As COVID-19 swept through U.S. meatpacking plants (slaughterhouses currently account for almost half of the country’s hotspots), plants closed, leaving farmers with millions of animals they couldn’t get to market. This prompted Tyson to take out an ad in the New York Times, warning that the “food supply chain is breaking.”
But COVID-19 didn’t break the food system. The four Big Meat titans—Tyson, Smithfield, JBS and Cargill—broke the supply chain. They did it by forcing consolidation in the meatpacking industry, which ultimately created another “too big to fail” industry.
Congress has a plan to save Big Meat, by taking an old law intended to help family farmers in times of crisis, and turning it into a rescue plan for big corporations.
Tell Congress: Don’t You Dare Bail Out Big Meat!
In 1933, to protect farmers during times of economic crisis, Congress created the Commodity Credit Corporation (CCC), a government-owned corporation that operates under the U.S. Department of Agriculture (USDA).
The CCC originated as part of the New Deal response to the Great Depression. It gives the USDA incredible powers to borrow and spend money to shape our food system, powers that come in handy in a crisis. The CCC can purchase, warehouse, transport, process, handle and sell any agricultural commodity other than tobacco.
If these powers were used properly, there would be no disparity between what it costs farmers to produce food and what they get paid for it, supply would always be matched to demand and there would be no such thing as food waste.
In a crisis like the one we’re facing now, the CCC makes it possible for the USDA to buy food that would go to waste because of supply chain disruptions, and deliver that surplus food to food banks and other programs for the growing number of hungry or out-of-work Americans.
Now Congress wants to make changes to the CCC, using the $3-trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act just passed by the U.S. House of Representatives.
If the HEROES Act passes as is, the CCC will be amended to give the USDA two new spending powers that will largely help big corporations:
(h) Remove and dispose of or aid in the removal or disposition of surplus livestock and poultry due to significant supply chain interruption during an emergency period.
(i) Aid agricultural processing plants to ensure supply chain continuity during an emergency period.
These are gifts to Big Meat. Here’s why.
In the vertically integrated industrial meat system, it’s typically the big corporations that own the animals. This is especially true in the poultry industry, where independent farmers, under contracts with companies like Tyson, are forced to take all the financial risk associated with owning the land and buildings to house and raise the chicks, but Tyson owns the birds.
By amending the CCC charter to allow the USDA to pay for the “disposal” of birds due to lack of processing capacity, Tyson benefits—not the farmers raising the birds.
The other gift to Big Meat? Allowing the USDA to provide funds to companies like Smithfield so they can keep their slaughterhouses open—no matter how many COVID-19 deaths this causes.
Here’s why we should insist lawmakers don’t use the HEROES Act to push through these changes to the CCC:
• Companies like Tyson, Smithfield, JBS and Cargill don’t need our help. No one in Congress seems to have heard of it, but there is an alternative to the bailout. It’s called bankruptcy. Under bankruptcy laws, shareholders typically get wiped out and creditors assume ownership of the company. The company doesn’t disappear. It just gets a new owner (this has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a business that remain profitable. In contrast, the promise of a taxpayer-funded government bailout actually encourages companies to take risks, knowing they won’t suffer the consequences if they fail.
Recently, a billionaire made the case for bankruptcy not bailouts on CNBC. As Planet Money paraphrased his argument, he explained, “Oftentimes, the workers are protected in bankruptcy. And the people who are investors—the stockholders, a lot of whom are very rich—they are the ones who take the loss.”
Just because a company or an in industry is struggling, doesn’t mean Congress should rush to bail it out—especially, as is the case with the meatpacking industry, if forcing the company to change their business practices would save lives.
• Money spent on the food system shouldn’t perpetuate the system’s failures. The fact that the big meat companies bear such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place. If the USDA is going to spend money on the food system, spending should be used to make the food system more resilient the next time a crisis, like climate change or another pandemic, strikes.
Instead of bailing out Tyson, Cargill, JBS and Smithfield, Congress should fund the transition to localized regenerative organic agriculture by passing the Food Systems Reform Act, the Climate Stewardship Act, and the Agriculture Resilience Act.
At the very least, federal money should be used to create alternatives to the COVID-19-contaminated slaughterhouses where meatpacking workers and food safety inspectors are being sent to their deaths. A good start would be passage of H.R. 6682 to make it easier for farmers and ranchers to get Value-Added Producer Grants to fund on-farm and cooperative local meat processing. Congress should also pass the Processing Revival and Intrastate Meat Exemption (PRIME) Act and the New Markets for State-Inspected Meat and Poultry Act.
What Congress shouldn’t do, is use the HEROES Act to prop up an extractive, exploitive industry that has proven itself unable to provide food security in times of crisis. Far better to spend our federal dollars building out a resilient network of local and regional food producers and processors.