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Cargill’s Proposed Acquisition of Sanderson Would Hurt Farmers

When Dallas McClendon called the Rural Advancement Foundation International – USA Farmer Hotline, it was after being presented with a troubling new poultry contract that would cut his family’s Mississippi chicken farm income by $45,000 this year. This week Dallas and his mother Trina shared their story in two publications: FERN and The Washington Post. It is a story that is all too familiar to RAFI-USA — yet another chapter in the troubling decades-long trend of corporate concentration, extraction, and harm in the U.S. livestock industry.

Sanderson Farms, the massive corporate poultry integrator that supplies chickens and feed to contract poultry growers like the McClendons, recently announced a merger with agribusiness giants Cargill and Continental Grain. If approved, the resulting poultry conglomerate will become the dominant poultry processor in Mississippi and control 15% of the national poultry market while pushing the market share of the top three U.S. poultry corporations to over 50%. These levels of concentration allow corporations to abuse their outsized power to extract greater profits at the expense of farmers and rural communities. At the same time, such concentration also erodes the resilience of the U.S. food system to shocks like climate disasters, pandemics, and cyberattacks.

Corporations like Sanderson Farms and Cargill will claim that the efficiency of their extractive model delivers better prices for consumers. And yet, during the course of the COVID-19 pandemic, meat prices have skyrocketed even as farmer incomes continue to fall. It’s almost as if something in the livestock industry doesn’t add up — and it turns out, that’s exactly the case. Multiple poultry corporations including Cargill, Koch Foods, Pilgrim’s Pride, and Sanderson Farms have either been indicted or privately sued for price-fixing or wage-fixing, with Pilgrim’s Pride pleading guilty in federal court last year.

Earlier this year, the Biden administration signed a very promising executive order on promoting competition in the American economy, which RAFI-USA hopes will result in much stronger antitrust and regulatory enforcement against abusive agribusiness practices. Cargill’s acquisition of Sanderson Farms gives the administration a chance to send a message to massive agriculture corporations that they cannot expect a rubber stamp on further consolidation. To protect farmers and their communities, the acquisition must be blocked from proceeding. 

Furthermore, it is vital that protections for farmers be strengthened in upcoming Packers and Stockyards Act rulemaking occurring later this year. These protections should include:

  • Clearly designating any tournament payment system as one providing an undue preference.
  • Reinforcing that it is unlawful for packers to provide preferential marketing arrangements to large-volume livestock producers over smaller-volume producers.
  • Providing protection for farmers to organize together based on the right to association and communication.
  • Providing protection based on protected class to combat racial discrimination in the livestock industry.
  • Clearly stating that there is no requirement to prove competitive injury to the sector as a whole when alleging a violation of the Act. 
  • Clarifying that a reasonable business decision does not justify an undue or unreasonable preference or advantage. 
  • Strengthening recordkeeping requirements to increase market transparency and facilitate appropriate USDA enforcement actions. 
  • Establish methods to continuously review and monitor industry practices to ensure that new practices do not result in violations of the Act.

Taken together, these strengthened provisions are vital to protecting the small and mid-sized farms and the rural communities they are rooted in from corporate abuse. In the meantime, farmers like the McClendons aren’t staying silent. 


https://thefern.org/2021/10/facing-a-merger-and-a-pay-cut-chicken-farmers-push-back/

https://www.washingtonpost.com/business/2021/10/04/poultry-companies-antitrust-crackdown/