IATP Hog Report - Institute for Agriculture and Trade Policy

Section 1
sell on the spot or cash market, but even here the farmer is a price taker.
Fewer bidders for his or her hogs means reduced competition and
therefore a reduced price. 62
Supplies of hogs that packers own, or that they contract with farmers to
produce for them, are known as "captive supplies." According to a recent
study by the Land Stewardship Project, the concentration in the packing
industry and the level of captive supplies on the market are high enough to
have some control over price. 63
Other Concerns
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Independent hog farmers find themselves "powerless to address their
problems in the closed concentrated systems with which they must deal." 64
Giant, farmer-owned processing and supplier cooperatives such as Land
O' Lakes and Farmland Industries, have used members' equity,
withholding or reducing dividends, to invest in contract hog production
and compete in the market with their members who produce hogs
independently. 65 In 1999, Farmland Industries, for example, was the ninth
largest producer of hogs in the United States, with 67,000 sows. 66
An anti-corporate farming law prohibits Land O' Lakes from owning hogs
in Minnesota where its headquarters are located, so it went outside the
state to build. In 1999, Land O' Lakes had production operations in
Oklahoma, Illinois, North Carolina, Iowa, Indiana, and northern Missouri,
and was the twelfth largest hog producer in the United States with 63,738
sows. 67 It marketed seven million hogs through contracts. Its swine
division lost $25.8 million in 1999 and $51.8 million during the past two
years. 68
It is the opinion of a growing number of independent family farmers that
they have been ill-served by organizations purporting to represent their
interests. In December 1999, membership of the Mississippi Farm Bureau
Federation unanimously adopted a resolution strongly condemning and
calling "a gross breach of faith" the American Farm Bureau Federation's
(AFBF) lobbying efforts against U.S. Senator Paul Wellstone's bill. This
bill would have placed an 18-month moratorium on agribusiness mergers
until their impacts on independent family farmers could be determined. 69
As of April 1, 2000, over 175 organizations and 600 individuals have
signed a petition initiated by GrassRoots Environmental Effectiveness
Network calling for a federal
investigation of AFBF, which was the subject of an April 9, 2000, CBS 60
Minutes report. 70