From the President

Where’s the Money Going? July 2020

Walter Schweitzer, President of Montana Farmers Union

I have been trying to wrap my mind around the trillions of dollars that are being spent on coronavirus relief. Up to now over $5 trillion has been allocated by Congress and the Federal Reserve due to the pandemic.

A trillion is a thousand billion. The USDA received a little over $50 billion, and about half of this funds programs that provide food to those in need. The airlines are getting over $60 billion. ExxonMobil, Chevron, and Conoco are getting $20 billion. Over $290 billion is going directly to individuals through the $1,200 direct payment. Since we have the highest unemployment our country has ever experienced, $268 billion is going to unemployment insurance. $800 billion was allocated for small business relief but much of it went to Fortune 500 companies. Over $300 billion went to hospitals and Pharma. Over $200 billion is going to local governments. Over $500 billion was allocated in the form of tax breaks for businesses again much of that went to large corporations.

This list accounts for about half of the federal spending. A lack of transparency leaves us wondering how the other 2.5 trillion was spent.The Federal Reserve is printing trillions of dollars to buy corporate debt and to prop up the stock market.

The reoccurring theme in coronavirus relief is that most of the money went to large multinational corporations some of which are totally foreign owned. Many of them are the same companies that received over a trillion dollars in tax breaks from the Tax Cuts and Jobs Act of 2017.What I am hearing from many Montana farmers and ranchers is that they don’t qualify for most of these programs, and if they do the amount of relief is nowhere near the losses they are incurring. Just like the payments that were to offset losses due to the trade wars with our customers most of it is going to large corporations with little of it making to the family farm.Sadly, this pandemic is not going away anytime soon and there will be more money spent. Let’s stop giving it to billionaires and multinational corporations.

We Need Food Security, May 2020

Walter Schweitzer, President of Montana Farmers Union

When I looked up “food security” this definition made the most sense to me. “Food security incorporates a measure of resilience to future disruption or unavailability of critical food supply due to various risk factors including droughts, shipping disruptions, fuel shortages, economic instability, and wars.” Covid19 has revealed that we do not have food security in the USA.It does not make sense that our local grocery stores are rationing dairy and meat products while family farms are being forced to dump milk and euthanize livestock. Our food supply chain is broken. How did we get to this surreal place in America history? Over 70 years ago American leaders started pursuing a cheap food policy. I listened to Agriculture Secretary Sonny Perdue brag in his speech at the National Farmers Union Convention that American farmers produce the cheapest food in the world.

He is proud that less than 10% of household income goes toward buying food in America. American farm policy encourages large corporate farms and centralized processing facilities. Montana and American farmers have become good at producing cheap food commodities for the world, but ironically the Covid19 crisis demonstrates that we struggle to feed ourselves. Most ag products are shipped 1000 miles to mega processing plants to be processed and packaged and then shipped back 1000 miles to be put on our local grocery shelves. This is a recipe for disaster. Many of these multinational plants are being forced to shut down because their workers have Covid19. This has caused a disruption in supply. Because of the disruption farmers have too much of their production left on the farm at the same time consumers are being rationed.

History has proven that we can reverse this trend. In 1920, five packers controlled 75% of the beef trade. The Federal Trade Commission with the threat of enforcing antitrust laws forced the packers to sign the 1920 Packers Consent Decree and 18 months later the President signed into law the Packers Stockyard Act. “The act makes it unlawful for any packer (1) to engage in unfair, unjustly discriminatory or deceptive practices; (2) give undue or unreasonable preference or advantage in commerce to persons or localities; (3) purchase or sell as between each other for the purpose of (a) apportioning supply, (b) manipulating or controlling prices, (c) creating a monopoly, or (d) restraining commerce; (4) engage in practices or commit acts which in effect result in creating monopolies or restraint of commerce; (5) conspire, combine or otherwise arrange with other persons to apportion territory for business purposes, allocate purchases or sales, manipulate or control prices, or (6) aid or abet in doing any of the things made unlawful by the act.” Congress had to force the Attorney General to enforce the law and eventually the 5 packers control of the beef trade was reduced to 25%.

In 1981, Clark Willingham filed a lawsuit to end the Packers Decree and he won. He later became the first president of the NCBA the packers lobbying group. Gradually four packers were able to gain control of 84% of the beef in America. In 2017 the USDA eliminated the Grain Inspection Stockyard Agency and moved it under Agricultural Marketing Services effectively gutting the agency.However, the laws are still on the books and could be enforced. We need to act now to encourage Congress and USDA to enforce these laws and break the stranglehold that the packers have on consumers and producers.We should be using some of the Covid19 dollars to invest in regional processing plants. Smaller processing plants located near the production spread throughout rural America would create a more resilient food supply. These small regional plants would create good paying jobs for the underemployed in small cities across America. With just a few workers in each plant we would not run the risk of a disease outbreak shutting down a plant that that processes a quarter of our meat supply. It would give producers more option to market their production and consumers would have a secure supply of locally produced and processed food.I suggest during the Covid19 crisis we should take this opportunity to make lemonade from lemons.

Coronavirus Puts Microscope on Food Processing & Distribution, April 2020

by President Walter Schweitzer

Coronavirus is impacting all of us in many different ways. The anticipation of what will happen next is part of many conversations. I have been remote conferencing with phone or video nearly every day since the middle of March. The whole country is reeling from the economic shutdown nationwide. Some of this could have been prevented had we taken seriously the threat in January and started ramping up our testing. Knowing the severity of the infection by region/ state and where the hotspots are located are critical to managing a disease outbreak. Because testing didn’t get started until late March our leaders are being forced to make difficult decisions about social distancing requirements without having proper information.

Coronavirus has put a microscope on our food supply chain. It is corrupt and broken. The multinational meat packers took advantage of the crisis by price gouging the consumers and the producers. The packers charged more for boxed beef and paid the producers less for live animals; this is wrong anytime but taking advantage of Americans during a crisis is a whole new level of wrong. Leaders from all over the US are asking for an investigation. There really is no need for an investigation of their guilt, the packers did this in plain daylight and the NCBA (the packers lobbying arm) admitted it in a letter to the White House. The only question that needs an answer is, how much did the price gouge cost? Was it $500 per head, $600 or even more? Multiply this by the number of head and fine the packers this amount or more. Collecting that fine will probably fully reimburse the agriculture’s portion of the CARES act. It is not just the meat packers. Milk processors are selling dairy products at higher prices, grocery stores are rationing dairy products and the processors are paying the producers less. The processors are also refusing to buy milk originally destined for schools and restaurants telling the producers to dump milk down the drain.

These monopolies have dictated policy to Congress and USDA for too long. Concentrating our processing in the hands of a few is not only bad economic policy, it is bad policy for food security. It seems insane that the USDA has allowed multinational packers to speed up the chain at slaughter plants risking workers and food safety but won’t allow your local butcher to slaughter and sell meat. Brazilian owned JBS plants in the US have had millions of pounds of meat recalled each year for the last several years. How is that better than your local butcher? Now, we are seeing these large processors shut down because of coronavirus outbreak in the workplace. This is going to cause even more disruption in our supply chain. We should be processing more of our food regionally, but our local butcher shops seem to be getting more scrutiny. American agriculture had become good at feeding the world. I just worry that the system we have may prevent us from feeding ourselves.

With adversity comes opportunity. Coronavirus has put a microscope on our food processing and distribution system. I hope our leaders will see that food security should be a priority. As more large multinational processing plants shutdown, everyone will see we have a broken system. This is an opportunity to address the US food system. We need to decentralize our processing, take it out of the hands of a few multinational corporations, and put it back in the hands of many in all regions of the US.

Economy Grinds to A Halt, by Walter Schweitzer, March 2020

What to do now:
The Coronavirus has taught us our markets and supply chains are vulnerable. I saw a presentation by an Agricultural Economist that showed how every commodity boom that depended on export had a total bust going back 500 years, starting with cotton and tobacco during the colonization. The more secure and sustainable markets are in our own country. Supplying our agriculture products to a local processor to package it for retail makes more sense than shipping raw product overseas and then bringing it back in packages. Instead of giving $100’s of billions of dollars to corporations and multinationals like JBS, Cargill and Delta we should invest in the infrastructure to process our own food locally and to produce our own biofuels. This will not only create a more secure and sustainable economy, but it will create good paying jobs in America.

After the crisis we need a marketing strategy to get our customers back and to find new ones. Instead of corporate handouts we should be investing money and time rebuilding our markets. This will require multiple trade missions. Bringing buyers to the USA to see firsthand our production. Sending representatives to explore new market opportunities. Producers have been doing this for decades with our own checkoff dollars. It is now time that Washington DC step up and match or exceed our investment in building our markets.

How we got here:
Our economy is grinding to a halt and commodities prices are dropping like a rock from the already low prices caused by our trade wars with our customers. Each year brings a new set of challenges some are preventable, and others are not. All we can do is learn and try to become more adaptable.The trade wars could have been prevented, but would have required a well thought out plan and a willingness to negotiate to a common solution. Ideally, we would have worked with our allies to leverage China, Instead, we had a lot of bluster, threats and ultimatums against our major customers with no clear goals or solutions. The fact commodity prices dropped as each agreement was signed is an indicator that the agreements were not good for farmers. During the trade wars our customers found new suppliers. Just because a trade deal is signed doesn’t mean we get our trade back. For example, after the China Phase 1 deal was signed, China purchased one million ton of wheat from Australia, Canada and France none from the USA.Farmers have invested checkoff dollars and four decades developing markets that have been lost due to trade wars. These wars were not started by farmers and were never meant to help the farmers, but the farmers are paying a heavy price. Trade deficiency payments, bypassed USDA rules which cap the amount given each entity. Consequently, payments mostly went to large corporate farms and multinational corporations leaving little for the family farm.

President’s Message, by President Walter Schweitzer, February 2020

Watching the Kansas City Chiefs come from behind in their playoff games to win the Superbowl gives me a little hope for the family farm. What we are missing is the MVP quarterback and Hall of Fame coach to guide us down the field to success. Many in the agriculture community had hoped for a come back win with the recent announcements of the treaties. Instead it seems we have had a series of turnovers.The first big turnover was the trade agreement made with Japan. At first glance this play looked like a winner, but it turned out to be a fumble. Because the Japanese trade agreement only begins to phase out the tariffs over several years, it leaves the USA at a competitive disadvantage with our major competitors like Australia, Brazil, Canada, etc.

The USMCA was a trick play that left us in the same place we started with one less down. As it turns out the USMCA is no different than NAFTA and leaves the family farmer in no better position than we started.The China Phase 1 was our hail Mary pass. Promises of doubling agriculture sales to China was going to be our winning touchdown but the ball fell to the ground with time running out. The ag commodity markets fell when the deal was signed. It has been a couple weeks since the Phase 1 announcement and the biggest news out of China is that they finished filling their 2019 wheat quota by buying a million ton of wheat from Australia, Canada and France, none from the USA. Like most family farmers, I am an optimist. While researching USMCA and NAFTA I found little difference between the two. I did discover that under NAFTA North Dakota had received approval for some of their varieties to be sold into the Canadian as food grade wheat. Digging a little deeper I found out the approval was driven by Canadian Processors and growers. They wanted the North Dakota varieties because they performed better. At first, I was angered by the unfairness of Canada’s ability to downgrade our wheat to feed just because it was not on their approved variety list. Sharing my frustration with Kim Mangold she suggested that maybe we could work with Pacific Northwest Economic Region (PNWER) to allow Montana State University (MSU) to test our varieties utilizing the Canadian grading system to get them approved for sale into Canada as food grade wheat. I have reached out to MSU President Cruzado and MSU Dean of Ag Dr. Bajawa to encourage them to work with PNWER and AG Canada to develop testing protocol to get Canadian approval of our varieties.We are not done yet. We do know that our coach has been calling the wrong plays. If we are going to be successful, we will have to take the ball into our hands and make our own

USMCA Fails to Address Trade Problems

By MFU President Walter Schweitzer; January 2020

The USMCA was published and posted online for all to read. It has 34 Chapters and over 1,000 pages of text and another 1,000 pages of charts, letters and annexes. I have been studying it for several days and I cannot find anything in it that makes trade better for the family farm. I have also been comparing it to NAFTA and see very few changes. Without the changes made by Congress the USMCA and NAFTA were nearly identical.
Congress forced the White House, Canada and Mexico to negotiate some changes that start to make NAFTA a fair trade agreement. Language was added to raise the labor and environmental standards with oversight and enforcement provisions. Changes were made to the arbitration procedures that may help settle disputes in the future.

Nothing was changed that would increase trade with Mexico or Canada for agricultural products. There has been a lot of rhetoric about how USMCA will increase trade with our neighbors. Not true. In fact you still have to grow Canadian varieties to export food grade wheat into Canada but Canada can dump their varieties of wheat into our food grade markets. Proponents of USMCA mainly support it because they feel President Trump will follow through on his threats to withdraw from NAFTA.
Another frustration is the language added to address the origins of steel in automobiles with detailed formulas to determine the region value of the origin of products in automobiles. In fact there are 270 pages in the “rules of origin” chapter defining how to determine the origins of products including fruits, nuts, vegetables, lamb, poultry, seafood, clothes, equipment, etc, but there is no language addressing the origin of beef and pork. It seems there is more concern about the origins of parts in a car than where our beef and pork originated. Clearly House members from steel producing states were able to try to protect their economies; House members from beef producing states didn’t.

After reading both NAFTA and USMCA I think we have wasted over two years negotiating a trade agreement that we already had with our neighbors. The only reason I can see passing this agreement is the very real threat of the President blowing up NAFTA if he doesn’t get his way. Pass it so we can focus on getting trade agreements with major markets where we have no agreements.

Corporate Subsidies Instead of Trade, December 2019

By MFU President Walter Schweitzer

To offset losses caused by trade wars the USDA created a taxpayer funded program called the Market Facilitation Program(MFP). Much of the $14.5 billion dollars of taxpayer funds targeted to help producers affected by the trade war ended up in corporate bank accounts.One outrageous example is the $90 million dollars of corporate subsidies given to JBS a multinational meat packer. JBS headquartered in Brazil has packing plants in the USA, Canada, Australia, Mexico and numerous other locations around the globe. JBS is currently one of the largest exporters of beef to China from its plants in Brazil, Canada, Australia, etc. The facts are so outrageous they deserve repeating. While family farm income is down because of trade wars, the U.S. government is sending $90 million taxpayer dollars to JBS, a multinational corporation that is filling the void with foreign beef. Doesn’t make sense, but very little of the MFP instead of trade makes sense. Although farmers in the North, Midwest, and West have experienced the greatest harm from trade disputes, 95 percent of counties receiving the highest payment rates are based in the Southeast (Sonny Perdue country). The disparity in payments also makes no sense. Farms in counties side by side get $150/ acre vs $15/acre. Most Montana counties got $15/acre or less and are scheduled to get no more payments while counties in the south that got the highest rate are going to get two additional payments. Like the trade war itself none of this makes sense.

Message from the President, November 2019

By Walter Schweitzer

I am honored to have been elected Montana Farmers Union President by producer members who drove treacherous wintry roads to attend the convention. I look forward to visiting with you at an event near your community. One of my main goals is to grow our membership and I need your help. Please let our office know about events in your community that would be enhanced with MFU participation by mailing, calling or emailing the details of the event to our office. Please call (406)452-6406 or email the information to mfu@montanafarmersunion.com.

I want to thank Alan Merrill for his 14 years of service as MFU president. He and his family have dedicated three generations to Montana Farmers Union and played a role in making MFU what it is today. Thank you to the Merrill family. As President I started by chairing the MFU board meeting Sunday. The board evaluated the state convention and the board unanimously agreed to commend the staff on their hard work. Jan Tusick was elected Secretary/Treasurer. Monday morning was an all staff meeting which provided an opportunity to get to know each other and to make a few plans as a team. Every staffer works hard each day to further the MFU goals and objectives. One of my goals is to organize a few more MFU events near you and I am counting on your help planning and turning out people to these events. Please respond to the survey in this newsletter.

My first week ended in Bozeman where I attended the MSU Agriculture Celebration. Montana Farmers Union is a proud sponsor of MSU’s Celebrate Agriculture Scholarship Dinner. Meanwhile in Washington DC, Senator Jon Tester submitted a resolution asking Congress to reinstate COOL (Country of Origin Labeling) for beef and pork. The consumer has the right to know where their food comes from and the producer has the right to distinguish our products from foreign products. In 2015 Congress repealed COOL for only beef and pork at the urging of multinational meat packers with the backing of NCBA, Stockgrowers and Farm Bureau. NFU and MFU had invested time and money for years promoting COOL for all AG commodities before Congress passed COOL into law. Some of the highest prices Montana family farms received for our commodities was while COOL was enforced. Within 6 months of COOL being killed by Congress for beef and pork feeder calf prices had dropped by nearly 50% and yet the price of a steak in the store stayed the same price.

Over the next few years all commodities followed the downward trend. Opponents to COOL claim other factors caused the downward trend, I disagree and suggest we try COOL again and see if prices rebound.I am encouraged by South Dakota Senators Thune and Rounds recognition of the misleading label “Product of USA”. They have introduced a bill that will stop the practice of letting Multinational Meat Packers from importing hamburger from foreign countries and packaging it with a label “Product of USA”. It will require beef or pork to be born, raised and slaughtered to be labeled “Product of USA”. Hopefully they will be willing to work with Senator Tester to reinstate COOL.