Here's a new word to use and enjoy: Monopsony. It's the condition that exists when there are sellers for a product but only one buyer. As in, "I wanted to sell all this old farm equipment at auction, but nobody showed up on the sale day so I didn't get enough to cover what I owe."
Unlike monopolies, where buyers only have one seller to choose from, a monopsony means big trouble for sellers. At the same time, the monopsony becomes a monopoly when it's time for the monopsony to sell what it bought.
Here's an example: Let's say you're a hog farmer and all your neighbors are also hog farmers. Let's say there's only one buyer in your state. So they buy at a ridiculously low price because they have no competition. Then, owning all the hogs, they want to sell bacon. Will they pass on the savings or will they simply claim more profit?
I'll let you think about this.
I ran across "monopsony" while reading about the Smithfield-Cargill-Farmland wars. Farmland started life as a farmer co-op, when several Missouri farmers got together to create a label to compete with the corporations. Figuring that they could pool their resources, they worked together, hired a board of directors and opened an office in Kansas City, and did fine for a while. Then the board of directors decided that the co-operative could do better by adopting corporate management techniques and Farmland was soon in business raising hogs on its own, in competition with the original co-op owners.
In 2002, Farmland was broke and for sale. Two giants -- Smithfield and Cargill -- started to bid. Smithfield Foods Inc., based in Virginia, the largest pork processor in the nation, offered $363.5 million. Cargill Inc., of Minnesota, countered with $385 million. Either of these giants could create a monopsony that would dominate the market in their regions.
It's easy to argue that the market restriction has already happened. Most hogs are already raised in confined animal feeding operations, or CAFOs, where animals are housed in metal buildings, each with a computerized feeding system, a thermostat-regulated air-handling system, and an automatic manure-handling system.
Using this system, two or three people can raise as many hogs as were once raised by an entire county of independent family farmers. That's why so many independent family farmers have been forced out of business
A 1966 study by David L. Eaton of Pioneer Feeds identified 169 swine odor compounds, many poisonous, emitted from waste. To handle excrement, the steel floors in the pens are slatted so that feces and urine fall through the slats and onto a sloping concrete floor.
Water washing across the floor sweeps the excrement into gutters and into plastic pipes that go to cesspools. In the cesspool, solid wastes sink and the same water is recycled back through the buildings.
Once or twice a year, the cesspools are pumped out and the liquid is applied across fields. Even though a CAFO can produce as much excrement as a city, there is no treatment before the excrement is spread on the land.
Another field additive is the composted carcasses, because in this city of thousands crammed together like commuters on the subway, death is common.
Feed mixed to the corporate owner's specifications and usually supplied by the corporation comes into the building through pipes. This means that the old market system that provided grain at market prices has been bypassed. For the industry, this means more control. For the community, it means that jobs at the feed store have been eliminated.
This system is absolutely industrial, but current laws give protection to Agriculture, so the Industry continues to hide behind the Agriculture designation.
Livestock industry associations help the industrial giants hide behind agriculture by issuing materials that perpetuate the myth that animals are typically produced on small family farms. I once picked up a flyer labeled: "Communicating a positive message about Pork Production and the Environment," at a Livestock Producers meeting sponsored by the University Extension. The flyer said they do not like words like "confinement," preferring "environmentally controlled housing." They say the word "industry" should be replaced by "networking/alliances."
And, I picked up a pork producers children's coloring book at the Boone County Fair. The story follows a little pig named "Blue Ribbon Oink" raised by young Jamie Anderson. In the book, Jamie cares for his pig from its birth to the county fair, where it wins the blue ribbon.
At this writing, it looks like Smithfield is going to win the bidding for Farmland. Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Sen. Tim Johnson, D-S.D., asked the Justice Department to look into the Smithfield-Farmland sale, arguing that the government should block it to prevent Smithfield from getting too firm a grip on the meat market. It goes without saying that the monopsony/monopoly scenario can be extended to every segment of the food system -- corn, hogs, beef, rice, you name it.
"It's disheartening that the Justice Department won't intervene in the bankruptcy court's sale of Farmland Foods," Grassley said, "The continued trend in agriculture concentration works against the family farmer, and today's news is very bad for Iowa's independent pork producers."
And, he might add, for consumers.
Margot Ford McMillen farms and teaches English at a college in Fulton, Mo. Email: mcmillm@jaynet.wcmo.edu.