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January 22nd, 2013

Grist’s Foodopoly Q&A: The Extended Version

Foodopoly by Wenonah HauterLast week, a condensed version of Andy Bellatti’s interview with Wenonah Hauter on her new book Foodopoly ran on Grist: Aisle be damned: How Big Food dominates your supermarket choices. We thought our blog readers would appreciate seeing the entire interview, which goes into the specifics on how fractured our food system really is,  how it got that way and what we can do about it.

1. In Foodopoly, you make a very convincing argument that, unlike what many in the “good food” movement think, crop subsidies are not the problem to solve, but rather the symptom of a much larger problem. Can you expand on that concept?

Without question, the system of farm subsidies needs reform, but the real problem is the massive control of our food system by a handful of companies. Twenty companies produce most of the food eaten by Americans, even organic brands. Four large chains, including Walmart, control more than half of all grocery store sales; one out of three grocery dollars is spent at Walmart. These companies are so large that they have the economic and political power to dictate food policy from laws on advertising junk food to children and manipulating nutrition standards to weakening federal pesticide regulations and stopping the labeling of genetically engineered foods.

They have been able to become so large because of the evisceration of antitrust law during the Reagan administration. And since that time, no U.S. President has been willing to tackle the issue of concentration. This is ironic since all of the rhetoric about our economic system revolves around competition in the marketplace, but all public policy drives a frenzy of mergers and acquisitions. This is especially true in the food industry.

It was these large and consolidated companies who lobbied for the policies that led to the subsidy program and they are the largest ultimate beneficiaries. In 1996, after decades of lobbying by the food industry, the Freedom to Farm Bill eliminated the farm programs that managed the supply of commodities and prevented the oversupply of commodities like corn and soy.

The immediate result was massive overproduction and plummeting prices. In 1999 the price of corn was 50 percent below 1996 levels and soy was down by 41 percent. By 1998 there were so many farms going out of business and such economic havoc in farming communities that Congress was forced to do something. So rather than reinstate the commonsense supply management programs like a grain reserves or idling marginal land that had worked well over time, they instituted emergency payments. In 2002 these payments were made permanent and the subsidy system was born.

So the real beneficiaries of overproduction are the grain traders, food processors and the meat industry. Researchers at Tufts University estimate that soft drink companies have saved almost a billion dollars during a nine year period after deregulation when corn prices were lowered. Tufts estimates that large meat companies saved nearly $4 billion on animal feed between 1997 and 2005.

Contrast this to what farmers receive for growing corn. They get 4 to 5 cents from the sale of a box of corn flakes and 2 to 3 cents from the sale of a full-sized bag of corn chips. The corn content of a soda in the form of high fructose corn syrup nets the farmer 2 cents out of each consumer dollar. Ninety-eight cents goes to the food companies that make, market and sell soda.

It’s time that we stop demonizing farmers as the chief culprits behind our dysfunctional food system and start addressing the structural issues. We must put the revitalizing of antitrust regulation on the food movement’s agenda. For the long term, we need farmers to be partners in creating a sustainable food system, especially small and midsized farms.

These are the farms that are not doing well financially because farm income is not keeping up with the cost of producing crops. Even today, with higher crop prices because of the production of ethanol from corn, the high cost of seeds, fuel, fertilizer, feed and other inputs makes farming an expensive venture. After accounting for all of the costs of farming, small and medium farms net only $19,274 annually from farming according to the most recent USDA figures and almost half of this amount is from government payments. Earnings from off-farm jobs made up the rest of the household’s income. The income of these full time farmers is 19 percent below the U.S. average.

If we got rid of the subsidy program without reforming farm policy, we would lose even more of the small and medium-sized farms that are going to be critical for transitioning to a sustainable food system.

 

2. One of the main themes of Foodopoly is that consolidation and organization of the food industry over the past few decades is what has mainly led to our current broken food system. Do you see this consolidation as one that has the potential to get even worse over the next five to ten years? If so, in what way(s)?

Consolidation is likely to continue and even accelerate over the next few years. Although the pace of mergers stalled during the economic recession, there are signs that merger and acquisition activity has started to pick back up as the economy slowly strengthens. Some food companies have been hoarding cash and forgoing investments to weather the downturn; others have been limping along, maintaining the same sales volume but at lower prices.

The cash-rich companies will likely resume snapping up their over-leveraged competitors. Just since Thanksgiving, two more mega-mergers have been announced. ConAgra is purchasing Ralcorp, the nation’s leading manufacturer of store-brand food, and JBS, the world’s largest meatpacker, is purchasing the second largest Canadian meatpacker, XL Foods.

XL Foods made headlines earlier this year after significant food safety lapses allowed millions of pounds of potentially E. coli-tainted ground beef to enter the marketplace. More than 2.5 million pounds of potentially tainted ground beef produced by the company were recalled in the United States alone. JBS-Swift is already one of the top U.S. beef packing companies (and also owns Pilgrim’s poultry) and the addition of XL’s plants in Nebraska and Idaho would significantly strengthen the company’s buying power over cattle producers throughout the Western Plains.

The ConAgra-Ralcorp merger presents a new set of problems and one that speaks directly to the challenge of curbing monopoly power in the heart of the supermarket aisle. The companies only compete head-to-head for a few products (like peanut butter and some frozen dinners), but they compete alongside one another for supermarket shelf space. For example, ConAgra makes a wide range of popcorn snacks (Jiffy Pop, Orville Redenbacher, Fiddle Faddle and Act II are all ConAgra products) and half of store-brand pretzels. Ralcorp makes corn and tortilla chips, snack mixes, nearly half of store-brand snack nuts and two-thirds of store-brand crackers. For a consumer standing in the snack aisle, choosing between different snacks based on price, these are competitors. (See Food & Water Watch’s letter to the Federal Trade Commission here http://documents.foodandwaterwatch.org/doc/ralcorp_conagra_ftc_doj_letter.pdf.)

Unfortunately, federal regulators do not believe that mergers between conglomerates affect consumers unless they compete directly for the same narrowly defined products. Rather than examining the impact on the overall grocery cart, antitrust regulators consider only choices in very small sections of the supermarket shelf. The overall effect of very few manufacturers controlling large swaths of the supermarket is that these companies can slowly ratchet up overall food prices and reduce consumer choice.    

 

3. In your book, you touch on nanotechnology — a relatively new issue within the food movement that has shades of genetic modification. Can you share some of the concerns surrounding nanotechnology, and the implications it has for the overall food system?

Promoters of nanotechnology are constantly hyping nanomaterials as the next big thing to hit our kitchens, offering up easier-to pour ketchup and cutting boards or cutlery made sterile through the use of embedded nano-pesticides. On the farm, nanotechnology could be used to make bioavailable pesticides and fertilizers to be absorbed directly into living tissue, and later in the food chain it could be used in food packaging. 

A nanometer is one billionth of a meter, approximately 1/100,000 of a human hair. Nanotechnology is creating a new class of chemicals by shrinking the size of a given particle, like silver, to the nano-scale. This is so small that the properties and behavior of the element actually change. Nano-silver is one of the most widely used nanomaterials and it can effectively kill bacteria, but as the Environmental Protection Agency (EPA) notes, “the same property that makes it antibacterial may render it toxic to human cells.” 

Many nanomaterials used in consumer products may end up in the environment and our food. Because wastewater treatment plants can’t break down these chemicals they end up in sewage sludge that is often applied to farmland. Materials on the nanoscale exhibit properties and behaviors that can be completely different from larger particle sizes of the same substance, and scientists do not yet really understand how these materials operate in nature or our bodies. While this field creates a whole new class of chemicals that can do unique things, it also presents society with a whole new class of potential hazards – some of which have already come to light, as researchers are linking nanoparticle exposure with potential problems like “asbestos-like pathogenicity.”

Unfortunately, regulators at the EPA and other federal agencies are doing little to monitor, contain or ensure that these materials are not harmful. And so far they have totally failed to require manufacturers to label products containing nanomaterials.

 

4. You make the disturbing — yet excellent — point that food and biotech lobbies are so powerful “they can literally buy public policy”. Of the many heinous examples of this, what stands out as one that had particularly troublesome public health consequences?

There are a lot of possible answers to this one, and the meat industry is at the center of many of them. But one of the most clear-cut public health problems driven by food production has got to be the overuse and abuse of antibiotics in industrialized livestock production. Simply put, factory farms are breeding resistant bacteria that are making their way into the environment and contributing to the public health problem of antibiotics that are no longer effective in treating disease.

Imagine a world where antibiotics are no longer effective.

It’s common practice on factory farms to routinely give low dosages of antibiotics to healthy livestock, to prevent disease and promote growth. This process is commonly referred to as subtherapeutic use, because the drugs are not being used to treat sick animals. Eighty percent of antibiotics sold in the United States are used for agricultural purposes.

When bacteria are repeatedly exposed to low doses of an antibiotic, plenty of strong bacteria survive the exposure and go on to reproduce. The bacteria that survive are antibiotic-resistant, and can pass their resistance genes on to other bacteria as well (See this infographic on how the process works). The danger comes when these bacteria remain in meat that you buy at a grocery store or restaurant, or are released into the environment via livestock waste.

The livestock industry still asserts that there is not enough scientific evidence to ban subtherapeutic uses of antibiotics, but the evidence is clear. Several DNA analyses of antibiotic resistant bacteria point to livestock as the source. The American Public Health Association, American Medical Association, American Academy of Pediatrics, Infectious Disease Society of America and World Health Organization have all issued statements calling for restrictions on subtherapeutic uses of antibiotics in livestock.

The Food and Drug Administration has been stalling on this issue for decades, under tremendous pressure from the meat industry. It took a lawsuit by public interest groups to force them to finish one regulation that had been sitting on their desk for 35 years. Congress should step in and pass the Preservation of Antibiotics for Medical Treatment Act (PAMTA) that would rein in the overuse of antibiotics in livestock production.

 

5. Since the 1980s, a plethora of deregulation has occurred. Is reversing some of that deregulation a plausible goal, or at this point is it more likely to simply prevent further deregulation?

Ultimately, to create a fair and healthy food system we need to build the political power to create commonsense regulations – and enforce them – for food safety and labeling, antitrust policy, biotechnology and other new technologies used in the food system. Inspiring the kind of political activism necessary for taking back our democracy means that we must be visionary about the kind of world we want and the food system that will provide the nourishment. This means having our eye on the long-term prize of a regulatory system that really works.

Laying out what this ideal regulatory system should look like also creates more political space for achieving short-term goals and mobilizing more people. Activists are really tired of fighting for just the best they can get in the latest fight over some terrible deregulation scheme. We want to fight for what we really want.

This means that we must do both. Because we are always faced with attempts to weaken the rules that are already on the books, even if they are already inadequate. Food safety is a good example. We have spent the last year battling a proposal from the USDA to privatize the inspection of poultry products and allow much faster line speeds in poultry plants, a move that would put consumer and worker safety at risk. Stopping these current deregulation attempts is not only necessary, but it also helps us to build the political power we will need to eventually fight for better food policies in the future.

 

6. The Farm Bill, while certainly a complex document, plays a crucial role in structuring food and agricultural policy that has long-reaching effects. If you were granted three wishes to improve the Farm Bill in order to help build a more sustainable and just food environment, what would they be?  

Congress demonstrated its complete lack of courage on food policy by passing an extension of the last Farm Bill in the dead of the night this New Year’s Eve as part of the fiscal cliff legislation. The deal they cut left many of the farm policy gains of the past decade – including support for beginning farmers, conservation practices and cost sharing for new organic certifications – on the cutting room floor. So my first wish would be to reinstate these programs.

Second, the next Farm Bill needs a strong competition title that includes real livestock marketing reforms and strengthens protections for farmers producing under contracts. We need to make sure that the USDA plays a positive role in policing the marketplace for unfair, deceptive and anticompetitive practices. There are only a handful of firms standing between 2 million farmers and more than 300 million eaters and they are squeezing all of the value out of the food system. Farmers sell into a hyper-consolidated market where the corporate buyers have managed to press down on the real prices farmers receive for decades and it is long past time for the USDA to take action to curb these abuses.

As part of this mandate, the USDA needs to implement real livestock marketing reforms. They can start with the derailed regulation from the 2008 Farm Bill known as “the GIPSA rule” for the Grain Inspection, Packers and Stockyards Administration that would administer it. The new regulation would have prevented meatpackers from offering sweetheart deals to favored feedlots and lower prices to smaller farmers even when they brought the same number and quality of livestock to the slaughterhouse. A new version of this rule should include a ban on meatpacker owned livestock that allow them to avoid livestock auctions when prices are high and re-enter the market when prices are low, effectively pushing long-term livestock prices down forever and it should provide protections for contract farmers from abusive and deceptive practices.

Third, we need to reinstate the commonsense supply management policies and price safety nets that make agribusiness, not taxpayers, pay farmers fairly for the food they grow. This means bringing back strategic grain reserves, requiring that farmers leave a portion of land fallow, and maintaining minimum price floors for crops to ensure that farmers are at least paid the cost of producing food. If we did that, the subsidy program could be done away with!

 

7.  As with the food industry, Big Ag also has its share of front groups. Can you fill us in on the innocuous-sounding American Farm Bureau Federation (specifically how they have continuously fought against farmer labor organizing)?

Calling itself the “voice of agriculture” and promoting itself as a tireless defender of farmers, the American Farm Bureau Federation has successfully positioned itself as one of the most powerful interest groups in the United States. But a look beyond its pro-farmer public relations campaign reveals billions of dollars in assets, close alliances with the insurance industry and legions of lobbyists working to promote the interests of the agribusiness corporations with which it regularly partners.

The American Farm Bureau Federation, the parent organization of nearly 3,000 state and county-level bureaus, has been the largest or second-largest lobbyist from the agricultural sector for the last 10 years, putting as much as $8 million a year toward influencing legislation — in some years single-handedly representing close to a third of all money spent on lobbying from agriculture.

On labor issues, the Farm Bureau often sides with agribusiness interests. Last year, the California Farm Bureau opposed legislation designed to protect farm workers from heat illness. Historically, the Farm Bureau has opposed popular labor movements, going so far as to produce an anti-labor propaganda film that vilified labor leaders like Cesar Chavez and the popular boycott movements of the 1960s and 1970s.

 

8. It’s very easy for us to think of ineffective and corporate-controlled food policy as a national issue, but with the likes of NATO and the WTO, these issues are global. How has the WTO been integral to help agribusiness cut costs and skirt around laws?

International trade deals like NAFTA and the WTO have allowed transnational agribusiness and food companies to pit farmers worldwide against one another in a global race to the bottom for farm prices. In the model promoted by trade negotiators and agribusiness companies, U.S. companies shift their manufacturing plants overseas where the labor and environmental standards are lower and U.S. farmers are forced to compete against considerably cheaper imports that are produced under less rigorous environmental rules.

In the developing world, agricultural production is transformed from supplying food to local people to an export platform for commodities. The developing world was promised that globalization would allow farmers to sell their raw commodities on the global market to earn more money to buy food that they would no longer grow for themselves. However, flowers, fruits, vegetables, coffee, cotton and cocoa flow from the developing world to supermarkets in the United States and Europe while the majority of the workers who harvest and produce these goods are just as poor or poorer than they were before. 

But when U.S. corn prices are lower that what it costs to produce the crop because of failed U.S. farm policy, the U.S. dumps corn on the world market (selling cheap corn in both Mexico and Missouri). Corporate buyers get cheap corn for industrial livestock feed, high fructose corn syrup or corn chips, and farmers everywhere are forced off their land. But as the international food crisis of 2008 showed, often the low prices earned from growing cocoa, cotton and coffee can be too meager for developing world farmers to purchase imported rice and wheat.

Additionally, international trade bodies like the World Trade Organization can become forums for agribusiness to challenge democratically established food safety rules in other countries. The United States issues an annual report on foreign trade barriers that contends that labeling genetically engineered foods is an illegitimate trade barrier. The U.S. country-of-origin labeling requirement for meat has been challenged by Canada and Mexico at the WTO as an illegitimate trade barrier. It is absurd to allow far away trade tribunals to try and overturn domestic laws and regulation.

 

9. What kind of effects has the dissolution of antitrust laws had on our food system?

The presence of thousands of products on supermarket shelves hides the fact that a few companies own most grocery stores and produce most staple foods. The four largest companies in each industry slaughter nearly all the beef, process two-thirds of the pork, sell half the groceries and manufacture about half the milk in the United States. Only two firms sell two-thirds of the corn and soybean seeds.

These national measurements can conceal much higher levels of concentration at the regional or local level, where one company may have a virtual lock on an industry. The top four supermarket chains control half of the national market, but on the local level the top four chains can control more than 70 percent of the marketplace. These meatpackers, food processors and supermarkets contend that their size offers consumers more choice and affordability. In reality, these companies rarely pass their lower costs on to consumers through lower retail prices.

Pork production in Iowa offers a good example of this trend that is occurring throughout our food system. In Iowa, over the last three decades, massive amounts of outside money created pork-processing plants that became so large that many smaller plants have been forced out of business. Today the biggest four packers slaughter nine out of every 10 hogs in Iowa. And as pork packing consolidated and hog farms in Iowa became larger and more integrated with the pork processors, the value of hogs to farmers and the local economy declined.

Gradually, enormous processing plants were matched by super-sized factory farms. The average-sized Iowa hog farm ballooned more than 10-fold between 1982 and 2007.

Iowa’s pork economy has devolved from one that supported rural communities to one that extracts value to send it far from the Iowa countryside. Food & Water Watch recently released a study that documented this trend. We found that over the past three decades, the Iowa counties that sold the most hogs and had the largest hog farms had declining county-wide incomes, slower growth in median household income and falling numbers of local businesses compared to the statewide average. Iowa farmers sold twice as many hogs in 2007 as in 1982, but the total real value of Iowa’s hog sales was 12 percent lower in 2007.

And in spite of what Big Pork boosters constantly claim, there is little evidence that the trends in Iowa hog production have been good for consumers either. One USDA study found that although large-scale hog farms and processors may have reduced the cost of production (and the price paid to farmers for their hogs), consumer prices for retail pork nonetheless “increased substantially.”

 

10. Your book touches on several crucial issues food advocates need to be aware of (from GMOs to corporate consolidation within organics to factory farming). What would be your advice to someone beginning to read about these issues who feels overwhelmed as far as where to start focusing their advocacy efforts?

Once you start learning about the realities of our food system (which food companies desperately try to prevent with their pretty pictures of farms and red pickup trucks in their ads and on food packages), it’s easy to get overwhelmed. A natural response is to try to avoid the worst offenders in the marketplace and “shop better.” That’s important and as you learn more about different aspects of how our food is produced you may end up questioning some products you’ve been buying for years. But as I say throughout my book, we can’t shop our way out of the problems in the food system.

So I think the most important thing you can do is to find a way to get involved in building a food movement that has the political power to change the rules for our food system. Find a local organization working on food policy in your community or do research on your local officials and how to contact them – then call them up and tell them you expect them to step up on a food issue that matters to you, whether it’s labeling GE foods or passing a better Farm Bill. Signing up with Food & Water Watch is a great way to learn about what’s going on in food policy and how to weigh in with your elected officials.

 

11. Is there any topic or issue I haven’t addressed in this Q&A that you want to comment on, or anything in particular you want everyone reading this interview to know?

Since the 1996 introduction of genetically engineered traits, biotechnology has been embraced as a silver bullet for the food system. The industry promotes biotechnology as an environmentally responsible, profitable way for farmers to feed a growing global population. But despite the hype, genetically engineered plants and animals do not perform better than their traditional counterparts, and they raise a slew of health, environmental and ethical concerns.

People want to know if they are eating GE foods. A range of polls have shown that almost everyone, whether they support biotechnology or not, believes that they have a right to know if they are eating a biotech product. But, the industry continues to lobby against labeling. Most recently, the biotech and processed food industry spent over $40 million dollars defeating a GE labeling initiative in California.

If the industry really believes its products are safe, it should stand aside and support the labeling of all GE foods.

 

 

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