockton

A third-generation Montana cattle rancher, Gilles Stockton raises beef cattle and sheep on five thousand acres in Grass Range, Montana. Stockton is an international agriculture development specialist, a member of the Northern Plains Resource Council, and the past president of the Montana Cattlemen’s Association. He is a regular contributor to agricultural news magazines such as Western Agricultural Reporter and the Tri-State Livestock News. Stockton advocates on behalf of the nation’s ranching and farming communities.