In one generation, we’ve lost the vast majority of the hog farms in the country, foreign corporations now control half of the industry and consumer prices for pork have gone up 187% since the mid-80s.
As a 5th generation Missouri farmer, I know what the stakes are.
As independent family farmers, we are responsible for our animals and the land 365 days a year, through every type of weather, year in and year out. We carry the majority of the risk, and then we watch corporate meatpackers take the majority of the profit after just a few days of ownership.
When we say the system is rigged, it’s not hyperbole — it’s farmers’ daily lived experience.
The threat is also not hypothetical because it’s happened before — we lived through this with the hog industry right after coming out of the farm crisis of the 1980s.
It’s the reason Missouri Rural Crisis Center (MRCC) is fighting to stop and reverse corporate control of the cattle and beef industry, and it’s why we started Patchwork Family Farms pork in the early 1990s to keep family hog farmers on the land when we saw the “writing on the wall” for the industry.
We called on our government to do something about it when they had the chance, but they caved to the power of corporate money. And now, 50% of the U.S. pork industry is controlled by 2 foreign corporations (Brazil and China), and over 80% of all U.S. hog farmers got put out of business.
Here’s what happened:
For generations, hog production was a major economic driver in rural Missouri. Hogs were called “mortgage lifters” because they allowed farmers to make money and pay down farm debt. We also significantly contributed to our local economies and locally owned small businesses, like feed dealers, vet suppliers, buildings, fences, equipment and other infrastructure.
Back in those days, we were able to sell our hogs at multiple buying stations and auctions all around the state. Thanks to that competition, farmers were given a premium for having good hogs.
And, the hog market was self-stabilizing, meaning when prices were high, farmers raised more hogs, and when prices went down, farmers raised fewer hogs — a true supply and demand system and the way it’s supposed to work in real capitalism.
Then, in the early 1990s, Premium Standard Farms (PSF) came to Missouri, and their business model began to take over.
They incorporated in Delaware and had “big ideas” on how they were going to change the pork industry. Unfortunately, they did change the industry, it just wasn’t for the better.
This was one of the first attempts at industrializing the hog industry outside of North Carolina.
However, in North Carolina, corporations used production contracts, where the landowner owned the land and infrastructure, and the corporation owned the hogs. Here in Missouri, PSF was going to own it all and be a flagship for vertical integration.
They went to Wall Street for a cash infusion, getting $800 million from Morgan Stanley, which meant anti-corporate farming laws had to be changed to allow corporate farming in three northern Missouri counties.
According to PSF, “a couple of local representatives and a senator snuck it in a bill. We got it done under the radar.”
Almost overnight, they went from raising zero sows to raising 80,000, which put millions of excess hogs on the market. Ultimately, they expanded to 105,000 sows. This put 2.5 million hogs onto the market, flooding it and driving down prices paid to independent producers like my family.
PSF didn’t have a packing plant at the time, so they sold their hogs to other meatpackers. Because PSF could deliver a lot more hogs than family farmers, meatpackers gave them “sweetheart deals” on the hogs, while independent producers, who had been getting premiums for their high-quality hogs, weren’t able to get those deals–if they even bought from them at all. Not surprisingly, hog farmers started going out of business in droves.
In 1993, PSF decided they were going to fully vertically integrate and build their own packing plant and create their own branding, owning the process from “squeal to meal.”
For the next two years, hog producers had fewer and fewer markets to sell into, and other hog factories started moving in, like Murphy Brown and Continental Grain. By the fall of 1994, hog prices had plummeted, and rumors were circulating that PSF was paying 12% interest to Morgan Stanley and losing $600,000 a day.
By 1995, it was clear to family farmers that, without policy change, industrialization and corporate control was going to completely destroy the hog market. That’s when MRCC and other farm and rural organizations started the Campaign for Family Farms, which was made up of thousands of farmers and rural citizens.
During a meeting in D.C. with then-Secretary of Agriculture,Dan Glickman, we requested that he come meet people in our home states. He accepted, which resulted in hundreds of farmers meeting with Glickman in a machine shed in north Missouri on opening day of deer-season in an ice storm.
It’s safe to say it was memorable in several ways.
Our demands on Nov 11, 1995, to try to save the hog industry, and the farmers and businesses that depended on it, are eerily similar to the demands we are asking for now relative to the cattle industry. We asked our government then, and are asking them now to:
- Stop megamergers in the food and agriculture industry.
- Strengthen and enforce antitrust laws, including the Packers and Stockyards Act, to stop unfair, deceptive, discriminatory and anti-competitive packer practices.
- Prohibit meatpackers from paying large corporations more money for their livestock than independent family farms for animals of the same quality.
- Prohibit meatpacker ownership and feeding of livestock.
- Stop using taxpayer dollars to subsidize the industrialization of the livestock industry, including through direct and guaranteed loans.
- Require meatpackers to make forward contracts for slaughter supplies on a firm bid basis and to offer contracts in an open, public manner.
In 1996, PSF defaulted on $421 million of junk bonds, declared bankruptcy and had to go back to Wall Street for a bailout, despite being the 5th largest operation at the time. Then, PSF got bought out by Continental Grain, who then got bought out by Smithfield (who had already bought out the two biggest pork producers in the country–Carroll’s Foods and Murphy Farms), who ultimately got bought out by a Chinese corporation (Shuanghui, now WH Group).
Each of these buyouts and mergers mattered. Each individual merger that seemed like not a huge deal at the moment was another step toward one foreign-owned corporation now owning 25% of our pork industry — and when combined with JBS, another foreign-owned corporation from Brazil, two foreign corporations control 50% of the U.S. pork market.
At the same time, other hog corporations continued to build and expand.
The hog market was no longer “self-stabilizing” and hog prices paid to producers went even lower as the market was flooded with corporate hogs. The corporate goal was to be the “last one standing” at any cost, and they knew they couldn’t compete unless they were the biggest.
Even the corporations knew what was happening in a market without rules — 43 corporations with 10,000 sows or more increased their sows by 18%, even knowing many of them would probably go out of business. And lots of them did, taking thousands of independent hog farmers down with them. It had nothing to do with being the most efficient producers of pork; it had everything to do with the market being broken. In fact, the top 3 producers at that time aren’t even in business today.
The corporate system of livestock production means that when too many pigs hit the market, there is no structure for liquidation. When you’ve invested millions of dollars and are financed by Wall Street, you can’t back out and you have to stay in until you get wiped out.
In December 1998, because of the mass overproduction by corporations, hog prices plummeted to 8 cents a pound, which resulted in a mass exodus of independent hog producers, and fewer and fewer places to sell hogs, if they could even sell them at all. In the months that followed, things got worse.
That next year, another 13% of hog operations went out of business, then another 13% in 2000, and yet another 10% in 2001.
In 1998, it took the top five pork corporations to have over 900,000 sows, and as of 2021, Smithfield (WH Group) alone owned over 900,000 sows.
To recap the results: In one generation, we’ve lost the vast majority of the hog farms in the country, foreign corporations now control half of the industry and consumer prices for pork have gone up 187% since the mid-80s.
Time is critical to stop the same from happening in the cattle industry.
The Big Four meatpackers currently control 85% of the beef industry, and we’ve already lost 35% of our cattle producers since the 80s. We are now losing, on average, 1,700 cattle farmers every year.
Brazilian-owned JBS already controls 23% of the beef market. Just like with pork, consumer prices have sky-rocketed, along with corporate meatpacker profits. It’s important to know those dollars aren’t going back to the farmers — which especially matters for Missouri, where we have the second largest number of cattle operations in the country after Texas.
So, what happened to the hog industry, and what is trending in the cattle industry, was totally predictable.
We knew it back in 1993 when we started Patchwork Family Farms pork. We knew it in 1995, when we made our demands to USDA when they could have taken action and stopped it. And we know it now, while we still have a chance to take action to save the cattle industry.
We not only know what the problems are, we also know what the solutions are. We have to raise our voices loud enough, together, to save cattle farmers and consumers from the fate of the hog industry while we still can. This year’s Farm Bill is a prime opportunity to address the challenges facing livestock farmers by passing the policies that we’ve clearly needed for three decades.