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Livestock Crisis Symptom Of Corporate Concentration: NFU

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The crisis facing Canadian livestock farmers is a result of
excessive corporate concentration in the meat packing industry, according to
Don Mills, a farmer from Granton, Ontario who serves as Coordinator of the
National Farmers Union (NFU) in that province.

In a presentation to the Canadian Auto Workers – Canada (CAW-Canada)
convention in Toronto earlier in December, Mills said simply re-opening the US border to
live Canadian cattle will not solve the long-term structural problems facing family
farms.

“The Bovine Spongiform Encephalopathy (BSE) crisis has certainly contributed to
farmers’ financial difficulties,” he pointed out, citing a recent Bank of Montreal
study which pegged farmers’ losses since May, 2003 at about $5 billion. “But
farmers’ share of the consumers’ food dollar has been continually shrinking while
concentration of ownership in food processing companies has increased.”

Today, two major US-owned packing companies, Tyson and Cargill, control over
70 percent of the Canadian meat processing industry, and while they are paying
rock-bottom prices to farmers for Canadian cattle, they’re still making top dollar
by exporting large amounts of boxed beef to the lucrative US market. Canadian
consumers also continue to pay high prices because of the domination of the
market by a relative handful of processors and retailers.

“The closed border provided the big packers with the opportunity to drive down
prices for Canadian cattle while boosting profits from beef exports,” Mills said. “In
1984, farmers earned 62.5 cents of every $1 of beef sold in grocery stores. By
2001, the farm share had dropped to 46 cents, and when the BSE crisis hit, the
farmer’s share fell to only 21 cents. Meanwhile, packer gross profit per head rose
from about $75 to about $210.”

Alberta farmers suffered the most serious drop in net income because they were
the most vulnerable and most dependent on the US market. Both Tyson and
Cargill have large export-oriented packing plants in Alberta. Mills said Alberta’s
net farm income last year was negative $412 million, by far the lowest in the
country.

Mills said while the border closure aggravated the crisis, the long-term trend is
clear. Net farm income has declined steadily for the past thirty years, from an
average of approximately $30,000 per farm in 1973 to a loss of negative $20,000
per farm in 2003. While gross incomes for farmers have risen over that period,
their costs have risen even faster, squeezing the average margin of family farms
to unprecedented negative levels. While farmers posted huge gains in
productivity over that time frame, the benefits flowing from these increased
efficiencies were captured by corporate processors and input suppliers.

The negative consequences of this high level of corporate concentration in the
meat packing sector could be repeated in the seed sector if proposed changes to
the Plant Breeders Rights Act and other legislation are allowed to proceed,
warned Mills. “At present, ten companies control one-third of the global $23.3
billion global seed market. They are pushing countries to implement laws which
limit farmers’ ability to save and re-use seed on their own farms. This in turn will
lead to less control by farmers and consumers over the food system.”

@ December 21, 2004