Tom Vilsack, 73, has previously come under scrutiny for his close ties to agribusiness companies and organizations (Jared Strong/Iowa Capital Dispatch).

MADISON, Wis. — Agriculture Secretary Tom Vilsack, who moved into a dairy lobbying position following his first go around as head of the USDA, did not reject making a similar move once his current time as secretary ends.

Speaking to reporters last week at the World Dairy Expo in Madison, Vilsack was asked by Investigate Midwest if he would again join the rotation of federal regulators working in the agriculture industry.

“My plans are to be here today to talk about the dairy industry, because I care about the industry,” he said to a group of reporters after speaking at the Global Dairy Summit, hosted by the state’s Department of Agriculture, Trade and Consumer Protection.

“That’s what I’m focused on today. That’s what I’ll be focused on tomorrow. That’s what I’m going to be focused on as long as I’ve got energy and breath.”

When pressed again, Vilsack said he couldn’t make promises because he can’t predict the future.

“Nobody can promise where they’re going to be tomorrow. I could be dead tomorrow,” Vilsack snapped, closing the press conference. “Good grief, man, what a question.”

Vilsack, 73, has previously come under scrutiny for his close ties to agribusiness companies and organizations. He’s also been criticized for taking part in what’s known as regulatory capture, a process where government officials, responsible for regulating an industry, later work for that same industry.

Previous Investigate Midwest reporting found that the “revolving door” between regulatory agencies and the agriculture industry is common practice for USDA employees.

Jeff Hauser, founder of the nonprofit Revolving Door Project, said the USDA has a history of promoting the interests of corporations in charge of the nation’s food supply, regardless of administration. The nonprofit group researches and tracks the relationship between officials working in the government and the industries they are supposed to regulate.

“You’re just unlikely to want to get into a feud and enforce a law strictly against an industry that you might be a member of very shortly,” Hauser said.

Soon after Vilsack, a former governor of Iowa, left his first stint as USDA secretary in 2017 under former President Barack Obama, he took an executive position in the dairy industry where he received an annual salary of nearly $1 million, according to public records.

Vilsack became vice president of Dairy Management Inc., the trade association that manages the industry’s checkoff fund. He also served as the CEO of the U.S. Dairy Export Council, an arm of the organization focused on international trade promotion.

Checkoff programs are federally mandated and require commodity producers, from dairy to watermelons, to pay into a pot of money used to market products. A Milwaukee Journal Sentinel investigation found that the dairy checkoff program accounted for nearly half of all the nation’s checkoff spending, with expenses that included large salaries, private jet flights and Super Bowl trips.

Vilsack, who returned as agriculture secretary in 2021, and the USDA have been criticized by lawmakers for delays in publishing federally mandated financial reports from the dairy checkoff program. As of early October, the dairy checkoff program had not published the most recent two years of audits and missed its July deadline to do so.

Current Dairy Export Council CEO Krysta Harden, who also spoke at last week’s World Dairy Expo, highlighted the council’s push in the past two decades to grow the nation’s export market. She also said she was confident the nation’s dairy industry will continue to expand outside of the country thanks to a “government that supports dairy.”

Harden worked under Vilsack during the Obama administration, eventually becoming the USDA deputy secretary of agriculture. Prior to joining the USDA, she worked in policy and roles for seed and chemical heavyweights DuPont and Corteva. She now leads the export council after Vilsack returned to work for the federal government.

Despite growing markets for export, dairy farmers have only turned a profit three times in the past two decades. In Wisconsin — host of the annual World Dairy Expo since 1970 — dairy farms have declined by nearly two-thirds in that same time.

Joe Maxwell, co-founder of Farm Action, a nonprofit that works against agricultural consolidation, believes Vilsack is an example of the ways regulations have been delayed or stymied because of the close nature between the federal government and industry.

“The USDA has been in bed with the very people that they’re supposed to keep in line, either as a regulator or approval agency for checkoff funding,” Maxwell said.

“Government has a responsibility to put the safeguards in place so our economy works for people,” Maxwell continued. “When our agencies are hired by the very people they’re regulating, those safeguards go away and the people aren’t represented, and this economy works for the corporations and not for the people.”

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

A Tyson Plant in Rogers, Arkansas, on June 28, 2020 (Spencer Tirey, for Investigate Midwest)

Tyson Foods annual sales have doubled in the past two decades, increasing from $26 billion to $53 billion from 2004 to 2023, according to a review of U.S. Securities and Exchange Commission filings.

Yet Tyson, which is the country’s largest chicken company, has closed nine meatpacking plants over the past year — including two in Missouri impacting more than 2,000 workers.

The plant closures and the company’s contracts with affected chicken farmers sparked an investigation by the U.S. Department of Agriculture. The meatpacking company is also being sued for allegations of antitrust violations.

The Arkansas-based company operates 183 chicken facilities in the U.S., including hatcheries, processing plants and feed mills. In addition to chicken, the company’s sales come from beef, pork and prepared foods.

In July, U.S. Sen. Josh Hawley sent a letter to Tyson Foods CEO Donnie King demanding transparency and accountability after a lawsuit brought against his company alleged that Tyson lied about its intentions to sell its chicken plant in Dexter to a competitor.

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

USDA Supervisory Agricultural Meat Graders at the annual national beef correlation event, Aug. 13, 2019. In 2019, the top four beef packers — Tyson Foods, JBS, Cargill Beef and National Beef — processed around three quarters of the nation’s beef in 27 facilities across the nation (Preston Keres/USDA).

Meat industry groups and major meat companies spent more than $10 million on political contributions and lobbying efforts in 2023. For some, last year’s spending was an all-time high.

The federal government has been rolling out changes to the protections given to livestock and poultry producers, as well as how these farmers operate. In turn, these changes prompted various meat companies and industry groups to lobby against certain provisions. In some cases, industry groups backed lawmakers seeking to do away with the new rulings altogether.

The now-finalized updates to the Packers and Stockyard Act include addressing discrimination of livestock and poultry growers based on race, sex, age, or disability from the companies that purchase their animals or pen the contracts by which producers abide. Another update, known as “Transparency in Poultry Grower Contracting and Tournaments,” requires sharing information between large chicken companies and the independent, contract farmers that raise chickens for consumption.

The changes are a step in the right direction to protect producers over businesses, said Mike Stranz, National Farmers Union vice president of advocacy. The National Farmers Union, according to its website, “helps the family farmer address profitability issues and monopolistic practices” and represents 200,000 farmers and ranchers across the country.

“Decades of consolidation and unchecked vertical integration have created a livestock market that tips the scales away from family farmers and ranchers and puts much of the power in the hands of just a few multinational corporations,” Stranz said in a statement provided to Investigate Midwest. “USDA is rebalancing the scale and providing fairness for farmers and ranchers.”

R.J. Layher, the director of government affairs at the American Farm Bureau Federation, said in a statement provided to Investigate Midwest that the prominent agricultural group also supports the changes to the Packers and Stockyards Act. The Farm Bureau is an agricultural advocacy and lobbying organization with more than 2 million members across the country.

“We believe that the changes to the Packers and Stockyards Act will bring needed transparency for contract poultry growers as well as clarifying what constitutes retaliation and deception,” Layher said.

President Joe Biden has made consolidation and anti-monopoly efforts a core tenant of his administration, with the meat industry a primary target. Changes to the 103-year-old Packers and Stockyard Act continue to spark lobbying efforts and political donations to influential federal lawmakers in agriculture and livestock focused states.

Austin Frerick, an agriculture policy expert and author of the book, “Barons: Money, Power, and the Corruption of America’s Food Industry,” said the rise in spending points to meat organizations’ and companies’ concerns over the U.S. Department of Agriculture’s changes.

“These slaughterhouses are throwing record amounts of money at politicians right now because they see farmers and voters clamoring for change and they want to stop it,” he said.

Companies and lobbying organizations said their increase in lobbying was directly related to legislation like the Farm Bill as well as addressing specific concerns for individual industries.

Investigate Midwest analyzed two decades of political campaign contributions and lobbying dollars from meat industry groups National Pork Producers Council, National Chicken Council, National Turkey Federation, National Cattlemen’s Beef Association, and major meat companies JBS, Tyson Foods, Smithfield Foods, and Cargill.

The National Pork Producers Council, Tyson Foods and Cargill spent the most on lobbying federal lawmakers and agencies last year. The annual revenue reported by industry groups is based on 2022, the most recent public tax filing year.

The National Pork Producers Council:

• is headquartered in Des Moines, Iowa, and has local associations in 39 states
• reported nearly $20 million in annual revenue in 2022
• spent $2.8 million lobbying last year — the largest spend and year-over-year increase seen in any meat group analyzed
• increased its lobbying spending three-fold since 2003
• has executive members from pork companies Clemens Foods and Smithfield Foods

Tyson Foods: 

• is the nation’s largest poultry company and is headquartered in Springdale, Arkansas
• reported nearly $53 billion in annual revenues last year
• spent $2 million lobbying federal lawmakers and agencies in 2023
• has doubled its annual lobbying spending in the past two decades
• shuttered eight meatpacking plants in last year, leaving growers with large amounts of debt and few options to pay it of

Cargill Inc:

• is the nation’s largest private company and is headquartered in Wayzata, Minnesota
• reported $177 billion in annual revenues last year
• spent $1.3 million lobbying federal lawmakers and agencies in 2023
• has increased its lobbying spending 106% in the past two decades

In a statement provided to Investigate Midwest, Cargill said the company’s lobbying aligns with business priorities across all of its food and agriculture sectors, not just meat. The company said that it did increase its spending from 2022 to 2023 to focus on major problems facing the sector.

“Looking specifically at the meat industry, our efforts in 2023 focused on critical issues facing the entire industry, not just Cargill, including the Farm Bill, climate, supply chain resiliency and transportation,” the statement said.

The National Pork Producers Council and Tyson Foods did not respond to multiple requests for comment.

Regarding political donations, the National Cattlemen’s Beef Association, the National Turkey Federation and the National Pork Producers Council spent the most last year. The National Pork Producers Council donated nearly $293,000 in donations to federal lawmakers in 2023. (Companies cannot donate directly to politicians. All donations come through political action committees organized by top company officials and employees.)

The National Cattlemen’s Beef Association:

• is headquartered in Denver Colorado and has offices in Washington, D.C.
• reported $55 million in annual revenue in 2022
• nearly tripled its political donations in the last two decades and spent $609,000 in 2023
• said the USDA’s new Inclusive Competition ruling “fails to give adequate consideration to the severe costs that increased litigation and litigation risk will impose on the beef industry”

The National Turkey Federation:

• is headquartered in Washington, D.C.
• Reported a much smaller annual revenue than its peers at $3 million in 2022
• spent an organizational record $308,500 in political donations in 2023
• tripled its political spending in the past two decades
• has leadership from poultry companies Butterball, Tyson, Jennie-O Turkey, and Cargill
• urged the USDA to not include turkey growers in its final “Transparency in Poultry Grower Contracting and Tournaments” rule, even though the turkey and chicken industries use similar payment systems

“Turkey farmers and others who work in the industry are actively engaged in (the National Turkey Federation)’s legislative efforts, and support for the PAC has increased as a result,” National Turkey Federation communications manager Laycee Gibson told Investigate Midwest in an email. “With increased contributions over the years, the PAC has been able to allocate more funds to address the needs and issues of the industry.”

The National Cattlemen’s Beef Association did not respond to multiple requests for comment.

While these industry groups and companies represent individual meat producers and products, they often work in tandem on major issues facing the entire industry. For example, the Pork Producers Council has advocated on behalf of the poultry industry when the USDA introduced changes to how poultry companies pay contract growers.

Sarah Bryner, OpenSecrets’ director of research and strategy, said increased spending on lobbying often correlates with specific legislation, such as the Farm Bill or updates to the Packers and Stockyard Act.

“If they’re spending more, they’re probably hiring more, or more expensive, lobbying firms to represent them,” Bryner said.

Which lawmakers benefited from industry money?

Federal lawmakers in major agricultural states have raked in hundreds of thousands of dollars in industry campaign donations over the past 20 years. And industry support transcends partisan lines.

Rep. Jim Costa, a Democratic Congressman from California, received nearly $400,000 from all of the meat industry groups and corporations analyzed from 2004 to 2023. Costa — a ranking member of the House Committee on Agriculture’s Livestock, Dairy, and Poultry Subcommittee — topped the list for these three organizations. His office did not respond to a request for comment.

And of all the meat industry groups and corporations analyzed, the National Cattlemen’s Beef Association, the National Turkey Federation and the National Pork Producers Council have had the largest increase in political spending over the past two decades, according to an Investigate Midwest analysis of Federal Election Commission data.

In Midwestern states, the top five recipients of industry money in the past 20 years are:

• Rep. Frank Lucas, a Republican Congressman from Oklahoma and the longest-serving member of the House Committee on Agriculture ($265,495)
• Rep. Adrian Smith, a Republican Congressman from Nebraska ($237,864)
• Rep. Collin Peterson, a former Democratic Congressman from Minnesota, who lost re-election in 2020 and recently began lobbying on agriculture issues ($232,545)
• Rep. Sam Graves, a Republican Congressman and Senator from Missouri ($177,399)
• Roy Blunt, a former Republican Congressman from Missouri, who retired in 2023 ($166,866)

In the past 20 years, Smith received more than $80,000 from the National Cattlemen’s Beef Association. Lucas received nearly $67,000.

Smith also received $60,000 from the National Pork Producers Council over the two-decade period, the second-highest in that time. The pork organization also donated large sums to representatives in major pork states such as North Carolina and Iowa.

In late 2023, when the USDA introduced its final language for the Transparency in Poultry Grower Contracting and Tournaments ruling, numerous members of Congress wrote a letter to the agency, asking for an extension of the public comment period as well as scrutinizing the agency’s plans to update the ruling. Congressmen Lucas, Smith, Graves, and Costa signed onto the letter.

Representatives Lucas, Smith and Graves did not respond to multiple requests for comment.

Former Minnesota Rep. Peterson received the second-highest amount of money from the National Turkey Federation. Other major contributions from the Turkey Federation include $53,000 to Rep. Steve Womack, a Republican Congressman from Arkansas and co-chair of the U.S. Congressional Chicken Caucus.

Peterson said he received his donations from industry groups because he was the chair of the House’s Agriculture Committee. He also told Investigate Midwest he received donations from meatpackers and poultry groups because of his work in his home state during the 2015 avian flu pandemic, as well as efforts to reopen meatpacking plants during the onset of the COVID-19 pandemic.

“My door was always open whether they had given me any money or not,” he said.

Death of a rider

In 2024, Congress is up against finalizing a long-overdue Farm Bill, a presidential election year and its annual allocation of federal dollars to agency budgets.

While federal lawmakers were trying to finalize budgets for agencies from the USDA to the Food and Drug Administration earlier this year, an effort to quash all updates to the Packers and Stockyard Act was circulating in the nation’s capital.

A subcommittee of Congress members is responsible for proposing the USDA’s budget. The Agriculture, Rural Development, Food and Drug Administration Appropriations Subcommittee is a majority-Republican group of 15 people, from Iowa to California.

In May 2023, Rep. Andy Harris, a Maryland Republican and subcommittee chairperson, introduced an appropriations bill that included language meant to nix all enforcement of the USDA’s new poultry transparency ruling.

The bill failed, but as final negotiations began on Capitol Hill in late February, the language was resurrected as a potential policy rider — an amendment to legislation often added to larger bill packages to pass controversial items — into the USDA appropriations bill.

A section of the failed bill from 2023 said none of the funds made available by the bill could be used to “implement or enforce” three separate issues being addressed by the USDA’s Packers and Stockyards Division:

• The now-finalized Transparency in Poultry Grower Contracting and Tournaments rule
• Future USDA rulemaking to tackle problems in the poultry industry’s tournament system
• Proposed Packers and Stockyards Act revisions that would encourage competition in the meatpacking industry and penalize anti-competitive behavior

Harris received more than $24,000 from meat industry organizations in 2023, a career-high for the congressman. (Harris added a policy rider with similar language during the annual budgeting sessions for the USDA in 2016.) His office did not respond to multiple requests for comment.

As the federal government inched closer to a March 1 deadline this year to finalize the appropriations bill, agriculture reform advocates and elected officials began to sound the alarm that this language made its way back into budget negotiations, said Jordan Treakle, the policy coordinator for the National Family Farm Coalition, an advocacy organization that works with farmers, ranchers and rural communities.

“We are strongly opposed to this recurring policy rider and don’t feel that it reflects the interests and needs of the family farmers and poultry growers that we represent, and feed our communities everyday,” Treakle said.

Senators Chuck Grassley, an Iowa Republican, and Jon Tester, a Montana Democrat, also published a joint letter to their fellow senators on Feb. 20, urging them to reject any policy riders that would prevent the USDA from enforcing regulations that prevent meatpacking companies from continuing to fix prices and make record profits.

“They want to abuse their market power to pay producers less and charge consumers more,” the senators wrote.

The policy rider was not included in the USDA’s final budget this year.

Attempts to delay or dismantle new USDA rulings meant to provide fairness and transparency in the meat industry are not new.

In December 2023, members of the Congressional and Senate Chicken Caucuses wrote the USDA to request that the agency delay implementing the poultry transparency rule, stating that the agency’s impending rule “dramatically underestimated” the necessary time and people needed to update current contracts between farmers and meatpacking companies.

The National Chicken Council also sent a similar letter to USDA in December.

In response to the request to delay the final rule implementation, USDA spokesperson Allan Rodriguez told Investigate Midwest that poultry growers have long waited for basic transparency needed to avoid deception from major corporations. He said the agency made the proposal rule available to the public for more than a year, and the final language was available for 100 days between its announcement and implementation.

Reform of meat industry regulation has been nearly 20 years in the making.

The 2008 Farm Bill included language tasking the USDA to revitalize its enforcement carried out by the Grain Inspection, Packers and Stockyards Administration — or GIPSA —, which enforces the Packers and Stockyards Act and is responsible for enforcing rules and regulations in meat and grain markets.

In 2010, the USDA proposed regulations that would increase contract transparency for poultry and swine farmers, a decision commonly referred to as the “GIPSA rule.” Before the regulations were finalized, Congress prohibited USDA from implementing its final recommendations. This lasted until 2015, with policy riders that suppressed the release of the final rule.

GIPSA was allowed to draft and propose a finalized rule in the 2016 appropriations process. When then-President Donald Trump took office, his administration threw out all new GIPSA rules changes.

Now, despite the Biden administration’s work to tackle consolidation and power in the meat industry, farmers and agricultural reform advocates have become increasingly frustrated with the pace of new regulations from the USDA and Secretary of Agriculture Tom Vilsack.

Frerick, author of “Barons,” is among those frustrated.

“The meat industry is the closest we have to a criminal organization in modern day American business and the USDA just seems incompetent to deal with them,” Frerick said. “It’s allowing them to keep engaging in these incredibly abusive practices to both our workers and farmers.”

He said there was a heavy sense of deja vu this year when it came to fights over policy riders and meat industry monopolies influencing legislation.

“The meat industry has so much money and power,” Frerick said. “It’s going to win in the darkness.”

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

Timothy Bundren's chicken barns are all standing empty since Tyson cancelled his growing contract last year. His operation near Harrison, Arkansas, was photographed on March 31 (Julie Anderson, for Investigate Midwest)

Timothy Bundren must have heard wrong.

The sun wasn’t up yet. He was still groggy from starting his morning routine of walking through chicken barns.

His phone rang and his contact with the global meat company headquartered in Springdale, Arkansas, just two hours south of his farm, started telling him he would no longer be raising chickens.

Bundren, 52, didn’t believe him at first. Just hours later, he was supposed to meet with the bank about another loan to buy the farm down the road. Bundren waited an hour and then called the man back.

The news didn’t change, but the weight sunk in.

Tyson Foods closed four meatpacking plants that day in North Little Rock, Arkansas; Noel and Dexter, Missouri; and Corydon, Indiana. Bundren lives near the plants closed in Missouri and Arkansas. Because of this, the company canceled Bundren’s contract to raise broiler chickens.

But to his knowledge, the chickens Bundren raised weren’t processed at the plants shut down that day. His chickens were shipped to a Tyson plant in Green Forest, Arkansas, just half an hour away and still in operation.

When Tyson closed those regional plants, it had to reassess which growers would send chickens to which plants to meet demand, said Eddie Todd, president of the Missouri-Arkansas Poultry Growers Association and president of the Arkansas Farmers Union.

“The plant that (Bundren) sent his birds to might not have been directly the cause since it didn’t close, but it was because of the other closures and how Tyson looked at all the plants’ feasibility,” Todd said.

Bundren and other growers affected by the closures have been caught in the wake of a larger, company-wide initiative to cut costs. But that has left some growers with more than a million dollars in debt — debt they accumulated at Tyson’s urging — and few options to pay it back, according to growers Investigate Midwest interviewed.

Bundren is $1.4 million in debt. Nine months since that call, his barns are still empty.

While relieved he didn’t sign onto another loan, his world has been turned upside down.

“I’m thinking if I’m hearing this right, I’m out of business,” he said. “How am I going to pay a loan this big back?”

Tyson introduced a restructuring program in 2022 that included consolidating corporate headquarters, reducing expenses and increasing efficiency, according to its filings with the U.S. Securities and Exchange Commission.

“These assets that we’re shuttering would have required significant capital in order to make them competitive,” said Tyson President and Chief Executive Officer Donnie King in an August 2023 investor meeting, the same morning the company announced plant closures across four states. “If you look at the returns on those, it really didn’t make sense to do that.”

The company’s plans came at a human cost. Tyson closed eight meatpacking plants in 2023, six of them chicken processing and two beef processing. It laid off more than 4,200 workers across all of its plants last year.

The company has a lot to gain from its contract growers. In 2023, Tyson Foods had nearly $53 billion in sales — a third of which was from chicken. The company operates 183 chicken facilities across the country, which include processing plants, hatcheries, feed mills and grain elevators. The company’s website states it contracts with more than 3,600 poultry farmers nationwide.

It is unclear how many growers, who are not employees, had contracts with Tyson before the plants closed last year.

But in the counties where Tyson shut down chicken processing plants last year, and where contract growers who spoke to Investigate Midwest operate in, there were a total of 114 broiler chicken farms under production contracts in 2022, according to the USDA’s most recent agricultural census. Many farms raise more than a million birds each year.

Bundren has spent the past six years annually raising about 600,000 broiler chickens, or chickens bred for consumption.

Like almost all broiler chickens in the country, his were raised under contract for a major poultry company. Many chicken growers only grow for a single company as more than half of contract chicken growers live in a region with two or fewer companies, according to a 2012 Journal of Agricultural and Applied Economics study.

“I stand a chance of losing everything. Every (chicken) house I got, all my land, everything,” Bundren said. “It’s throwing me and my family in the street. Tyson ain’t thinking about that, and I guess they don’t care.”

An expensive proposition

From the pivotal early morning phone calls to the millions in debt, former Tyson contract growers who spoke to Investigate Midwest said they have had to take out upwards of $2 million loans to become Tyson contract growers. Their contracts canceled, they’re now saddled with massive debt.

They said the company pushed them to go into more debt to upgrade their barns to meet company demands. Growers also said the company told them that they would be given chickens to raise for as long as they had loans on their barns.

Now that their contracts have abruptly ended, Tyson contract growers said they aren’t able to pay off the debt. Growers are staring down bankruptcy and foreclosures. Some have sold off land or other property to pay off debt while others have retired or looked for work off the farm.

Investigate Midwest spoke to five growers, located in Arkansas, Missouri, Indiana and Virginia, and pored through lawsuits filed by four other contract growers to find how Tyson’s closures have affected the farmers who raise the company’s chickens. A grower in Virginia asked for anonymity because of concerns over breach of contract. Another grower asked to speak on background only, but their situation mirrored that of the other growers.

Tyson did not answer specific questions about the closures, its relationship with contract growers, or how many growers lost contracts due to these closures. In a statement emailed to Investigate Midwest, it said closing plants was not an easy move:

“Tyson Foods is proud to partner with a network of independent growers across the country, and we value the contribution that these growers make to our business. Closing plants is always a difficult decision, and we understand the impact it has on the people and businesses in those communities. We work to help our team members and partners through that transition, and Tyson Foods has provided affected growers with several options to honor our contractual commitments and allow growers to receive fair value.”

Almost a year after the first announcement of Tyson plant closures and canceled contracts, King, Tyson’s president and CEO, said in a February investors meeting that the company is already “seeing the benefits of these actions and we’ll continue to evaluate opportunities to drive efficiency, across our segments.

“The improvements are coming from operational improvements, operational excellence both in plants and in live production and really driving out waste from the business,” King said.

Tyson’s 2023 annual report states it lost $322 million in costs related to closing plants in 2023. One of those costs was contract terminations for chicken growers. The growers that Investigate Midwest interviewed were offered buyouts of their contracts but all stated it would not be enough to cover the entirety of  their debt.

Raising poultry is the most expensive type of livestock or animal production farming in the U.S., according to Census of Agriculture data.

The poultry industry was one of the first to introduce the practice of outsourcing debt and risk associated with raising live animals. All major poultry companies use the practice, said Aaron Johnson, a co-policy director at the agricultural reform nonprofit, Rural Advancement Foundation International, or RAFI, headquartered in North Carolina. Tyson owns and delivers the birds to the growers who must put their own money into their operations.

“The model is designed to put that debt load external to the company so that if the company decides to shut down a facility, they are not left holding the bag,” Johnson said. “The contract growers are.”

Tyson’s cost-cutting doesn’t appear to be helping the company’s stock price. Earlier this month, it experienced its worst one-day decline in a year, according to Reuters.

From top grower to empty barns

Six years ago, Bundren moved to rural Harrison, Arkansas, to start growing chickens for Tyson. A former car mechanic, electrician and property manager, he switched careers to put his family into a better financial position and so he could stop working multiple jobs.

Bundren said Tyson verbally promised him years of steady pay if he took out the loans needed to purchase chicken barns. Now, the rug has been pulled out from beneath him.

“They told me point blank that as long as I grow decent birds and do my job, they would keep me in birds long enough to pay my loan off,” Bundren said.

There’s pride in his voice when he talks about his chicken barns and the life he was afforded by raising chickens.

He emphasizes that he always kept his barns clean. Along the dirt road on which his house is located, his driveway is the only one paved.

Chicken growers are generally paid under a system known as the tournament system, a method in which chicken companies rank a grower’s flock of birds against neighboring growers based on the size of the birds and how much feed and other expenses they used. The higher the ranking a contract grower receives, the more money they get. The opposite remains true, though, leaving poultry contract growers susceptible to major swings in pay.

Today, Bundren’s barns are useless. He has no income from poultry farming. The barns he purchased are designed for Tyson chickens, making it difficult to transition to raising poultry for another company.

This is a common experience across the poultry industry. Growers will build or purchase barns with company-specific parameters. In instances where a contract is cut short or growers want to move to a different poultry company, they often are unable to use or sell the equipment and barns they already own, according to a 2006 study in the American Journal of Agricultural Economics.

After the initial shock, Bundren talked to a regional Butterball plant about raising turkeys for the company — only to discover it would cost at least $250,000 to upgrade his barns to its specifications. He said the brunt of the cost was replacing all feed and water lines to be sized for turkeys instead of broiler chickens.

In the end, Bundren said he was unable to raise turkeys for Butterball because his farm is located too close to other poultry operations. He was told this could create a biosecurity risk for the birds.

“Right now I’m scared to death,” Bundren said. “I’m scared I’m gonna lose everything and I made a mistake by putting my family up here.”

Bundren entered the industry at a rough time for growers. In the seven counties in Arkansas and Missouri affected by plant closures, chicken farms were consolidating. From 2002 to 2022, the number of broiler farms under contract was cut in half, according to USDA data.

At the same time, poultry farm debt in Arkansas and Missouri exploded. In Arkansas, the amount of debt and other liabilities held by poultry growers tripled from 2003 to 2022, according to an analysis of USDA farm income data. In Missouri, the figure increased six-fold.

In 2022, the total cost of raising poultry in the country was nearly double that of raising hogs. Poultry is more expensive to raise than dairy cattle, beef cattle, sheep and goats. USDA research shows that raising chickens can also provide less revenue.

Nationally, the cost of raising chickens increased 35% from 2012 to 2022, according to an analysis of Census of Agriculture data. This data does not separate out types of poultry or delineate between the cost of raising chickens for consumption or egg production.

Despite rising costs and debt loads, growers said Tyson continued to ask for upgrades and investments or they would lose their contracts.

Bundren noted growers, if they don’t invest in further upgrades per Tyson specifications, they’re told they won’t receive additional birds. “(Tyson) don’t give a damn about how much money it costs,” he said.

Sleepless nights

Nine months ago, Preston Arnold’s phone rang as he was driving his 1999 white Chevy Silverado to his chicken barns. He pulled over to the side of the road to answer it.

It was his Tyson broiler manager. A few moments into the conversation, Arnold, 67, thought he was joking.

As the man on the phone walked him through the news, Arnold realized he wasn’t.

He looked down the road and saw his eight chicken barns in Sikeston, Missouri. They would soon be empty. He stood to lose everything.

Arnold had been around the chicken industry for years. His brother and father raised birds for Tyson for 25 years while he pursued a career in the insurance industry. He said as he got older, he wanted to travel less and be home more. He bought chicken barns half a mile from his house in Sikeston.

Then, he contracted with Tyson to supply birds for the Dexter, Missouri, slaughter plant 30 minutes away.

For almost five years, he raised close to a million chickens a year for Tyson. When he started as a contract grower in 2019, Arnold’s original loan was for $1.6 million.

As of mid-April, his loan balance sits right around $900,000. His barns now barren.

Arnold said he put his home and property up as collateral for the initial loan. Since the plant’s closure, he said that his bank has threatened foreclosure.

In negotiations with the bank, he said he’s suggested the idea that he keep a barn located at his home throughout the potential foreclosure process, so as to at least have a roof over his head.

“We’ve gone a lot of sleepless nights,” he said. “This has just been a roller coaster of emotions.”

The Farm Service Agency, the federal agency that assists and secures loans for agriculture producers, said in a statement to Investigate Midwest that it has met with Arkansas contract growers who lost Tyson contracts. It has yet to meet with growers in other states, though. The agency said situations like this are why the USDA is examining the treatment of contract growers.

Often, poultry companies will require or strongly encourage growers to upgrade their barns and equipment in order to get more birds to raise, according to USDA research and interviews with contract growers. The USDA estimates that it costs roughly $400,000 to build a new chicken barn, with many growers having multiple barns.

Arnold said in the last two years, he’s invested in upgrading his barns and spent $500,000 on a new one.

“Had I known that there was even talk about (closure), I wouldn’t have (upgraded or built new barns),” Arnold said.

The news of Tyson’s closure blindsided Arnold and other contract growers whose chickens were processed at the Dexter plant. According to two lawsuits filed by four Missouri contract growers, Tyson allegedly planned to shut down the Dexter facility at least a year in advance of the announcement. (Tyson did not respond to a question about the lawsuit’s allegations.)

Despite this, the lawsuits state that the company encouraged contract growers to continue taking out loans and updating facilities. The filings allege that Tyson largely benefitted from the contract operations because it did not have to build or maintain farms that the company would knowingly abandon.

One of the lawsuits was settled out of court for an undisclosed amount of money. Attorney Russell Oliver, who represented the family that settled and still represents the  contract growers suing Tyson, declined to comment. The other lawsuit is pending.

“We were not free to seek out other business opportunities on the open market and could only perform this service for the Tyson Companies,” wrote grower Eric Kessler in a signed affidavit from the settled lawsuit. “As such, we are not in ‘business’ for ourselves but were exclusively servants of Tyson.”

The Dexter processing plant was bought by Cal-Maine Foods, the largest egg company in the country, in March. Cal-Maine operates more than 100 production, processing and packing facilities across Arkansas, Missouri, Oklahoma, Ohio, Texas, and much of the South.

The company plans to convert the plant to process egg products and said it will work with some of the region’s former Tyson contract growers to now raise eggs.

Cal-Maine’s vice president and chief financial officer, Max Bowman, said the company has already started placing birds with contract growers in the Dexter area. He declined to say how many new growers used to contract with Tyson, and he declined to say how much money it would cost to convert their operations to meet Cal-Maine’s requirements.

“We’re quite confident that the opportunity we’re going to offer to the growers will be as good as or better than what they had in their former contracts,” Bowman said.

Arnold said the cost to convert his barn to meet Cal-Maine’s specifications was estimated to be at least $550,000 per barn for four barns, meaning he would have to take out another large loan in order to produce eggs for the company. He is still considering taking out a new loan, but has yet to act.

A loan of more than $2 million on top of his other debt is hard to swallow.

“If something doesn’t happen in the way of an FSA debt relief plan or some new legislation, then we’re going to lose everything that we’ve worked our lives for,” he said.

Tyson told growers the company was ‘not going anywhere’

The same morning Arnold pulled over to the side of the road, racking his brain about his next move, Jonathon Morrow answered the phone.

His Tyson service technician told him he was no longer getting birds and the Dexter complex was closing.

Morrow, 60, who raised roughly 1.8 million broilers annually for Tyson, was nonchalant in his response.

“I thought, ‘Yep, I’m losing everything,’” he said.

Following the Great Recession, Morrow started looking for other career paths. After working in construction and roofing for decades, he eventually landed on contract chicken growing for Tyson. In 2013, he said he began to build chicken barns on his family’s farmland in Dudley, Missouri, just outside of Dexter.

Now, he is weighing the options of spending more money to become a contract grower with Cal-Maine, selling the barns, or tearing them down and selling the farmland.

“We went from (360,000 birds a flock) to nothing real quick,” Morrow said.

Morrow had two different contracts to raise two different types of birds for Tyson. He raised broiler chickens in Dudley and breeding chickens in Annapolis, Missouri, more than an hour away.

Morrow, a man of faith with an optimistic demeanor, said he was able to pay off his debt on his barns built for his broiler chickens. But, he said, he is millions of dollars in debt for the barns built for breeding chickens.

Both his broiler contract and breeder contract were canceled by Tyson. The barns have been empty since October 2023. Without a chicken processor in the area, there’s no company to provide him with the birds to occupy them.

“It’s not like you can buy 300,000 chickens on your own and put them in (barns) and find a market,” he said.

In the interim, Morrow has gone back to working construction. On a recent morning call, his laughter was interrupted by the beep of dump trucks.

After the Tyson closure in Dexter, Morrow said he was approached by Cal-Maine to become a contract grower. When he heard that it would take nearly a million dollars for him to meet their specifications, he said he was brutally honest with the company.

“I said, ‘If you think a bank would even loan us more money after this, you’ve lost your mind,’ ” he said. “ ‘And if you think I would be stupid enough to borrow almost another million dollars after this, you’ve lost your mind.’ ”

The agency is currently finalizing a rule proposal internally that will address “certain problematic practices” such as the requirement for additional capital investments in poultry production facilities and equipment. This effort is part of the agency’s ongoing updates to the 100-year-old legislation known as the Packers and Stockyards Act.

The act, created in 1921, is supposed to protect members of the livestock, meat and poultry industries from “unfair, unjustly discriminatory or deceptive practice.”

The USDA finalized a new rule under the act in February that is supposed to give chicken growers more transparency in their contracts and an understanding of how exactly they are paid. In March, a separate ruling to prevent discriminatory practices was finalized and became law on May 6.

“Like with starting any new business, chicken farmers typically incur some debt to get their chicken houses built and their farms up and operational,” said Tom Super, National Chicken Council senior vice president of communications, in a statement to Investigate Midwest. “But chicken farmer loan performance data show more consistent payments and one of the lowest loan default rates in all of agriculture. Raising chickens under contract is one of the best and most reliable sources of cash flow that helps keep families on the farm.”

The National Chicken Council is an industry group that promotes the sale of chicken in the U.S. and whose board members include executive leaders of several major poultry processors.

Morrow said he knew the risks of such a large loan when he became a contract grower. But he, just like other growers, was told that if he does a good job, the company was “not going anywhere.”

“Somebody higher up the food chain had to know this was a possibility,” Morrow said. “Yet they’re (still) giving out contracts to build new (chicken) houses.”

A waiting game

In Arkansas, Bundren’s six chicken barns are remain empty as he negotiates with the bank and the FSA about how to handle his debt. His barns were once a source of steady income, but now the empty metal husks are a reminder of the debt he carries.

“(The barns) are worth zero now,” he said. “When you’ve got a contract, they’re worth $200,000-$300,000 used, a piece.”

Now, it’s a waiting game for Bundren. His wife has started looking for work and interviewing for jobs. He is now doing landscaping, excavation and stump grinding to pay bills.

He said the bank has been working with him to repay the loans and, after some conversations with the FSA, he feels hopeful the agency will help him find a way to manage the financial burden.

Still, his debt of more than a million dollars weighs on him. This past December, while uncertain whether he could keep his house, he tried to have a normal Christmas for his two daughters.

That uncertainty has turned to frustration when he thinks of the money and time he put into making his barns the perfect place to raise Tyson chickens.

“The mental stress is killing me,” Bundren said. “I still don’t know if I’m going to get to keep anything.”

If he keeps his land and avoids foreclosure, Bundren said he may tear down the barns.

“I don’t want to grow birds anymore anyway,” he said. “You just can’t trust Tyson.”

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

Investigate Midwest analyzed 27 years of USDA pastureland data for the nation’s top 10 beef producing states to understand how pastureland conditions have changed over time (USDA photo by Preston Keres)

Thirty years ago, the weather on Annie Doerr’s family ranch felt reliable. Now that she’s taken over from her parents, it’s been anything but. In recent years, drought has made finding good pastureland for beef cattle to graze increasingly difficult.

“I always pray for a normal year,” she said, “which I don’t really know what that looks like anymore.”

Drought has affected operations at her 500-head beef cattle farm in Creighton, Nebraska, less than an hour from the South Dakota border.

In any given year, the nation experiences dry periods without rainfall. Livestock producers mitigate the effects by providing additional water sources directly to animals or crops, such as water lines to livestock or irrigation for crops. Droughts occur when dry conditions last longer than usual and water isn’t replenished to crops, groundwater, lakes or other bodies of water, resulting in water-supply problems, according to the United States Geological Survey.

During droughts, Doerr said she weans her calves off milk earlier than usual, a common practice in dry years, but one that can also put young cattle at higher risk of dying. She also slows the growth of her herd, and spends more money on sourcing feed for cattle.

This same scenario has played out again and again across the nation’s major cattle-producing states.

The size of the overall U.S. beef cattle herd has continued to decline since 1975, a trend largely attributed to an increase in global beef production and cattle imports. But at the beginning of 2024, the nation’s inventory of beef cattle hit a 61-year low, according to data from the U.S. Department of Agriculture.

In the nation’s top 10 beef-producing states — responsible for nearly 60% of the country’s beef production — half reported the lowest number of cattle since 1995 as of the beginning of this year, according to an Investigate Midwest analysis of the USDA’s data.

Droughts starting in 2020 are a contributing factor in the nation’s historically low beef inventory, according to USDA research. Nebraska and Missouri — two of the top 10 beef-producing states — experienced the largest decline in the quality of June pastureland since 2020 compared to the other top states, according to an Investigate Midwest analysis of USDA data.

Finding land with plentiful grazing for cattle is difficult in drought years. An analysis of USDA pastureland data shows that grazable Nebraska pastureland shrunk by a third since 2019 during the month of June.

Climate change has made dealing with droughts more complicated.

Current research shows climate change has caused more frequent large rainfall events coupled with months of zero precipitation. This volatility has made relying on typical weather patterns and grazing conditions difficult for the nation’s beef producers.

Doerr said a successful cattle operation comes down to having enough feed. Drought can ruin the available pasture to graze in summer as well as the harvested hay animals eat in the winter, leading some producers to cull their herds — or “get rid of mouths” — she said.

When a drought hits livestock producers, the ripple effect can last for years. Ranchers, like industry experts, also attribute recent drought years to the nation’s historic low for beef cattle.

And fewer beef cattle equals a reduced supply available to meat processing companies nationwide. The declining inventory has been linked to rising retail prices for beef products, according to market reports from the American Farm Bureau.

Currently, cattle market experts report that the price paid by meatpackers to beef cattle ranchers is expected to be an all-time high. Food industry experts told various media outlets in late 2023 that this price increase would translate into sticker shock for consumers.

The average retail price per pound of ground beef in January of this year was $5.03, a 5% increase compared to the same time in 2023, according to the U.S. Bureau of Labor Statistics. At the end of last year, the price of beef per pound peaked at $5.35, a 40-year high.

Dealing with drought

Dennis Todey, climatologist and director of the USDA’s Midwest Climate Hub, said drought affects agriculture differently across the country. In the Midwest, much of agricultural production is fed by rain and groundwater.

Climate change has complicated the region’s drought realities, Todey said. In recent years, the Midwest has seen significant rainfall and floods, then goes months without any precipitation, causing drought.

“You can have more overall rainfall, yet still have more drought,” Todey said.

Livestock producers now deal with weather whiplash — the result of climate change —  of severely wet years, followed by intense, dry seasons.

The top beef cattle-producing states, in particular, have seen varying degrees of drought conditions during the last few years.

In 2021, for example, 30% of Nebraska was in various levels of drought in early June, when many ranchers require a good supply of pastureland for grazing. The next year, almost the entire state was in a drought during early June, according to the U.S. Drought Monitor.

In another example, none of Missouri was in a drought during early June 2022. During that same period of 2023, 86% of the state was in a drought, according to the drought monitor.

When droughts persist year over year, livestock production can take a major hit. Grasslands don’t have time to recover to sustainable levels. When rain doesn’t fall, ranchers are left with tough choices.

In some cases, ranchers transport water or alternative feed like corn to cattle, which then can increase production costs. Sometimes, the more financially sound decision is to cull animals instead.

When the grass doesn’t grow

In recent years, Nebraska pastureland has provided little to no feed for livestock during the month of June, according to USDA data.

Poor and very poor crop conditions result in almost total crop failure, according to the agency, and require producers to feed livestock supplemental food. In 2023, more than a third of all Nebraska pastureland was, at minimum, in poor condition throughout the month of June — the highest level for the state in 10 years, according to an Investigate Midwest analysis of USDA pastureland data.

In Missouri during the same time period, half of the state’s pastureland was at least in poor condition, which was the highest percentage seen in June in nearly 30 years.

Eric Bailey is an assistant professor and state beef nutrition specialist at the University of Missouri. He said that in a normal year, a rancher will lose around 20% of their herd, due to aging cattle, health issues, pregnancy failures, or natural death.

When drought conditions are worse than normal, producers kill off more animals due to increased costs for alternative feed and transporting water, leading to greater decreases in the herd’s original size. For the years of 2022 and 2023, the rate of beef cattle culled on farms was the second and third highest, respectively, since 2011, according to a February USDA report.

“(Cattle ranchers) should be expanding right now, but because we’ve been dry, people have been reluctant to keep heifers on the farm,” Bailey said.

The past few years of drought means there is a pent-up demand to expand cattle herd sizes, Bailey said.

“People were itching to expand in fall of 2022, and we were dry. Then the price of cattle increased dramatically in 2023,” he said. “We’ve just got to have growing conditions that people feel good about.”

An easing drought?

Snow storms in the Midwest at the beginning of 2024 are expected to bring relief from the recent run of drought years. As the snow melts, water will be restored to rivers, streams and groundwater systems in desperate need of replenishment.

Despite forecasts of reduced drought levels for 2024, ranchers will continue to recover from previous drought years.

Nebraska rancher Mackenzie Johnston runs a 450-head cattle ranch with her family in the Sandhills region of central Nebraska.

Last year was the first time she had to truck in hay from more than 500 miles away in Des Moines, Iowa, because of the substandard quality of grasses near her. She said this additional cost would have been too steep if not for the Livestock Forage Disaster Program, a federal initiative that provides financial help to agriculture producers during droughts.

During other drought years, Johnston said she would typically buy hay from South Dakota if Nebraska grass was in too poor condition.

Johnston said 2022 was “so darn dry” and the ranch’s hay production was minimal. When the operation had levels of grass too low for grazing, cattle became more expensive to raise. She said any cow that gave birth to sick calves or had an overall lower reproductive rate was sent to slaughter — or in her words, “went to town.”

Johnston said their operation has survived through the years because they focus on being conservative with the hay they feed their cattle. If there’s any grass on the ground, her cattle aren’t being “pampered” and are wrangled to graze outside, rain or shine.

Nebraska meteorologists expect this year to have more precipitation compared to last year. However, climate experts in the state warned state officials in 2023 that there needs to be better drought preparedness in the coming years to prevent future impacts to agriculture.

At the end of January, Johnston said there was nearly a foot of snow on the ground, followed soon after by acres of melt and muck.

“We have mud up to our knees, so even thinking about it being dry is just crazy,” she said.

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

Iowa, North Carolina, Illinois, Minnesota and Missouri had the most pigs born in the country from 2013 to 2023, accounting for roughly half of the nation’s pork supply (Scott Olson/Getty Images).

In 2021, two years before California enacted new hog confinement standards for pork to be sold within its borders, Seaboard Foods said it would “no longer sell certain whole pork products” in the state.

Passed in 2018, California’s Farm Animal Confinement Initiative, often referred to as Proposition 12, required pork producers to give sows, or mother pigs, at least 24 square feet of space per animal.

Nearly 5% of Seaboard’s 7 million hogs produced each year are sold in California but the company said the coming Prop 12 standards would significantly decline how much business it would do moving forward in the nation’s most populous state.

But when the new standards went into effect on Jan. 1, 2024, Seaboard was listed as a Prop 12-compliant distributor with the California Department of Food and Agriculture.

“In our connected food system, our farms raise market hogs born from sows in various housing types based on customer requirements, including … for Prop 12 group housing compliant for California,” David Eaheart, a spokesperson for Seaboard, told Investigate Midwest when asked about the company continuing to sell into California. “Because of this, we can flex between different sow housing requirements to produce pork products based on customer demand.”

Seaboard did not say how its business this year compares to years past. But it’s an example of how many of the nation’s largest pork producers, who once said the new standards would limit or end their business in California, are adapting to the new standards.

Investigate Midwest reviewed financial statements from more than a dozen of the largest pork-producing corporations and California’s new Prop 12 pork distribution lists, along with speaking to several hog farmers to better understand the impact Proposition 12 is having on their industry.

Two months into the new Prop 12 standards, the picture that emerged is one where the nation’s largest pork producers are largely adapting to the new rules in an effort to continue sales in a state that consumes about 15% of the nation’s pork, the highest rate in the nation, according to consumption estimates from the National Pork Producers Council.   

The Biden administration is also concerned that Prop 12 could create a 50-state patchwork of legislation for hog producers.

In 2022, the administration asked the Supreme Court to strike down California’s animal confinement legislation.

At a February Senate Agriculture, Nutrition, and Forestry Committee hearing, U.S. Department of Agriculture Secretary Tom Vilsack said he supported the federal government stepping in to clarify these regulations.

“Farmers don’t need the chaos,” Vilsack said. “They need clarity and certainty.”

While many of America’s largest pork producers and distributors have said they plan to comply with the new law, some have blamed the additional hurdles for recent plant closures and layoffs. More than 230 out-of-state distributors already have been licensed to sell pork in California by the state’s Department of Food and Agriculture, according to the agency’s latest registered distribution list.

Some local hog farmers with compliant pens have found an opportunity to sell into a new competitive market, while those with non-compliant operations have balked at the new standards, claiming it would be too expensive to comply with or is against their principles.

“I don’t like California telling me (that) to be able to sell in this state, I have to raise these pigs this way,” said AV Roth, who owns a 3,000-sow farm in Wisconsin.

Roth, who is also vice president of the Wisconsin Pork Association, said none of his hogs will ever go to California because he’s against another state regulating his business. His sows are housed in 14-square-foot gestation crates.

“If they want to tell their farmers in California how to raise pigs that’s totally fine by me, but this is the great country of the United States and I should be able to sell in all 50 states,” Roth said.

Dan Sumner, a professor of agriculture economics at UC-Davis, said that sentiment is common among many hog farmers.

“Frankly, a bunch of know-nothing Californians who’ve never been on a hog operation think they can tell these guys what’s better for their pigs,” Sumner said. “If I was a hog farmer I’d be pissed off. It’s just insulting.”

Anti-Prop 12 groups, including the National Pork Producers Council, claim hog farmers would have to spend $3,500 per sow to become compliant. The council, along with the American Farm Bureau, has vowed to continue pursuing legal and legislative avenues to overturn Prop 12.

But animal welfare organizations have called the cost estimates overblown and said new confinement standards are the ethical thing to do.

“I don’t think anyone needs to be a rocket scientist to understand that having space to lie down and stretch your legs is necessary for mental and physical well-being,” said Allison Molinaro, U.S. campaigns manager for the nonprofit organization Compassion in World Farming. “Living in a gestation crate is like having a human live in a telephone booth.”

Where’s the pork?

California is the nation’s largest consumer of pork products but pinpointing exactly where the state’s pork supply comes from is not clear.

According to the California Department of Food and Agriculture, before Prop 12, no public data tracked how much pork comes from specific states or companies. To see which states could be impacted the most by Prop 12, Investigate Midwest analyzed U.S. Department of Agriculture data to locate where most baby pigs are born.

Iowa, North Carolina, Illinois, Minnesota and Missouri had the most pigs born in the country from 2013 to 2023, accounting for roughly half of the nation’s pork supply.

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Local chapters of the National Pork Producers Council located in these major states declined multiple requests to comment, but economist Steve Meyer, a consultant with the National Pork Producer Council, told the Des Moines Register in 2022 that less than half the pork sent to California met Prop 12 standards, at that time.

In January, Meyer told Investigate Midwest he estimates there still isn’t enough compliant pork supply in the U.S. to meet demand based on what California consumers have eaten in the past.

While there aren’t available data points to support this claim, Meyer said he was confident the nation is short roughly 250,000 complaint sows to meet California’s historic demand, which would lead to either a price increase or a lack in availability for cuts of pork.

“I believe the covered products are in short supply, and California consumers are substituting exempt pork products and other proteins,” Meyers said.

Premade pork products are exempt from Prop 12 standards, including sliced ham, salami and deli meat.

Most of the nation’s major pork producers have taken steps to become compliant with the new California law, some starting the transition more than a decade ago.

Smithfield Foods, the nation’s largest pork producer and owner of some 885,000 sows, has spent years transitioning to group housing that meets the standards of Proposition 12.

The company owns more than 400 pork production farms in Colorado, Idaho, Illinois, Missouri, North Carolina, Oklahoma, South Carolina, Utah and Virginia, according to Smithfield spokesperson Ray Atkinson. According to the company’s 2021 Sustainability Report, all of the company-owned farms are compliant with large, group housing for sows.

Smithfield Foods, the nation’s largest pork producer and owner of some 885,000 sows, has spent years transitioning to group housing that meets the standards of Proposition 12.

The company owns more than 400 pork production farms in Colorado, Idaho, Illinois, Missouri, North Carolina, Oklahoma, South Carolina, Utah and Virginia, according to Smithfield spokesperson Ray Atkinson. According to the company’s 2021 Sustainability Report, all of the company-owned farms are compliant with large, group housing for sows.

The company contracts out pork production to more than 2,000 contract farmers across the county, and information about the compliance of these farms was not made available.

“We have established supply agreements for Prop 12-compliant pork and will continue to engage customers to expand the availability of compliant products,” Atkinson said in an email.

Still, the company has openly complained about the new Prop 12 standards, and said it was one reason it recently closed meatpacking plants in California.

Atkinson said Smithfield continues to sell into California but its sales numbers are confidential.

“We fully support a federal legislative solution that will resolve a growing patchwork of state-by-state regulations that make it increasingly difficult to keep food affordable,” Atkinson said.

Other major pork producers and grocery chains have said they are compliant with Prop 12 as of the beginning of 2024:

• Tyson Foods did not respond to repeated requests for comment. However, in a 2021 earnings call, Tyson CEO and President Donnie King said that the company is ready and able to provide compliant pork products. “It’s not something we were excited about, but we can align suppliers, and we can certainly provide the raw material to service our customers in that way,” King said.

• Clemens Food Group, a major pork producer based in Pennsylvania, has been Prop 12 compliant since the beginning of 2023. The company has “fully transitioned to group housing for all our sows,” said Brad Clemens, the company’s president, in a statement.

• JBS, the nation’s fifth largest pork producer, purchased an Iowa pork producer in 2022 to expand its Prop 12-compliant sow housing. According to a translated transcript of a November 2023 corporate earnings call filed with the U.S. Securities and Exchange Commission, the Brazil-based company said it took steps to begin transitioning into Prop 12 compliance when there was still “uncertainty” about the legislation becoming successful. The company did not respond to repeated requests for comments.

• The top five grocery retailers in California — Walmart, Albertsons, Grocery Outlet, Kroger and Trader Joe’s — are all complying with the state’s confinement legislation to varying degrees. Albertsons’ website notes that some of their suppliers have decided not to comply with Prop 12 standards, which could limit the pork products sold on store shelves. Walmart’s website notes that it has asked its suppliers to “implement solutions to address concerns regarding housing systems that lack sufficient space, enrichment, or socialization, such as sow gestation crates.” According to Kroger company documents, the chain aims to have all of the pork they sell come from sow group housing by 2025. Trader Joe’s spokesperson Nakia Rohde said the grocery chain has provided gestation crate-free pork since 2018, which is clearly labeled in California and Massachusetts stores. Rodhe said in an email that the company sources its pork from the Midwest, but didn’t further clarify the sourcing. Grocery Outlet did not respond to a request for comment.

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While California is the largest pork-consuming state in the U.S., a growing amount of the nation’s pork is being sent overseas, lessening the impact of Prop 12 on many large producers.

Until 1995, less than 5% of American pork production was exported. Today, 27% of U.S. pork is exported, a higher rate than beef or poultry.

There were some concerns that Prop 12 could have an impact on exports because much of America’s pork destined for Asia passes through California ports. But several weeks into Prop 12, export officials said they haven’t seen any problems.

“The bottom line is that so far exports transiting California for shipment out of the West Coast ports seem to be flowing smoothly,” John Herath, a spokesperson for the U.S. Meat Export Federation, told Investigate Midwest.

Pork industry says it will continue to fight Prop 12

National agriculture groups and major pork producers originally hoped a legal challenge would end Prop 12 before it ever started. But the American Farm Bureau and the National Pork Producers Council’s lawsuit was struck down by the U.S. Supreme Court, where a 5-4 ruling last year upheld the law.

Despite the loss, the groups said they continue to look for ways to overturn Prop 12.

“If we are going to have a patchwork of 50 different rules, that is going to make it very difficult … to produce livestock efficiently in this country,” Jack Irvin, vice president of public policy for the Ohio Farm Bureau, said from the American Farm Bureau’s national convention in Salt Lake City in January.

Prop 12 was a major discussion topic at the convention, Irvin said, where members passed a resolution asking the farm bureau to continue its opposition against the measure, including pushing for a federal law banning state-level confinement standards.

But opponents of a federal law banning Prop 12 claim it would create further chaos.

The Ending Agricultural Trade Suppression Act, also known as the EATS Act, is a proposal in Congress that would prevent states from enacting laws similar to Prop 12. But a Harvard Law School analysis of the EATS Act warned it could have consequences beyond just regulations on animal confinement and jeopardize more than 1,100 state laws related to invasive plant disease protection, food safety regulations, horse slaughter laws and some narcotic laws.

Supporters of Prop 12 believe lawmakers should focus more on helping farmers retrofit their operations.

U.S. Rep. Angie Craig, a Minnesota Democrat, told the Brownfield radio network in January that her office was looking into federal grants to help pork producers adhere to Prop 12 standards.

In Oklahoma, Senate Bill 1325 would create a $4 million fund to provide grants to pig farmers to remove gestation crates and build new structures that meet California’s standards.

Prices still leveling out while producers see new market

Economists are also watching the impact Prop 12 might have on consumer prices, with some estimating the new law will increase the price of pork in California by roughly 25 cents per pound, according to a study by the University of California.

A California Department of Finance analysis estimated that consumers of egg and whole pork products would pay $1.1 million more for the newly regulated commodities in the first year of Prop 12.

Data for the price increases since Prop 12 became law is sparse. In November 2023, the USDA began tracking the average premium paid to producers for hogs sold under California’s confinement legislation. The amount paid to producers for being compliant with the law is negotiated between processors and producers. The average premium given to compliant producers was $6.30 per hundred pounds in the first month of the year, in addition to the base price paid for their hogs.

For some producers, the price increase and growing interest are seen as an opportunity to expand into new markets.

In Clear Lake, Iowa, Chris Petersen has operated a hog farm since the 1970s, raising thousands at a time up until the Iowa hog market crashed in the late 1990s.

Now, he raises a few hundred hogs a year with 30 sows on his farm. None of his animals are in gestation crates or confinement, and they never have been.

“I don’t believe in totally confining any type of livestock down to a small cage,” Petersen said.

Rather than going through large packing companies, he raises a premium breed of hogs known as Berkshires. He said it’s likely that some of his meat wound up in California before Prop 12 was finalized through the supply chain, but now that the ruling is in place, he sees California consumers as a new revenue stream.

“Absolutely I’ll sell to them,” Petersen said.

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.

Greg Gunthorp in a pasture at his farm near LaGrange, IN, on Monday, Oct. 23, 2023 (Chelsi Daley for Investigate Midwest).

Over the past two decades, Greg Gunthorp carved out a niche operating a small meat processing plant in northern Indiana. He sold several kinds of meat to chic Chicago and Indianapolis restaurants and to Chicago O’Hare International Airport, he said. He also sold direct to consumers.

But selling in grocery stores was not an option, as the largest meatpackers often have those contracts. In his circumstances, he found it difficult to compete in the chicken industry, and he recently stopped raising and slaughtering the bird.

“In an extremely concentrated marketplace,” he said, “it’s difficult for a small processor — especially a plant that slaughters — to find a sweet spot somewhere to fit long term.”

In an industry in which four companies — Tyson Foods, JBS, Smithfield and Marfrig — control most of the meat market, small slaughterhouses are struggling to compete. The Biden administration has tried to address the concentration, including offering grants to help small processors expand. But it’s not enough for many small processors that face proportionately higher operating expenses than the industry giants, according to interviews with small processors and experts.

“I think we’re gonna see a lot of these plants go out of business or sell,” said Rebecca Thistlethwaite, the director of the Niche Meat Processor Assistance Network, which helps support small processors apply for federal grants and with marketing.

When asked about the problems small processors identified, the U.S. Department of Agriculture responded that the $1 billion in grants it’s invested in expanding small processors “is a historic investment that will directly combat consolidation in the meat processing sector and help build resiliency in the face of market disruptions.”

Smaller plants that process fewer than a thousand animals a year can serve a region. But the largest meatpacking plants, the ones that process millions of animals a year and are owned by industry giants such as JBS and Tyson Foods, package the majority of meat that ends up in grocery store aisles across the country.

Just 12 federally inspected plants produced slightly less than half of the country’s beef supply in 2022, according to Investigate Midwest’s analysis of U.S. Department of Agriculture data. The same year, 14 plants produced about 60% of the nation’s pork.

Hundreds of small processors were responsible for less than 1% of the nation’s beef and pork supply.

Because of their size, the largest meatpacking companies can keep their expenses low, leading to more profits, experts said. The same economic rules don’t apply to small processors.

In the pork and poultry industries, large meatpacking plants often already own the pigs and chickens they slaughter, so there is no need to buy animals on an open marketplace. In the beef industry, cattle ranchers still often sell their product to slaughterhouses, but the sparse number of meatpacking plants in a given area lowers what plants are willing to pay.

Large meatpackers also have contracts with retailers, ensuring their product ends up at grocery stores, as opposed to farmers’ markets or meat counters, said Bill Bullard, the CEO of R-CALF USA, which advocates for independent cattle producers.

“They’ve exceeded any efficiencies associated with economies of scale and are now engaged in controlling the marketplace,” he said.

The North American Meat Institute, a lobbying organization for the meatpacking industry, disagreed with the premise that meatpacking giants make it harder for small ones to compete.

Large processors have experienced their own problems — drops in earnings and recent plant closures, such as the ones in Missouri and Indiana — and have little sway over the meat marketplaces, the organization said.

“If large packers could control price,” Sarah Little, the organization’s spokesperson, said in an email, “they are doing a bad job of it.”

The retail price of chicken hit a record high in early October, which should benefit Tyson Foods and other major poultry processors, according to Reuters. Meatpackers have also been dogged by accusations of price-fixing: Last year, the country’s largest food distributor accused the largest packers of suppressing supply in a case still pending. Around the same time, Smithfield Foods, a major pork processor, paid $42 million to settle price-fixing accusations.

For Gunthorp, to maintain business in the Chicago area, he has to focus on quality over quantity, he said. He has to market directly to consumers, through his website or at farmers’ markets. Without a contract to sell at grocery stores, he’s cut out of access to many consumers.

He said the USDA’s grant program to expand meat processing capacity can be helpful, but the federal government isn’t addressing core problems.

“It’s a complex problem to solve,” he said. “I don’t know that they delved into it hard enough.”

Biden administration efforts

The meatpacking industry’s concentration has far-reaching effects. During the COVID-19 pandemic, some plants were forced to close for days or weeks as workers fell ill or died. Animals must be delivered to plants as soon as they reach a certain weight, but the closures interrupted the supply chain. Some producers were forced to kill their animals en masse.

Responding to the supply chain issues, the Biden administration announced last year a $1 billion program to combat consolidation in the meatpacking and food sectors. Any processors outside of the industry giants were eligible for funding. Plants in Iowa, Nebraska and North Dakota — states with large beef and pork footprints — have received the most funding. About $450 million has been awarded overall as of October.

When he announced the program, President Joe Biden said, “We’ll give farmers and ranchers more options beyond giant processing conglomerates, and shore up the weak points in our food supply chain.”

The funding is a promising sign in addressing the industry’s concentration, said Peter Carstensen, a professor of law emeritus at the University of Wisconsin and an antitrust law expert. But the administration should also be using its antitrust enforcement capabilities more than it is, he said.

“There is a real challenge to get to a scale large enough to be able to compete,” Carstensen said. “It’s a real problem for the smallest slaughter operations.”

Serving a small community

The USDA’s grants have had a tangible impact on the White Earth Reservation in northern Minnesota, home to just under 10,000 people.

Much of the reservation, the largest in the state, is considered a food desert. Residents often travel more than 40 miles to shop for groceries.

The grant helped Paul Benson start construction on a meat processing plant on the reservation. Once up and running, it will be able to slaughter and pack about 30 beef cattle a week. It should be able to feed roughly 14,000 people a year.

The plant, expected to open in 2024, will feature a storefront and sell at local farmers’ markets. The project received nearly $1 million from the USDA’s Meat and Poultry expansion grant. Benson said he was thankful for the support from the USDA as it will help revitalize food options for his neighbors.

“We’re not feeding the world,” he said. “We’re feeding a very small community.”

Closing after fewer than 2 years in business

In west Texas, a small processor had the opposite experience.

After opening in summer 2021, Marfa Meats closed its doors in January, said owner Christy Miller. In this area of the state, one-third of the rural population travel at least 10 miles to the nearest grocery store, according to the USDA.

“It was a major hit on this community when we went away,” she said.

Miller applied for a USDA grant but was denied. In her proposal, which she shared with Investigate Midwest, she requested about $48,000 to help her expand production: She needed a larger freezer space, compost equipment and packaging materials.

The grant funding must be spent on projects or new equipment, but Miller said what would have been most helpful was if she had been able to to spend the money on general operating expenses, which isn’t allowed.

“I’m bringing in a million dollars a year and I’m still not able to close the gap,” she said. “If you want me to stay in business, throw me a bone here.”

Several challenges contributed to the plant’s closure, Miller said.

• The plant’s location: Marfa is in a remote area about 60 miles from the U.S-Mexico border.
• Upfront costs: She routinely paid more for cattle because it was more expensive for ranchers, she said. It makes more fiscal sense for cattle ranchers to sell thousands of animals to a large processor rather than offload small quantities to small-scale processors.
• Labor: Miller had a hard time finding people who knew how to slaughter and carve an animal. Large processing plants use an assembly line approach — they have hundreds if not thousands of workers each performing one task over and over again.
• Needing to charge premium prices: Because of the business’s costs, Miller had to sell at a higher price than what many local consumers were used to paying for in grocery stores, she said. Miller estimated that her prices were a couple of dollars more per pound than chain grocery stores for items like ground beef.

“You’re competing against the costs of these huge operations,” she said. “Your prices are always going to be high.”

The USDA grant would not have been a silver bullet even if she received it, she said. It would have given her breathing room, but the grants do not address root problems in the industry, she noted.

“What upsets me is all of the lip service that they’re giving to these grants,” Miller said. “I’m living proof that it’s not a sure thing by any means.”

This article first appeared on Investigate Midwest and is republished here under a Creative Commons license.