Posted by KEH on June 20, 2014 at 06:48:33 from (67.231.175.190):
Just read a book, "The Meat Racket" by Charistopher Leonard, pub. by Simon and Schuster.
It first described the take over of the chicken business with cost cutting passed back to the farmer. It seems there are a lot of incidents of farmers being driven into bankruptcy by having them work in a system where they compete with other farmers and if their production records are slightly lower than the top producer eir payments are cut. They also are sometimes given a bad lot of chickens which die off. It seems that eggs from chickens more than maybe 2 years old don't hatch out good chickens. Then the companies require new facilities with crushing loan rates to the farmers, all in the name of efficiency. The companies do the vertical integration business to the point where there is only one big company and very few smaller ones.
They have done the same sort of thing in the pig business. Get the farmer to spend vast amounts of money on facilities, cut him off when he can't invest in newer facilities.
They haven't been quite as successful in vertilcal intergration of the beef business. Chickens produce vast amounts of eggs, pigs produce multiple birth litters, but cows normally produce one calf a year. However, there are only four large packing houses now, which try to stick it to the feed lots that they don't already own.
There is a discussion of the buy out of the Iowa Beef Processors company a few years ago, which some people on here from that area are probably familar with.
The banks have been willing to loan money to farmer for facilities because there is a government program which helps repay banks for bad debts to farmers. No help to farmers, just banks.
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