On the record with Rob Larew

NDFU Editor Chris Aarhus speaks with National Farmers Union President Rob Larew on the Fairness for Farmers campaign that started last September

Last September, National Farmers Union (NFU) launched the Fairness for Farmers campaign. NFU is fighting for stronger enforcement of antitrust laws and to break up the corporate monopolies that use their size to unfairly take advantage of farmers and ranchers while forcing consumers to pay higher prices at the grocery store.

Many of the companies controlling markets for farm inputs, like fertilizer, and commodities are vertically integrated, which means they control multiple stages of the supply chain. 

Farm equipment manufacturers have monopolized the market for repair. These companies unfairly force farmers to do key repairs solely through dealership networks by restricting access to certain parts or software. This can lead to lengthy repair delays and inflated repair costs. In fact, for Deere and Company, parts and repairs are six times more profitable than selling equipment.

Consider that:

• The four largest multinational meatpackers control 85% of beef packing, 70% of pork packing and 54% of poultry processing.

• Only four firms control 85% of corn seeds and 76% of soybean seeds.

• Farmers in the corn and soybean markets must sell their crops to the same four companies that control 84% of wet corn milling and 82% of soybean crushing in the U.S.

• Just four firms account for approximately 84% of the global herbicide and pesticide market.

• 95% of large farm tractors are made by just three companies: John Deere, CNH Industrial and AgCo.

NFU President Rob Larew recently visited with North Dakota Farmers Union editor Chris Aarhus about the Fairness for Farmers campaign.

CHRIS: Rob, thanks for doing this. Let’s get right into this topic of concentration in agriculture. At my first NFU fly-in with Farmers Union five and a half years ago, one of the topics we talked to Congress about was concentration in agriculture. That was 2016, and at that point, nobody else was talking about this. What did Farmers Union see that others did not?

ROB: This is a topic that’s really built into Farmers Union’s DNA. It’s why we came into existence back in 1902 — because we had such a monopoly-dominant economy that was putting farmers at a disadvantage. We were looking for ways to fix it, whether it be collective action, developing co-ops, et cetera. But they understood the power of farmers and ranchers working together toward solutions. Of course, it was when President (Theodore) Roosevelt was also looking to break up some of the trusts, whether it was banks, railroads, and the like. It was a huge movement that took a number of years to actually work through things, including the Packers and Stockyards Act. Over the last several decades, we’ve been drifting back into this monopoly dominated ag economy. We understand where we’ve been in the past, so it’s been on our radar screen. 

CHRIS: As a society, how did we get here with so few companies controlling so much? Were we just lulled to sleep by low-cost food?

ROB: Part of it was because in the early (1980s), there was a decision made in the review of any kind of merger or acquisition that if it didn’t affect consumer costs for goods, they were going to let these mergers go through. There was really a disregard for what the effects were on the rest of the economy, and obviously on the other end, farmers and ranchers. This has been building for a long time through many different presidents.

CHRIS: When I was growing up in the 90s, the only time I ever heard antitrust was when they were talking about Microsoft.

ROB: And you may have also heard about them breaking up the telecoms with Ma Bell and that kind of stuff. But in terms of the rest of the economy, you just didn’t hear about the issue.

CHRIS: When we look at these processors that control such a large share of the marketplace, some of these are foreign-owned. How worrisome is that?

ROB: It’s worrisome on a number of fronts. We sometimes talk about this issue as a national security issue. You and I have been talking about this in terms of making sure we have a food system that’s going to be able to weather a shock and still make sure folks have a reliable supply of food, and part of that is with concentration of these large companies. But when you factor in that these companies are China-owned (Smithfield) or Brazilian-owned (JBS), and they’re so globally dominant, that makes the question of food security in the context of national security all the more relevant.

CHRIS: There’s a lot of talk about the pandemic bringing these issues to light. What are the ways in which that happened?

ROB: When the pandemic hit, we had all of this shock to the supply chain. Some of that you’re always going to get whenever you have a disruption, whether it’s a pandemic or a major storm that hits a big part of your country. Suffice it to say, we have not experienced anything like (we are currently experiencing). We talk about the four packers on the one end, but they are selling into a very consolidated grocery chain as well. You have a system that’s efficient, but not very resilient. We had numerous disruptions – transportation disruptions, disruptions at the plants themselves because they’re needing to either slow or stop processing because of the pandemic. All of this ripples down. We see these awful images of produce going to waste, milk being dumped, hogs having to be euthanized at the farm because there was nowhere to deliver them. All of this was exasperated because there were too few players to handle processing.

CHRIS: But we’ve seen other issues, right? The Tyson Meats fire in Holcomb, Kan., in 2019. The JBS cyberattack in 2021 in which its beef and pork processing was shut down and it had to pay an $11 million ransom. Those aren’t pandemic related, but they showed weakness in the supply chain.

ROB: Absolutely. But those are like the canary in the coal mine, if you will, in particular the Holcomb fire. When it hit, you saw the impact it had on prices. We raised a lot of concern about that, but it got very little attention. There was a call for a study. But when the pandemic hit, it was so widespread in its impact, I don’t think anybody could ignore it. A silver lining in this is that for the first time in multiple generations, consumers are starting to look at the situation and realize that we don’t have a food system that can handle these kinds of shocks. We have so few companies dominating the supply chain and so few places for food to be processed, (consumers are) looking for answers on how to make this system better. 

CHRIS: Is it mainly about allowing mergers and acquisitions? Are there other shady things on the side that come from this type of extreme consolidation?

ROB: When you have this level of concentration, the economics of it make it ripe for market manipulation. You can have instances of price fixing and other illegal activities. They’re effectively incentivized to do that because the market is so concentrated. Tyson working with JBS, for example. This is the reason why Farmers Union is engaged in a lawsuit against them. And it’s the reason why there are multiple lawsuits against the packers — from grocery stores to farmers and ranchers. It’s because of these illegal practices. We’ve seen bigger companies try to settle these cases. In the case of poultry, we actually had the largest companies found guilty of price fixing, and they suffered a huge penalty for it. (Pilgrim’s Pride pleaded guilty and paid a $110 million fine for price fixing in 2020). We’re still in this court process with the packers, but we certainly think the market is ripe for (price fixing). We think it’s important for the judge to get the facts out there and find out what’s really happening.

CHRIS: A victory for farmers within the broader issue of concentration would be Right to Repair, which would guarantee farmers the right to fix their own machinery or at least have third-party options, rather than being limited to just the implement. It’s amazing how much this issue resonates with farmers. It used to be if something went wrong with a combine and it still worked mechanically, farmers would go until the end of harvest or at least as long as they could and fix it afterward. Now, small things seem to go wrong, and it shuts down the whole combine. You have to wait hours for somebody to drive out there and fix it, and this can happen in the middle of harvest. What can be done to ease this burden?

ROB: Farmers are going to continue to embrace technology, but what we’re looking for is choice in how it’s done. If everybody in the country was restricted to getting their car fixed only at the dealership, can you imagine the uproar over that? It’s the fact that farmers cannot access independent repair shops or diagnose the problems themselves. It’s costly and it causes potentially huge delays. Right now, we’re getting so much resistance from these companies that control such a huge part of the market. It’s what is really telling about this Right to Repair issue. This is not just Farmers Union. This issue speaks broadly across agriculture. The White House has signaled they want to do something about it. The (Federal Trade Commission) is looking at this issue, and they might be able to do something. Congress is also looking at some options. And we have states stepping up and trying to make it clear that equipment owners deserve some rights. Hopefully, we’ll see some change.

CHRIS: And that speaks to concentration, right? Companies like John Deere would be incentivized if they had more competition?

ROB: There is no doubt. When you are such a dominant player in the marketplace, you don’t have to create options for farmers. The incentives just aren’t there. There are so few options for farmers.

CHRIS: These are big issues in agriculture, but they affect everybody including the consumer. What is NFU doing to make its voice heard by policymakers in Washington, D.C.?

ROB: This is an issue Farmers Union has been dealing with for a long time. We’ve really raised our voices since the pandemic brought this to a new light and a new audience. Part of that is developing the Fairness for Farmers campaign itself. More broadly, it’s been having a voice with the (Biden) administration, so they understand. We were talking with both presidential campaigns before the election. Before the new administration took office, we were talking with them about why this is important, and we’ve been working with them continually. This past summer, the president came out with a strong executive order on competition in the marketplace, for not just ag but across the board. I don’t think it’s any mistake that when you look at the ag part of that, (it looks similar) to Farmers Union’s policy book. That’s the work of all of our members out there trying to make sure folks understand this is important. It’s our members putting it into our policy and making it a priority. It’s finally getting some attention.

CHRIS: What’s the end goal here? What do we want the supply chain to look like, ideally?

ROB: The word that gets tossed around is resilient. We want a marketplace that’s not just fair but resilient, so that when we have these inevitable disruptions, — whether they are future climate challenges, or future pandemics, God help us — that if one part struggles, it doesn’t ripple all the way through the marketplace. As farmers are looking to put things together for spring planting and you have a lot of talk about inflation, you have to take a step back. There may be inflationary elements. But in so many cases, whether it’s farm inputs or food costs, it can be tied right back to a lack of competition in the marketplace. One area being the cost of fertilizer, which is a heavily concentrated marketplace. Ultimately, what we want to see is a system that has more competition and more players in it, so these price effects don’t hurt farmers and ranchers, or consumers on the other end.