By LEE PITTS
Gross Profit
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by Lee Pitts
here are two books I remember reading from high school that had a profound effect on me. The first, and most important, was a book written by what you’d call today a far-right-wing conservative by the name of Ayn Rand. The book was called The Fountainhead and it literally changed my life. Ayn was born and educated in Russia before moving to the United States where she wrote about the dangers of socialism and communism in several books. I read them all. The other book was written by a person exactly opposite Ayn Rand on the political spectrum. Upton Sinclair was an avowed socialist and would probably be described today as a “commie pinko.” Sinclair’s writings fueled the flames of a movement called progressivism and its practitioners were known as “Progressives”. Sound familiar? Upton Sinclair wrote nearly 100 books, won the Pulitzer Prize and was best known for his classic muckraking novel The Jungle which exposed labor and sanitary conditions in U.S. meatpacking plants. Like Ayn Rand’s books, The Jungle is still in print. The two books made me a devout follower of capitalism, but The Jungle also made me aware of the dangers and the extremes some greedy men will go to if allowed to form monopolies, engage in price fixing, mistreat their workers and cheat the public. THE JUNGLE REVISITED
Sinclair called his book The Jungle because he believed capitalism led to a world in which people preyed on each other just as animals do in the jungle. The Jungle has sold millions of copies, was translated into dozens of languages and cemented Sinclair’s reputation
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Livestock Market Digest
as a crusader for social justice. Despite all the attention the book received, Sinclair felt that readers had missed his point, they had focused on the health risk aspects associated with unsanitary stockyards and meatpacking facilities, while he considered his main theme to be the dehumanization of employees and the brutal treatment of animals. “I aimed at the public’s heart,” he said, “and by accident I hit it in the stomach.” Shortly after The Jungle was published, the President of the United States, Teddy Roosevelt, started receiving thousands of letters demanding that he clean up the meatpacking industry and break up what Sinclair referred to as “The Beef Trust”. It was today’s version of The Big Four: JBS, Cargill, Tyson and Marfrig/National Beef. The biggest difference is that today two of our four major beef packers are owned by Brazilian firms. Roosevelt despised Sinclair and grew tired of his telegrams and told Sinclair’s publisher, “Tell Sinclair to go home and let me run the country for a while.” During Teddy Roosevelt’s presidency the American public was growing tired of monopolists like John Rockefeller, the railroad monopolists and The Beef Trust, so in 1902 he directed a couple underlings to investigate Sinclair’s claims. They confirmed Sinclair’s accusations and so Roosevelt told his Attorney General to bring a lawsuit against the Beef Trust on antitrust grounds using the Sherman Antitrust Act of 1890. In 1905 the Supreme Court ruled in the landmark case called Swift & Co. v. United States, that the “Big Six” leading meatpackers (Swift, Armour, Morris, Cudahy, Wilson and Schwartzchild) routinely engaged in a conspiracy to fix prices, divided up the market for livestock and meat in their greed for higher prices, blackballed any competitors who failed to go along, used false bids, and accepted rebates from the railroads. The Supreme Court ruled that it was The Commerce Clause that allowed the federal government to regulate monopolies if they had a direct and deleterious effect on commerce. The Court’s decision eventually did halt the price fixing by Swift and its Beef Trust buddies and in 1906 Congress passed the Pure Food and Drug Act and the Meat Inspection Act. And all this was inspired by one book written by a socialist/communist. Here’s the important takeaway from history: when Roosevelt divided up the Beef Trust the top six firms controlled 82 percent of the U.S. beef market. Today The Big Four corporations control an estimated 85 percent and many ranchers feel they are price fixing, cheating and gouging the consumer.
IN THE SICK PEN
Since its rebirth in 1983 this newspaper and this writer have been warning ranchers about the dangers of captive supplies, monopolist packers, foreign packer ownership by multinational corporations, the sellout of our national organization and the merger into the National Cattlemen’s Beef Association (NCBA), the theft of checkoff dollars by them and their staunch backing of the packers at the expense of ranchers. Now America’s ranchers are like a chronic steer and find themselves in the sick pen once again. Not that some brave souls haven’t tried to fix our many problems, R-CALF, the United States Cattlemen’s Association, the Organization of Competitive Markets and several upstart state organizations have tried to gain traction but their voices are drowned out by the NCBA with their checkoff dollars. Or, more correctly, your checkoff dollars. A couple years ago R-CALF filed suit alleging antitrust violations and have sought damages for ranchers. R-CALF alleged that The Big Four began coordinating in 2015 to reduce the number of cattle they slaughtered and the animals they bought directly from ranchers in the cash market in order to depress cattle prices. “For several years now the beef packers have been capturing unprecedented margins,” said R-CALF CEO Bill Bullard. “Cattle prices remained unresponsive to increasing beef demand.” You can say that again! During the recent COVID crises the price of boxed beef doubled while the price to ranchers fell 20 percent! Continued Bullard, “Why cattle producers and their conventional trade associations would remain complacent, indeed silent, while this inexplicable circumstance exists is mindboggling to say the least. But, then perhaps the entire beef industry, along with the beef industry’s favorite media outlets, have thoroughly conditioned America’s cattle producers to follow their lead by exclusively focusing on increasing beef demand. It is time for some serious, critical thinking about the structure of the cattle market by cattle producers . . . before it is too late,” warns Bullard. CATCHING COVID FEVER
Bullard cites 2018 as a good example. “According to the beef industry, increasing beef demand means good prices for retail beef, which will, like water, trickle down to reward every sector of the beef supply chain, including the live cattle producer. But that did not happen. Instead, fed cattle price fell nearly five percent during the same period
