Most hog farmers now use production contracts, USDA says; does that give more power to meat companies?

Graph by Investigate Midwest; click on it to enlarge

Most hog producers are now in production contracts that fix a price on the hogs before they're ready for sale. They have accounted for more than half of production for about two decades; now they are used by more than half of hog producers, according to nearly three-decade Department of Agriculture study.

A reliance on such contracts could leave hog farmers more at the mercy of large meatpackers, reports Madison McVan of Investigate Midwest. That's because in many if not most contracts, the packer "pays for the pigs, feed, veterinary care and transportation while the farmer provides equipment, housing and labor." This lowers the upfront cost for the farmer but gives packers the ability to drive down prices.

"As the meat industry as a whole has become more concentrated and a handful of large companies have more control over the market, advocates are concerned that the dominance of production contracts will lead to lower prices for producers," McVan reports. A bill pending in the U.S. Senate would "tackle the issue of producer exploitation by creating an Office of the Special Investigator for Competition Matters in the USDA. The investigator would be charged with enforcing the Packers and Stockyards Act, which includes protections for producers but is rarely enforced."

In fear of retribution, farmers rarely speak out about on abuses from meat companies, Steve Etka, the policy director of the Campaign for Contract Agricultural Reform -- an alliance of nonprofit organizations representing contract farmers, told Investigate Midwest in August.