The meat racket

Just read a book, "The Meat Racket" by Charistopher Leonard, pub. by Simon and Schuster.

It first described the take over of the chicken business with cost cutting passed back to the farmer. It seems there are a lot of incidents of farmers being driven into bankruptcy by having them work in a system where they compete with other farmers and if their production records are slightly lower than the top producer eir payments are cut. They also are sometimes given a bad lot of chickens which die off. It seems that eggs from chickens more than maybe 2 years old don't hatch out good chickens. Then the companies require new facilities with crushing loan rates to the farmers, all in the name of efficiency. The companies do the vertical integration business to the point where there is only one big company and very few smaller ones.

They have done the same sort of thing in the pig business. Get the farmer to spend vast amounts of money on facilities, cut him off when he can't invest in newer facilities.

They haven't been quite as successful in vertilcal intergration of the beef business. Chickens produce vast amounts of eggs, pigs produce multiple birth litters, but cows normally produce one calf a year. However, there are only four large packing houses now, which try to stick it to the feed lots that they don't already own.

There is a discussion of the buy out of the Iowa Beef Processors company a few years ago, which some people on here from that area are probably familar with.

The banks have been willing to loan money to farmer for facilities because there is a government program which helps repay banks for bad debts to farmers. No help to farmers, just banks.

KEH

It's not just some "Big Corporations" doing it. There was an elevator here who's owner ended up owning some farms around here by pulling some stunts like that. They got one two miles north of me. A guy was buying hog feed from them for his farrow to finish operation. They sent him moldy feed a couple of times causing his sows to abort. Told him after the first time,don't worry,we'll take care of you,just sign here.

That elevator isn't even standing anymore. Word gets around.

At 40 +/- head, I'm about the second largest independent hog farm in the county. 30 years ago, there were much bigger farms. Cargil came in and flooded the slaughter hog market. Many went bust. Those that could hold on were offered Cargil contracts. At the time, the cost to build a hog barn to their specs was about $2 million. Though I think "organic" etc. is a bunch of hooey, I'll try my best to fill that niche market here locally just so I can make it without the big boys.

Thats another reason, I'm just feeding 2 for my freezer

In my neck of the woods here on the plains of Northwest Iowa we have both farmer owned hog confinements and company owned, and we have a bunch of them. The company owned facilities tend to be the most modern the best maintained and arranged better for truck maneuverability. We haven't seen any new private facilities built for maybe ten years or so. The hog companies will buy ten acres from a land owner to build their 4000 head facility on with the land owner getting the manure rights. The turkey feeding facilities tend to be privately owned with the birds owned by a local processing facility. I live in an area that has both hog and turkey facilities and I don't hear anything bad spoken about either the hog or the turkey companies that own the livestock. The manure rights is a big plus for the land owners and the feed facilities bid up well for corn so it's pretty much a winning situation for the ag economy.

We have practically no small livestock farmers. A lot of the younger to middle aged farmers manage livestock buildings for a wage. The ones managing the 4000 head hog facilities spend a few minutes to maybe an hour doing chores every morning and night if the hogs are healthy and that's about it. The downfall is loading out fats in the wee hours of the morning. The turkey guys have to spend a lot more time taking care of the birds than the hog guys do but owning turkey buildings seems to be more lucrative.

With all of the livestock facilities we now have locally, the livestock trucking industry has grown and is staying busy, the feed haulers are doing well at making a living and the local power company has been updating the power distribution to make it more reliable since the confinements and feed facilities are so dependent on electricity. Downfall is the aromatics in the air during the spring and fall manure hauling season.

The independent farmers who contract feed for awhile and then are left high and dry are the ones with older, less efficient facilities that produce slower gains and more death loss. Jim

Most businesses are like that to a point.

Look at the automotive supplier base, only the big boys can get the real parts business, the smaller tier 2 shops are the ones that do not have huge financing from the banks. Look at the lumber yards, HD and Lowes are lower cost so the small guy suffers. The 2 decks I built on my home were built with lumber from a local place that has been down the crapper since 2008. Drug stores, Rite aid, CVS, Walgreens ran the small guys out.
It is a tough world out there.

We are very fortunate to have a small town lumber nearby and I give them most of my business just because I value them. A Menards was built just up the road from this small town lumber yard but the small lumber yard is still staying in business because the contractors drive right on by the Menards and go to this small yard to avoid the hastle with the order desk and guard shack. The small town lumber does carry quite a supply of dimensional lumber and they have a manager and help who are there RIGHT NOW. Jim

Is this book written on facts from NC farms.

Here in Iowa I have never heard of a building having any trouble getting filled with hogs if the farmer keeps the building maintained.

My son in law has had two 1500 head buildings for 15 years and gets calls from several hog owners wanting to put hogs in it. The same producer has filled it for all 15 years

If he had more land for the manure he would put up more.

I know of no one that was cut off from a hog supply by their hog supplier.

Here in Iowa you put up a hog building and the hogs will come.

Gary

Gary, the author may have mentioned NC but most of the discusion of hogs concerned IA. Point was made that IA has the good soil and the corn so feed lots locate there and so processors locate there.

The material on chickens came mostly from AR. One example cited had a man driven into bankruptcy and then his facilities sold to a Laotian immigrant, who was later driven under also. I understand vertical integration, but I don't understand a business model that drives out willing workers who have invested their own money. Years ago when chicken farming became popular in this part of the country it was soon pointed out that a person was lucky to stay in business long enough to get his facilities paid off. There have been numerous abandoned chicken houses in this area(also abandoned small dairy barns). Some of the chicken houses were not small.

#2 on the manure rights. Local turkey house gets some extra money selling the manure, I've bought some. There is also an egg producer that sells the manure and I am using it also.

Large scale poultry production started a long time ago. About 1950 my parents decided they could buy chicken and eggs cheaper than raiseing them in the yard. The quality of the store chicken was not as good. My father referred to the store chicken as "them old embalmed chickens" and he was right.

KEH