Livestock Farming

Today, just four meatpackers—Smithfield, Tyson, JBS, and Cargill—control 66% of the U.S. pork slaughterhouse business. But this figure only hints at the real level of concentration in the industry. In many parts of the country, farmers have only one or two packers nearby to sell to. Further, the giants are increasingly taking over the task of breeding, raising, and fattening the hogs: lines of business traditionally performed by independent farmers.

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This corporate consolidation of control over America’s hog market is a relatively new phenomenon. In 1993, 87% of U.S. hogs were sold on the cash market. By 2001, that share had dropped to 17%. The remaining 83% were controlled by packers, either through long-term contracts with farmers or, increasingly, through direct ownership. Today, the number of hogs sold on the open market has shrunk to less than 7% of the total. And the number of farms has fallen as packers gain control of the industry. In 1992, there were more than 240,000 hog farms in the U.S., compared to 56,000 in 2012.

The differences between traditional hog farming and today’s industrial system are extreme. Under the open market system, farmers would breed, raise, and fatten the hogs, then bring them to an auction market where packers would bid against one another for the animals. Along the way, the traditional rules of supply and demand would determine a fair market price. Today, vertically integrated meatpackers own the animals that farmers raise, force farmers to buy specific types of feed, then process the animals in their own slaughterhouses. They then pay farmers a predetermined price for their animals, and sometimes rank farmers against one another to determine the price per pig. This process is opaque to farmers, and can be manipulated if companies provide sick piglets or poor feed.

In some states, farmers managed for many years to use local and state laws to slow or stall the industrialization of hog production. They were aided in some states by long-standing restrictions on corporate ownership of livestock and land. But in recent years, meatpackers have begun to target these state-level restrictions, and in some instances, overturn them. In states where corporations have succeeded in clearing the way for packers to own hogs, the results have been dramatic. In 1997, USDA data show that the majority of hogs were raised on small- or medium-sized farms. Then in 2003, Smithfield successfully sued to overturn that state’s decades-old provision against corporate farming. According to USDA data, the number of hogs in factory farms in Iowa increased by 75% between 1997 and 2007. Now, virtually all of the state’s hogs are raised on industrial farms. Smithfield appears to be targeting the same laws in Nebraska.

Smithfield’s involvement in state-level legislation is also raising alarms due to the fact that a China-based corporation, with strong ties to the Chinese state, now owns the company. WH Group (formerly Shuanghui) is the largest pork producer in the world, with a valuation of around $80 billion. Yet the U.S. Federal Government has left this foreign-owned giant largely free to reshape the law across much of rural America, but also to manipulate market prices in a vital commodity.

Concentration in the pork industry also appears to harm the welfare of pigs. Pigs on factory farms are housed with hundreds, if not thousands, of other animals, sometimes in cages, with little access to the outdoors. Pigs that are confined in such a manner are more likely to get sick, thereby increasing their intake of and resistance to antibiotics. Organizations like the Human Society of the United States have fought long and hard to eliminate gestation crates, small cages for pregnant sows that give the pigs no room to move.

This increasingly extreme concentration of animals also harms the environment. This is especially true of confined animal feeding operations (CAFOs). Waste from those factory operations often results in water pollution, and also has been blamed for ills such as asthma. Animal farming in the US produces over 335 million tons of waste per year, and hog farming accounts for about 20% of that waste.

Parts of this essay were excerpted from “The Last State Standing Against Corporate Farming Weighs a Change,” originally published by Leah Douglas in Fortune.

Americans eat a lot of chicken, more in fact than any other meat. The U.S. produces nearly 9 billion chickens for meat – “broilers” – each year. Farmers also raise another 270 million chickens each year for egg production. But this large-scale production also comes at a great cost. Both the broiler and egg industries are highly concentrated, and among all livestock farming, the industrial concentration of chicken and egg production is widely regarded as perhaps the worst for the farmer, the worker, the animal, the eater, and the environment.

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Today, four companies control 53% of the chicken industry: Pilgrim’s Pride, Tyson, Perdue, and Sanderson. But this number greatly understates the actual degree of concentration in much of the industry. Roughly half of chicken farmers live in regions dominated by only one or two processing companies, hence they have little, if any, bargaining power. As a result, these local monopolists remain free to impose highly onerous terms on any farmer wishing to do business with them.

Today’s chicken production would barely have been recognized as “farming” in the mid-20th century. Until the 1950s, 95% of chicken farmers sold their animals freely on the open market. They bought their seed and chicks from a variety of suppliers, and sold their chickens to whoever offered the best price at market. The interests of farmers and other small businesses were protected by a piece of legislation passed in 1921, called the Packers and Stockyards Act (sometimes nicknamed the “Farmer and Rancher Bill of Rights”). The Act required meatpackers to pay farmers a fair price for their product, and required big processors to offer the same terms to all farmers selling the same goods.

After World War II, processors began to introduce a new model for the chicken industry. Farmers could now enter into a contract to sell a particular flock of chickens on a particular date to a particular processor. This model made it easier for both the farmer and the processor to manage their work and their capital, and soon became very popular. Farmers remained largely free to choose which company to contract with, and often moved their business from one processor to another. By 1958 about 90% of farmers had transitioned from the traditional open market to a contract model for selling their chickens.

But in the 1980s, a revolution in antitrust enforcement opened the door to two big changes to the chicken business. First, a series of mergers and acquisitions resulted in processors that were bigger than ever before. Second, those processors began to vertically integrate into the business of breeding chicks, and trading in feed, drugs, and other inputs. This newfound power made it easier for companies to impose a contract model on farmers. The new contract model stipulated that farmers should buy all their feed, drugs, and chicks from a particular processor, then sell their fully-grown chickens to that same processor.

In recent years, many of the larger chicken processors have adopted what they call a “tournament system” to determine how much they pay farmers. This system is designed to allow companies to pit farmer against farmer in competitions to see who can grow a flock of chickens most efficiently. Farmers who do a better job of turning chicken feed into chicken flesh – known as “feed conversion” – are supposed to be paid more per pound for their flocks, while those who don’t do as good a job are paid less.

But there are multiple problems with this tournament system. For one, the differential in feed conversion between the top farmer and bottom farmer can be just a few percentage points, while accounting for a much higher pay differential. For another, such a “zero-sum” pricing system violates the basic rules of all traditional markets, which call for a farmer’s earnings to be determined in open competition, not by just a single company.

More fundamental yet, the “tournaments” are not audited in any way. This means that the company is free to deliver different quality feed and different quality chicks to different farmers. It also means that no one, not even the farmer, is allowed to watch over the company when it weighs the grown chickens. Farmers are not even allowed to compare what they are paid with one another, as the terms of most contracts prohibit the sharing of any information. And many of the farmers who have complained publicly about the tournament system allege that the big processors have responded by arbitrarily punishing them, through the opaque and unfair payment processes.

The tournament system can take a psychological as well as financial toll on farmers. In 2015, a farmer in Charleston, South Carolina allegedly killed over 300,000 of his neighbors’ chickens after Pilgrim’s Pride cut his contract due to supposedly poor performance in the tournament system. The sheriff investigating the case acknowledged that the stresses of the tournament system might have contributed to the farmer’s discontent.

Chicken farmers have long pushed for reform or abolition of the tournament system. In response to their frustrations, the Obama administration arranged for Agriculture Secretary Tom Vilsack, Attorney General Eric Holder, and Christine Varney, the head of antitrust enforcement, to tour the country in 2010 to listen to farmers’ complaints about the abuse of power in the agricultural economy. Many chicken farmers testified during those hearings, based on their faith that the Obama Administration would protect their rights. But under pressure from lobbyists for the meat industry, the Obama Administration stalled its efforts to protect farmers from meatpacker abuse and passed through watered-down reform in their final days in office. The Trump Administration swiftly repealed these rules and replaced them with corporate-friendly criteria.

Massive consolidation in the chicken industry has also greatly affected the welfare of workers, the animals themselves, and the environment. As chicken companies seek greater output, they push workers to process chickens at a more rapid pace. The maximum “line speed” – the rate at which chickens can move down the processing line – has doubled in the past 35 years, from 70 birds per minute in 1980 to 140 birds per minute today. As Oxfam details in their recent report, Lives on the Line, workers in chicken processing plants suffer from extremely high rates of injury, must perform repetitive motions at a relentless pace for hours on end, and sometimes are forbidden from even taking a bathroom break. In 2014, workers and their advocates fought to halt poultry line speed increases, but in 2018 the Trump administration allowed certain poultry plants to run lines at 175 birds per minute and later introduced a rule to increase poultry processing speeds across the board in the middle of the COVID-19 pandemic.

The growing size of chicken farms also results in other problems. The median size of a chicken farm grew by 21% from 2002 to 2011, to 628,000 birds. A typical broiler chicken house contains up to 30,000 birds. Those chickens have little, if any, access to the outdoors, and the air in chicken houses is polluted with ammonia and feces. In such an environment, chickens are far more likely to contract diseases, including ones they can pass on to farmers and/or eaters. Each year, millions of Americans contract E. Coli and other bacteria from consuming contaminated meat. In 2010, Consumer Reports found that 8 out of 10 chickens purchased at a supermarket were contaminated with salmonella or campylobacter, the most common foodborne bacteria to cause illness.

Another problem is that processors often require farmers to dose chickens on industrial farms preventatively with antibiotics to fend off infection. This practice has been widely condemned for dangerously reducing the efficacy of many of the most important antibiotics used to treat human illnesses. The Center for Disease Control estimates that around 23,000 people die each year from antibiotic-resistant infections.

Industrial chicken farming also creates massive environmental problems. The chicken industry in Fresno, California, for instance, produces over 17 million broilers annually. These birds in turn generate six times more waste than all the people of Fresno. That waste is often spread on crop fields as untreated fertilizer, which can run off into rivers, lakes, and other bodies of water. The Chesapeake Bay, for instance, is highly polluted with excess nutrients from Maryland and Delaware’s chicken farms, where the 523 million chickens raised each year produce 42 million cubic feet of waste per year.

Poultry monopolies are also bad for consumers. Since 2016, the entire poultry industry has been embroiled in numerous price-fixing allegations from poultry buyers, workers, and farmers. These class-action lawsuits allege that poultry processors conspired together to cut back poultry production, manipulate price indicators, raise poultry prices, and hold down prices paid to farmers and workers in order to maximize their profits. During this alleged conspiracy, wholesale chicken prices increased by nearly 50% even as key input costs, primarily corn and soybeans, fell roughly 20%. From 2009 to 2016, Tyson’s operating margins grew from 1.6% to 11.9% and between 2012 and 2015 Pilgrim’s grew from 3.8% to 12.77%. This conspiracy may have cost the average family of four an additional $330 on chicken, per year.

In June 2019, the Justice Department revealed they were also investigating poultry corporations for price-fixing. A year later, the DOJ indicted ten current and former poultry executives for criminal price-fixing, including two CEOs of Pilgrim’s Pride, which was the first corporation to plead guilty to the conspiracy.

For more information, read “Obama’s Game of Chicken” by Lina Khan in the November/December 2012 issue of Washington Monthly.

Some 74% of beef slaughter is controlled by four companies: Tyson, JBS, Cargill, and National Beef (majority owned by Marfrig). But concentration in the beef industry looks different than in other forms of animal agriculture. Cows have only one calf each year, rather than the many chicks or piglets born by hens and sows. And it often takes more than a year before this calf grows big enough for slaughter. These characteristics mean that cattle farming is still largely unsuited for the many of the forms of vertical integration that now define chicken and hog farming.

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Until recently, the beef market was a model of open, competitive markets. Independent “cow-calf” ranchers bred and raised their own cattle, then sold them to independent feedlots, which fattened the cows and sold them to independent slaughterhouses. At each stage of the process, stakeholders were paid a fair price, based on the sale of cattle in competitive auctions. But beginning in the 1980s, a few large slaughterhouse corporations began to consolidate their hold on various stages of the business, especially feedlots. Just in that decade, the number of cattle-feeding operations in the largest cattle states dropped by 40% as large packers drove smaller feedlots out of business. Between 1981 and 1994 net profits for cattle feeders averaged $36 per head, but that amount dropped to $14 between 1995 and 2008.

Such consolidation means today there are fewer buyers bidding for cattle. In many regions of the country, ranchers report finding as few as two buyers in a market, and increasingly these buyers do not compete against one another. As a result, most cattle are no longer sold in open auctions. Today packers secure 75% of cattle through forward contracts or “formula pricing,” in which they determine the value of cattle based on a non-negotiated pricing formula (not unlike the take-it-or-leave-it contracts now common in pork and poultry).

The only semblance of competitive pricing comes from the fact that packers base these pricing formulas off of the going price for cattle in open auctions. However, with fewer cattle sold in these auctions to fewer bidders, ranchers have accused packers of manipulating cash auctions to suppress the price of cattle across the entire industry.

Increasingly, the most powerful beef packers are foreign-owned. The biggest player in the American beef industry is the Brazilian-owned company JBS, which is also the largest beef company in the world and one of the world’s largest producers of poultry and pork. Marfrig Global Foods is another key Brazilian player in the beef industry. Marfrig is the third-largest food processor in Brazil, and the fourth-largest beef producer in the world.

JBS has been embroiled in corruption charges for giving roughly $150 million in bribes to more than 1,800 government officials over several years to receive favorable financing from Brazil’s state-owned bank. JBS used these funds to finance major acquisitions across the globe, including the takeover of Swift & Co., then the third-largest U.S. beef and pork packer, as well as Pilgrim’s Pride, then the world’s second-largest poultry processor. JBS has already agreed to pay $3.2 billion to settle a Brazilian corruption case for these charges.

In 2017 Brazilian investigators discovered that JBS and other meatpackers also bribed health inspectors in order to ship rotten and tainted meat around the world. The U.S. temporarily banned Brazilian beef imports, but lifted this ban in early 2020.

American ranchers faced increase pressure from beef imports, but it is nearly impossible for consumers to identify true domestic product. In 2015, Congress repealed mandatory country of origin labeling on beef and pork and to make matters worse, a USDA rule allows foreign-grown meat repackaged in the United States to be labeled a product of the USA.

The highly consolidated nature of the beef industry in the U.S. also harms the welfare of workers, animals, and the environment. The enormous amount of manure produced by industrial feedlots can spill into rivers and lakes, leach into groundwater, and thereby enter municipal water systems. The close quarters in which animals are kept in contained animal feeding operations (or CAFOs) leads to air pollution for nearby residents, often resulting in asthma or other health conditions. Cattle kept in confinement are more likely to be exposed to diseases, requiring more antibiotic treatment and contributing to human over-consumption of antibiotics and the decrease in antibiotic efficacy. Slaughterhouse workers are also endangered by the industrial beef industry, as described in more detail on our Slaughterhouse Workers page.

Abroad, Brazilian meatpackers have been found to illegally source cattle from farms contributing to Amazonian deforestation. An Australian beef wholesaler that supplies Walmart and Safeway, Thomas Foods, was also found to import beef raised by Nicaraguan ranchers who violently seized land from Indigenous people for cattle production.

Milk is a quintessentially American kitchen staple and plays a fundamental role in our national diet. Dairy farming has long been a staple of our agricultural economy, with small dairies occupying a sentimental place in the American imagination. But over the past century, dairy farming has changed dramatically, from a market comprised of small producers to an increasingly consolidated, corporate industry.

In the first part of the twentieth century, milk production took place in a competitive, open market. Across much of rural America, dairy farms were commonplace. In 1940, the USDA counted about 4.6 million farms with milk cows (versus 105,000 in 2000). Milk processors, meanwhile, were small, local enterprises that competed strongly with one another, allowing farmers to sell their products to whoever offered the best price. Further, dairy farmers were able to freely organize themselves into cooperatives that enabled them to counterbalance the power of any bottler they thought didn’t treat them well: in the early 1940s, there were about 2,300 dairy cooperatives in America (versus 155 in 2007).

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But today, a handful of massive corporations and cooperatives work in concert to monopolize regional markets. Fewer buyers paired with chronic milk oversupply has collapsed milk prices and consolidated production in massive industrial farms, driving small farms out of business.

The number of dairy farms has dropped from 640,000 in 1970 to around 70,000 in 2003. And since 2003, half of those remaining farms have disappeared, leaving just 34,000 licensed dairies in 2019. Over this same period, milk production shifted to larger farms. In 2002, half of dairy cows lived on farms with 275 cows or less. Just ten years later, half of dairy cows lived on farms with 900 cows or more.

Dairy farmers are trapped in a cycle of overproduction and consolidation. On average, Americans drink 37% less milk than they did in 1970. But even with declining demand and dramatically fewer farms, overall U.S. milk production has only increased due to greater milk production per cow and the rise of larger industrial farms. Demand for other dairy products, such as cheese and yogurt, is on the rise but it is still not enough to absorb runaway milk production.

Oversupply collapses milk prices and creates perverse incentives for farms to double down, get bigger, produce more, and survive on volume – further increasing the milk supply and perpetuating the cycle. Prices paid to dairy farmers collapsed 40% between 2014 and today, and six years at below break-even prices accelerated dairy farm loss.

Cows on industrial dairies are given little access to the outdoors and these farms produce massive amounts of concentrated waste that pollutes the surrounding air and waters. Larger and more mechanized farms also require more hired labor, and increasingly dairy farms turn to exploitable immigrant and guest workers. These workers report sub-minimum wages and grueling working conditions, yet the dairy industry has recently lobbied to allow for year-round H2A guest worker visas to fill their labor needs, rather than compete for current and domestic workers by raising wages and working conditions.

Consolidation among dairy processors and cooperatives further weakens farmers’ bargaining power and drives production to fewer larger farms. Changes in antitrust enforcement precipitated a flurry of agricultural roll-ups since the late 1970s, including consolidation among dairy processors. Dean Foods, the largest milk processor in the country, bought fourteen milk companies and merged with Suiza Foods, the second-largest milk processor, between 1987 and 1998 alone. Today Dean sells 12% of all fluid milk and claimed to be five times larger than its next competitor in 2013.

To work with massive milk processors, cooperatives merged as well. The number of agricultural cooperatives dropped from 6,445 in 1979 to only 2,186 in 2014, largely due to mergers and buyouts. That included a four-way dairy cooperative merger to form industry goliath, Dairy Farmers of America, which today controls about 30% of the U.S. milk supply and handles more than two and a half times as much milk as the next largest co-op. While still technically a cooperative, DFA often acts its farmer members’ best interests to maximize profits in other parts of its business, such as processing.

Together, Dean Foods and DFA have been accused of colluding against dairy farmers and consumers for years. Three groups of farmers have received multi-million-dollar antitrust settlements over allegations that Dean and DFA used exclusive deals and no-poach agreements with other cooperatives to limit competition for farmers’ milk and suppress prices paid to farmers to guarantee cheap milk for processing.

Unfortunately, DFA recently took over the bulk of Dean’s assets in a bankruptcy sale, which the Justice Department approved despite antitrust concerns. This merger makes otherwise illegal collusion between Dean and DFA perfectly legal as internal business coordination. Dairy farmers have even fewer buyers for their milk and DFA has an even greater incentive to maximize processing profits, and thus, pay farmers less for milk. To add insult to injury, DFA will likely cut farmers’ milk checks to pay for this massive investment. A recent report by the Government Accountability Office (GAO) found that these investment withholdings lower farmers’ short-term earnings.

If DFA operated the way co-ops are supposed to, its farmer-owners would be able to decide if a major deal like acquiring Dean Foods was worth the risk. But because of its vast size and entrenched management, farmers have little control—an issue highlighted in the GAO’s recent report (more on this issue in our Cooperatives page).

In the face of this dairy crisis, farmers across the country are organizing around policies that would tackle consolidation and break cycles of overproduction by implementing supply management programs.

The American egg industry produces over 100 billion eggs annually. Just over half of shell eggs go directly to retail, and the rest are further processed for food service. While the top corporations control a smaller share of the market than in other livestock industries, egg production continues to consolidate among a shrinking number of industrial, vertically-integrated or contracted farms. Egg production is also concentrated regionally with some 45% of production located in just four states—Iowa, Ohio, Indiana, and Pennsylvania.

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So few players didn’t always control the egg industry. The number of egg producers in the U.S. declined from 2,500 in 1986 to just 700 in 2002. Today just 59 companies represent 87% of all egg production, and the four largest corporations claimed 28% of egg sales.

Mississippi-based Cal-Maine leads the industry with around 16% of sales and more than 40 million hens. Cal-Maine grew through takeovers, acquiring over 20 companies since 1989, and describes itself as a “leader in industry consolidation.” Unlike the poultry industry, where major chicken processors contract out chicken rearing to nominally independent farmers, Cal-Maine is truly vertically integrated and directly owns at least 44 egg farms as well as hatcheries and processing plants. The second-largest egg business, Rose Acre Farms, is also vertically-integrated with 17 facilities and more than 26 million hens. Rose Acre controlled 6% of the market in 2020.

To compete with these massive corporations, egg producers realistically have one of two choices: spend big money to vertically integrate into packing and processing or become contract growers for a corporate producer. Increased vertical integration from 2015 to 2020 drove industry consolidation, and corporate buyers pressure independent contract growers to get big or get out.

As such, the egg industry is consolidating into fewer, larger farms. In 1982 half of all egg laying hens lived on farms with 62,000 hens or less. In 2012, half of all hens lived on farms with over 925,000 hens, and average farm size has only continued to increase. The number of industrial egg farms fell 17% between 2012 and 2017, but the total number of birds at each facility grew nearly 50% in major egg regions, such as Iowa.

These large egg companies have—at least for periods of time in particular regions—leveraged their power to manipulate egg prices. In 2010, Land O’ Lakes settled a $25 million class action lawsuit that charged the company, alongside other large producers and trade groups, fixed prices in the egg industry in the early 2000s. By manipulating the egg supply, the lawsuit alleged, producers forced prices to record highs by 2007. The case marked the first price fixing suit ever brought in the agriculture sector. Texas and New York state attorneys general also accused large egg corporations of price-gouging during the COVID-19 pandemic.

Consolidation in the egg industry also has raised food safety concerns. In 2010, the CDC attributed nearly 2,000 cases of Salmonella poisoning to shell eggs and ordered a recall of nearly 500 million eggs. Yet even though the eggs had been sold under 24 different brands, they all traced back to a single Iowa-based company, DeCoster Egg Farms, owned by Austin “Jack” DeCoster. DeCoster had a decades-long list of wage, labor, animal, and environment abuses on his record before the outbreak. In 2015 DeCoster was sentenced to three months in jail and his company was dissolved.

Consolidation also was a factor in the outbreak of highly contagious avian flu in the egg industry in 2015. The flu spread to at least 21 states, and led to the death or slaughter of about 50 million birds. Very large egg-laying operations in Iowa were most affected by the outbreak, with that state losing about 30 million hens alone. Public health experts have said that housing large numbers of hens in each barn can facilitate the rapid spread of such disease.

The egg industry also produces environmental problems similar to other livestock industries that rely on containment of animals. The 7.7 million layer hens in Sioux City, Iowa, for instance, each year produce as much manure as all the sewage produced by all humans in Seattle. Much of this manure finds its way to our rivers, lakes, and bays. In 2009, the largest egg producer in Ohio pled guilty to releasing egg wash water, which contains manure, into a local stream. Studies have shown a high degree of manure pollution in the Chesapeake Bay due to agriculture in the area, including egg and chicken production. For workers in these facilities, long term exposure to poultry dust is linked with chronic respiratory problems.

There is growing interest among eaters in organic and cage-free eggs. Organic eggs come from chickens that are raised free-range (meaning the chicken has some access to the outdoors), fed certified organic feed, and don’t receive any hormones or antibiotics. Cage-free eggs come from chickens that live with hundreds or thousands of other chickens in barns; conventional farms, by contrast, confine laying hens in tiny battery cages that allow the chicken on average only 67 square inches of space.

Despite commitments from a majority of major restaurant chains and grocery stores to switch to cage-free eggs, the vast majority of eggs are still produced conventionally. In 2020, cage-free eggs accounted for 12.3% of production and organic free-range eggs accounted for only 4% of production. Building a cage-free facility costs at least twice as much as a battery cage farm, and the large buyers promising cage-free eggs are not fitting this bill. Consolidation also inhibits the transition to cage-free egg systems: only six corporations globally provide cage-free egg farm equipment, according to an industry representative.