Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: Hello and welcome to another episode of the All Thoughts Podcast.
Speaker 2: I'm Tracy Alloway and I'm Joe. Wasn't thal Joe? You
Speaker 2: know what I'm excited about.
Speaker 3: This could go anywhere, so I'm not gonna guess, just
Speaker 3: tell me.
Speaker 2: So we're recording this on March nineteenth. It is the
Speaker 2: first official day of spring. Oh, and that means that
Speaker 2: soon it will be berry time, specifically strawberries.
Speaker 3: I think many parents are talking about these days. But
Speaker 3: the berry budget that parents.
Speaker 2: When you said that, I was like smart, people are
Speaker 2: talking about strawberry.
Speaker 3: Oh, seriously, Like many this is like a persistent gripe
Speaker 3: among parents, like how much we have to pay for
Speaker 3: our kids freshberry habit. Strawberries, blueberries, blackberries, raspberries. They're really
Speaker 3: expensive and kids just devour them.
Speaker 2: And kids these days are spoiled. When I was growing up,
Speaker 2: I had fruit roll ups, which I don't even think
Speaker 2: you could classify as a fruit product. And all these
Speaker 2: kids have organic, freshly grown blueberries.
Speaker 4: Crazy.
Speaker 3: So when I was a kid, like, yeah, we had
Speaker 3: like apples and in this summer we had stone fruits,
Speaker 3: you know, peaches and stuff and then like grapefruit, and
Speaker 3: that was it.
Speaker 2: So where do you buy your strawberries from or other berries?
Speaker 3: Actually, before I answer that question, I want to say
Speaker 3: one other thing about my childhood no that I may
Speaker 3: be relevant to this conversation, which is that my grandmother
Speaker 3: in Michigan, her husband, her second husband, she lived when
Speaker 3: I was growing up on a farm in Elegant, Michigan.
Speaker 3: It had dairy, it had cows and stuff, but I
Speaker 3: also had like all these orchards and stuff. They're peaches
Speaker 3: and cherries and apple and it was just like wonderful
Speaker 3: and we had a great time as kids, and we'd
Speaker 3: gone to the orchard, so I did actually have a
Speaker 3: lot of fresh fruit. And I haven't been there in
Speaker 3: many years. But my understanding, I believe that farm is
Speaker 3: gone and now it's just entirely like soy or some brand,
Speaker 3: like all of those orchards are gone and it's just
Speaker 3: like one sort of like efficient unicrop farm these days.
Speaker 2: It's a microcosm of America's agricultural evolution. All right, Wait,
Speaker 2: but you didn't answer the question where do you get
Speaker 2: your strawberries and blueberries and things from?
Speaker 3: I don't know, probably Trader Joe's usually I think, I
Speaker 3: don't know, Maybe I don't know, Yeah, probably usual, probably
Speaker 3: usually Trader Joe's.
Speaker 2: Can you remember the brand?
Speaker 3: It's that one. I don't remember the name, but it's
Speaker 3: that one very brand.
Speaker 2: It's almost one hundred percent certain to be DRIs Calls.
Speaker 3: Yeah, that's right, and I specifically associate them with strawberries.
Speaker 2: But yes, so I think if you go into almost
Speaker 2: any grocery store in America, you are likely to find
Speaker 2: DRIs Skulls berries of one sort or another. And the
Speaker 2: crazy thing about Driscolls is, for me, they're pretty much
Speaker 2: synonymous with berries. I think berries, you think Driscolls. There's
Speaker 2: a brand there. However, they don't actually grow any of
Speaker 2: their own berries.
Speaker 3: I did not know that. That's really interesting, and it
Speaker 3: really is weird that there's like a brand that's the
Speaker 3: berry brand. You say that, and it hadn't really clicked
Speaker 3: to me that there is like the berry company in America.
Speaker 3: But yeah, there's the berry company in America's Driscolls.
Speaker 2: All right, So, as excited as I am about berries
Speaker 2: this year, and in the interests of equalizing corporate America,
Speaker 2: I am growing my own berries supply in Connecticut. So
Speaker 2: I will achieve berries interests. That's right, But I think
Speaker 2: it's sort of emblematic of a few themes that have
Speaker 2: come up on the show in one way or another.
Speaker 2: Number one is the decisions that have gone into creating
Speaker 2: America's agricultural landscape as it exists today. So you just
Speaker 2: mentioned the farm in Michigan, Your old family farm used
Speaker 2: to have fruit orchard, used to grow a variety of
Speaker 2: different things, and now grows a single unicrop, probably soy
Speaker 2: or something like that. We've spoken about this at various
Speaker 2: times on the podcast, so it keeps coming up. The
Speaker 2: other big theme has to be antitrust and the concentration
Speaker 2: of power in a few specific areas. So how did
Speaker 2: it come to be that Driscolls dominates the berry market?
Speaker 2: We have to ask these questions.
Speaker 3: I can't wait to find out the answer because I
Speaker 3: really like up. Like I said, up until you sort
Speaker 3: of said that, it just had never occurred to me that, oh, yeah,
Speaker 3: there's just this one company that I associate with berries.
Speaker 2: You will never be able to escape Driscolls ever. Again.
Speaker 2: It will be in your mind every time you see
Speaker 2: a little plastic package of blueberries.
Speaker 3: Every time we go to the grocery, store and my
Speaker 3: kids want twenty dollars worth a freshberries.
Speaker 2: Actually, I should just say we do, in fact have
Speaker 2: the perfect guests to discuss all this today, and after
Speaker 2: reading their book, I have come away with a completely
Speaker 2: different idea of agriculture that I cannot unsee in many ways.
Speaker 2: And it's kind of depressing because I do walk into
Speaker 2: grocery stores now and I start muttering to myself about
Speaker 2: the illusion of choice and dairy Chekhov's and things like that.
Speaker 2: So I'm going to try to make everyone else more
Speaker 2: like me. You can't escape it. We're going to be
Speaker 2: speaking with Austin Frerick. He's the author of a new
Speaker 2: book it's coming out this month, Barns Money, Power and
Speaker 2: the Corruption of America's food industry. He's also an all
Speaker 2: round agricultural and antitrust expert and a fellow of the
Speaker 2: Thurman Arnold Project over at Yale University. So, Austin, thank
Speaker 2: you so much for coming on all thoughts.
Speaker 4: Thank you for having me on. This is such a
Speaker 4: professional hunter. My husband and I are big fans. We've
Speaker 4: been big fans since September episode.
Speaker 2: Oh, thank you. I appreciate that. Let me just say,
Speaker 2: to begin with now you've been so positive, I'm just
Speaker 2: going to reiterate what a depressing read this was. Why
Speaker 2: did you decide to write a book on this topic?
Speaker 4: Honestly, this whole book started in a bar conversation in
Speaker 4: De Moine, Iowa. It was twenty eighteen, and it was
Speaker 4: a big governor's race in the state of Iowa. And
Speaker 4: Iowa doesn't have campaign contributional limits for state level races,
Speaker 4: and this political operative over a cheap draft Beers was
Speaker 4: telling me how this hog farmer donate is the largest
Speaker 4: donor in Iowa, donated three hundred thousand dollars to the
Speaker 4: governor's reelection campaign. And he was also telling me how
Speaker 4: they have a private jet. They fly back and forth
Speaker 4: between the only gated community in suburban Des Moines to Naples, Florida,
Speaker 4: and supposedly on this jet where their words and pigs fly,
Speaker 4: which to me, in my head part of it was, oh,
Speaker 4: this is good copy. But also this is such a
Speaker 4: powerful symbol of what happened to Iowa. What is going
Speaker 4: on when the most politically powerful person in the state
Speaker 4: is hog Baron. So I originally wrote an article for
Speaker 4: Vox with my buddy Charlie and then after we published
Speaker 4: the articles telling this bigger story of how did power
Speaker 4: consolidate in the hog industry in my lifetime, I realized, oh,
Speaker 4: this story can be repeated through the food system. This
Speaker 4: isn't unique to hogs. And then also this Robert Baron framework,
Speaker 4: to me, is a fun narrative device to tell these bigger,
Speaker 4: structural type stories.
Speaker 3: So I mentioned in the intro that I had this
Speaker 3: idyllic childhood of like running through the farm that my
Speaker 3: grandmother was living on and picking cherries and eating them
Speaker 3: right off the tree. And there were tart cherries and
Speaker 3: red cherries and the golden ones that are multicolored that
Speaker 3: were my favorite. And now that farm is gone and
Speaker 3: it's just probably like one crop as far as the
Speaker 3: eye could see. I take it that it was not
Speaker 3: just my grandmother's farm. No, I mean, this is the
Speaker 3: story of the American agricultural system. And what's to me
Speaker 3: the whole time, what I was thinking in my head
Speaker 3: when you're telling that story was I kept thinking of
Speaker 3: a retirement portfolio. M your grandma had a diversified portfolio,
Speaker 3: different crops going on at once. And what happens now
Speaker 3: is the system's incredibly fragile because most farms are only
Speaker 3: one or two crops. Can I just say something, Tracy
Speaker 3: is a personal regret. So my grandmother's husband, Jack, farmer Jack,
Speaker 3: if you were alive today, I would be so excited
Speaker 3: to talk to him, and I just think about, you know,
Speaker 3: ask him a million questions about like how does dairy work?
Speaker 3: And how do you get an agreement to get your
Speaker 3: He also made cider, how do you get your sight
Speaker 3: or on the shelves. It makes me very sad that,
Speaker 3: like when I was, you know, eleven, I didn't know
Speaker 3: that I would be interested in all these topics. I
Speaker 3: never really talked to him about.
Speaker 2: This is a very good reminder listeners to ask your
Speaker 2: relatives all the information that you want to hear about
Speaker 2: before it's too late. My aunt was quite senior at Countrywide,
Speaker 2: and she always promised to give me the inside scoop
Speaker 2: on what was going on pre two thousand and eight,
Speaker 2: and then she very sadly died early on of cancer.
Speaker 2: So yes, okay, we all have those regrets. Back to agriculture,
Speaker 2: that was a slight diversion. How concentrated is the US
Speaker 2: agricultural or food product landscape?
Speaker 1: Oh?
Speaker 4: To me it's one of the most concentrated spaces. It's
Speaker 4: a combination of a few things. I mean, you can't
Speaker 4: look at a hog market the same way with like
Speaker 4: a search engine, because you're not going to take a
Speaker 4: hog from Iowa and go butcher in North Carolina because
Speaker 4: of shipping cost. But you also have this whole dynamic
Speaker 4: of delusion of choice, like you mentioned earlier. I mentioned
Speaker 4: this briefly in my book, But there's like a peanut
Speaker 4: butter monopoly. Essentially one company has like roughly a fifty
Speaker 4: to sixty percent market share. But first of all, most
Speaker 4: consumers don't see that because they own different price points,
Speaker 4: because that rich consumer wants to think they're getting different
Speaker 4: peanut butter than the low income consumer. But on top
Speaker 4: of it, they tended to most store brands and you
Speaker 4: only find that out usually through recalls.
Speaker 3: So yes, okay, there's a highly concentrated food supply in America,
Speaker 3: and many aspects of the food industry in America are
Speaker 3: highly concentrated with a few dominant companies. And we'll get
Speaker 3: into like what some of these companies are and the
Speaker 3: distribution and the growing or the slaughtering, whether we're talking
Speaker 3: about meat on the other hand, outside of the inflation
Speaker 3: that's hit a lot of categories in the world over
Speaker 3: the last few years, we also live in a world
Speaker 3: of caloric abundance, and that seems pretty good and in
Speaker 3: the grand scheme of history, like meat is very cheap,
Speaker 3: and many people can afford burgers, and many people can
Speaker 3: afford steak, and many people can afford fresh berries, which
Speaker 3: really we never had as a kid at all, or
Speaker 3: very rarely, like I don't remember my parents even, you know,
Speaker 3: buying berries. So could you make an argument It certainly
Speaker 3: seems to me like maybe there are some cost and
Speaker 3: concentration of power issues, but we're in an era of
Speaker 3: food abundance.
Speaker 4: So just a few things on that. The first is, actually,
Speaker 4: per capita, Americans spend more food than Italians, so we
Speaker 4: actually we pain more and more for our food. This
Speaker 4: is even before the inflation stuffy according to USDA data.
Speaker 4: But that's also come at the expensive workers. I mean,
Speaker 4: that is like the hidden undercurrent. Sure of you can
Speaker 4: get cheap berries year around, because you have twelve year
Speaker 4: olds picking berries for other twelve year olds in developing countries.
Speaker 4: I mean, there's been reporting how basically any produce that's
Speaker 4: labor intensive with these trade agreements in America has moved
Speaker 4: offshore and kind of like a T shirt, it's so
Speaker 4: hard for journalists, especially the state of American media, to
Speaker 4: go investigate that the plant these farms are basically modern
Speaker 4: day plantations. And I would also last point on that
Speaker 4: is the obesity crisis in America. That undercurrent is We've
Speaker 4: never in the history of mankind had the lower classes
Speaker 4: be the overweight classes. And that to me is because
Speaker 4: the way the food system is designed, and I really
Speaker 4: get at this, my grain baron is you have to
Speaker 4: have money to beat healthy in America now because the
Speaker 4: food system picks favorites right now will be heavily subsidized
Speaker 4: processed foods.
Speaker 2: Yeah, I can't remember. You actually had a stat in
Speaker 2: your book specifically about this, and it was the price
Speaker 2: of fresh fruits and vegetables has gone up a certain
Speaker 2: amount since I think it was from nineteen eighty, whereas
Speaker 2: the price of processed foods has gone down quite a lot.
Speaker 4: So each baron's really built around an idea. And to me,
Speaker 4: my grain baron, which is Cargill, is about the farm bill.
Speaker 4: And to me, what I realize is, oh, this whole
Speaker 4: structure is designed to overproduce grains at the expense of
Speaker 4: everything else, and so in the constants it's crowding out everything.
Speaker 4: So like your family farm is, it's cheaper for people
Speaker 4: to plow up the orchards and put in corn than
Speaker 4: it does actually grow produce.
Speaker 3: What do you walk us through this specific You hear
Speaker 3: people vilify the farm bill a lot. What do you
Speaker 3: walker through some of the specifics of like what are
Speaker 3: the sort of policy underpinnings of the farm bill and
Speaker 3: what it does?
Speaker 4: Oh man, Joe, this honestly, this reminds me of the
Speaker 4: tax code. The farm bill has all these interlocking parts. Okay,
Speaker 4: that took me a while. They really get my head around.
Speaker 4: So to start off with, the farm bill comes from
Speaker 4: the New Deal, and that's from the dust bowl. These
Speaker 4: markets are over supplied and you had massive environmental damage
Speaker 4: because of people are pushing their land, engaging really destructive practices.
Speaker 4: So this New Deal farmwork was really centered in supply management,
Speaker 4: is what they call it. Sure, you can get subsidies,
Speaker 4: but you have to take land out of production. Most
Speaker 4: famously created all these reserves, grain reserves, cheese reserves, what
Speaker 4: have you. The government is trying to figure out the
Speaker 4: sweet spot for agriculture for production. What you slowly see happen,
Speaker 4: especially in the nineteen a's on is that framework kind
Speaker 4: of collapses to you're heavily subsidizing overproducing things. And it's
Speaker 4: kind of done three different ways. Think of it like
Speaker 4: a three legged stool. It's crop insurance, which like sixty
Speaker 4: percent of the premiums on crop insurance is subsidized by
Speaker 4: the government. You have the commodity programs, which it used
Speaker 4: to be to get a check like a subsidy check.
Speaker 4: Now it's kind of done through like a loan forgiveness.
Speaker 4: And then you also have the conservation programs. To me,
Speaker 4: like the grains are the big ones here, and then
Speaker 4: also like the caps have been raised, and also like
Speaker 4: even in crop insurance there's no cap and how much
Speaker 4: crop insurance you can get. So it's really pushing you
Speaker 4: to do this kind of model up production.
Speaker 2: So talk about how that model of production, in those
Speaker 2: decisions that were made through things like the Farm Bill,
Speaker 2: how that led to dominance in particular in the grain industry.
Speaker 2: And I think your example in the book was Cargil.
Speaker 4: Yeah, Cargil to me is a fascinating company. I did
Speaker 4: not originally include this when I started mapping out this book.
Speaker 4: It's the largest private company in America. They're bigger than
Speaker 4: the Koch brothers.
Speaker 2: It's amazing.
Speaker 4: Yeah, they do, like a think in my I think
Speaker 4: I one fourth of the world's grade trade. They're the
Speaker 4: middleman though, like I compare them my book to the
Speaker 4: closest thing we have in modern to modern day standard oil.
Speaker 4: But even at the end of that chapter, to me,
Speaker 4: they're more like the nineteenth century British Empire because the
Speaker 4: sun never sets on the grain Empire. So the original
Speaker 4: farm Bill actually to pay for it was a tax
Speaker 4: on processors companies like Cargill. So the family hated the
Speaker 4: original farm Bill. They fought it. They didn't like FDR
Speaker 4: because what the farm bill is doing the original one
Speaker 4: is limiting production. To me, it's politically brilliant to study
Speaker 4: because they use middleman. They don't usually engage in their
Speaker 4: political lobbying straight up. They give money to other groups
Speaker 4: to do their bidding. But you kind of uncovering the
Speaker 4: research is, Oh, they want to remove this because they
Speaker 4: just want to keep They just want tons of grain.
Speaker 4: And so what Cargill does has been doing slowly is
Speaker 4: buying up different parts of the supply chain, so you
Speaker 4: know they'll do like animal feed was a big part
Speaker 4: of Cargil, and then they got into meatpacking and then
Speaker 4: now that's just kind of their logic.
Speaker 2: So how does that actually feed into the antitrust discussion
Speaker 2: Because on the one hand, if a huge company like
Speaker 2: Cargill is buying up other businesses, you would expect regulators
Speaker 2: to be looking at that. But on the other hand,
Speaker 2: if Cargil is saying, well, we're not necessarily getting more
Speaker 2: grain producers, we're getting something that's adjacent to producing grain.
Speaker 2: We're doing grain transportation or storage or something like that,
Speaker 2: and there are synergies involved, and the American consumer is
Speaker 2: going to benefit through lower prices. How do those conversations
Speaker 2: or debates play out.
Speaker 4: Yeah, So, I mean I start with two fundamental notions
Speaker 4: of no company buys another company for pro competitive reasons.
Speaker 4: The goal of a corporate executive, and it's such a
Speaker 4: simple thing that I realized a few years ago, is monopoly.
Speaker 4: So you have that fundamental tension in markets where markets
Speaker 4: competitive markets are roofless, it's hard. Your goal is monopoly.
Speaker 4: So you're trying to get to a monopoly status. And
Speaker 4: so what you see with Cargill is they made a
Speaker 4: lot of these purchases thirty forty years ago before the
Speaker 4: Robert Bork anti trust framework took hold, that WO had
Speaker 4: not probably been approved. I can't remember off tom I head,
Speaker 4: but there's quite a few. I mentioned the book of
Speaker 4: large Acquisitions they made.
Speaker 2: You mentioned the magic word just then, which is Robert
Speaker 2: Bork and full disclosure. I had not realized what a
Speaker 2: influential figure Bork was in the world of anti trust.
Speaker 2: And I find it so interesting reading that chapter to
Speaker 2: compare and contrast the sort of Bork interpretation of anti
Speaker 2: trust versus what we think about today. And I'm trying
Speaker 2: to do this without mentioning hipster antitrust, but there is
Speaker 2: more of a I guess, a throwback today to the
Speaker 2: idea of, well, is this particular corporate action good for
Speaker 2: Americans in the sense of labor, not just prices? Whereas
Speaker 2: Bork basically argued that regulators and the courts should ignore
Speaker 2: harm to workers and focus purely on consumer prices. So
Speaker 2: the consumer welfare standard, which seems kind of nuts in retrospect.
Speaker 4: Yeah, I mean, what's so funny about that? Is number
Speaker 4: one kind of the undercurrent of this era are so
Speaker 4: much of the language it's designed to keep people out.
Speaker 4: These words don't really mean anything. So consumer Welfare Standard
Speaker 4: has like thirty different ductions by different people. Those words
Speaker 4: are really hollow, but they sound smart. Two, it tries
Speaker 4: to reduce this stuff to simple math equations when really
Speaker 4: like this is about power and who has it. These
Speaker 4: are moral questions that we're trying to mask with pseudo science.
Speaker 4: And for me personally, it was a coffee I had
Speaker 4: with Commissioner con back in twenty fifteen that really got
Speaker 4: me going on this. I was at the time a
Speaker 4: Treasury tax economist and I had written a paper on
Speaker 4: the growth of super rents, which is just like econ
Speaker 4: speak for monopoly level of profits into tax code. And
Speaker 4: I was like, huh, what's going on here? Why am
Speaker 4: I seeing a lot in agriculture, you know, anyone should
Speaker 4: able to make pop our chips. And read an article
Speaker 4: she wrote in like twenty twelve on like chicken monopolies.
Speaker 4: She was a journalist before she became a lawyer, and
Speaker 4: I was like, oh, this really explains what I see
Speaker 4: going on. Back in Iowa met with her and she
Speaker 4: kind of is the one who showed me, oh, there's
Speaker 4: this whole There's been this fierce intellectual debate in America
Speaker 4: over how we conceptualize power and kind of tell me
Speaker 4: that Bork history, And to me is, I mean, there's
Speaker 4: a lot of talk on big tech, but to me,
Speaker 4: the my book is really to like overlay that framework
Speaker 4: to agriculture in the food system.
Speaker 3: So I take your point about, Okay, a handful of
Speaker 3: extremely powerful companies have like come to have this dominant
Speaker 3: position within the agricultural system. On the other hand, it
Speaker 3: seems like this is a partly and you're applied, not
Speaker 3: unique to agriculture, which is just that we have seen
Speaker 3: the rise across many industries of like you know, megga
Speaker 3: behemoth global we used to call them like in the nineties,
Speaker 3: like multinational corporations. They're also like economies of scale are
Speaker 3: a real thing. I believe, you know, like how much
Speaker 3: of this is like a policy decision versus a sort
Speaker 3: of more like natural evolution of how many businesses have
Speaker 3: evolved of like companies figuring out scale and efficiencies. And
Speaker 3: I have to imagine that setting aside policy that whether
Speaker 3: we're talking about slaughtering hogs or whether we're talking about
Speaker 3: growing corn that you could save money and selled it
Speaker 3: at a cheaper price if you're a big company that
Speaker 3: has access to a lot of capacity.
Speaker 4: To me, it's a combination of both. I mean, the
Speaker 4: undercurrent of this book too is a lot of these
Speaker 4: companies got big not through organic growth, but through acquisitions
Speaker 4: that probably would not have been approved before. To me,
Speaker 4: the undercurrent two of this book is the whole negative
Speaker 4: externalities of this market power is just I mean, I
Speaker 4: think to me, as an Iowan, how I fell a
Speaker 4: part in my lifetime. It's the best farmland in the world.
Speaker 4: It should be the Italy of North America. Yet Iowa
Speaker 4: was now is basically an extraction colony. Like sixty seventy
Speaker 4: percent of the waterways highway you can't go into.
Speaker 2: This is because the hog runoff. To put it politely, Yeah,
Speaker 2: so Iowa has about twenty five million hawks.
Speaker 4: Hog defecates like three times more than a human being.
Speaker 4: So we're talking about the manure of the population of
Speaker 4: seventy five million people. Like Texas and California combined, that
Speaker 4: regulatory system because of my hog Baron's capture of the
Speaker 4: state government has been gutted. Keep in mind eye. I
Speaker 4: was also number one in chicken eggs. A lot of cattle.
Speaker 4: Like all this other maneuvers, they have too much maneuver
Speaker 4: for the environment. On top of it, you have this
Speaker 4: animals used to get their feet on land. You know,
Speaker 4: cows walk around, eat grass. They would fertilize their own feed. Now,
Speaker 4: because we basically stuffed most animals into these metal sheds,
Speaker 4: we have to use a lot of fossil fuelds to
Speaker 4: grow their feed. So you also have all that chemicals
Speaker 4: entering the water supply system too. And to add another
Speaker 4: layer to it is most farmland in Iowa's not owned
Speaker 4: by iwands anymore. Grammar Grapa dye kids moved to California.
Speaker 4: They put it into a trust. They rent out the
Speaker 4: land and you can always clock it when you're driving
Speaker 4: because they farm right up to the creek. So all
Speaker 4: those chemicals go right into the creek, including the manure.
Speaker 4: So what they do with these lagoons is they drain them.
Speaker 4: That they put these massive manure lagoons next to the buildings.
Speaker 4: Every few months, they drained the manure and they put
Speaker 4: it into the soil and they'll do in the winter,
Speaker 4: which is just awful. It's kind of illegal, but no
Speaker 4: one enforces that roll in Iowa. So you'll just see
Speaker 4: snow fields covered in snow with manure on it, and
Speaker 4: then just as you know, as the snow melts, it
Speaker 4: just go straight into the water system.
Speaker 3: What were this civic Iowa regulatory changes? If the story
Speaker 3: is okay, domess local political power, what were the actual
Speaker 3: regulatory changes that enabled this?
Speaker 4: The big one was the stripping of local control. This
Speaker 4: was back in nineteen ninety six. Secretary of Vilsack Biden,
Speaker 4: Secretary of Agriculture, actually voted in favor of this when
Speaker 4: he was a state senator. This whole thing too. I mean,
Speaker 4: you got an open revolt in Iowa. I mean, this
Speaker 4: wasn't just efficiency took hold. It was people are fighting
Speaker 4: tooth and nail.
Speaker 2: I mean, and no one wants to live next to
Speaker 2: a manure lagoon.
Speaker 4: That is like, it smells awful. I mean I can
Speaker 4: barely smell. When you get near one of these things,
Speaker 4: it's awful, and your home value collapses. Ten percent of
Speaker 4: these pigs and these facilities die, so next to everyone
Speaker 4: is a big dumpster fall bloated dead pig bodies. So
Speaker 4: you vultures but on top of it, just from a
Speaker 4: regulatory standpoint, if you treat pig manure like human manure,
Speaker 4: this model collapses. It's not efficient. It's efficient if you
Speaker 4: ignore all the negative externalities on top of it's just cruel.
Speaker 4: I mean, I'm not That's the other thing too, is
Speaker 4: like pigs are very social creatures, are smart, and you're
Speaker 4: putting two thousand of them into these metal sheds. And
Speaker 4: even the I with the open secret is if you
Speaker 4: build it below twenty five hundred pigs, so they'll say
Speaker 4: it's four hundred ninety nine, it's a different regulatory structure.
Speaker 4: But the open secret is they put four thousand in them.
Speaker 4: No one's checking this.
Speaker 2: Yeah, I mean this was one of the incredibly sad
Speaker 2: themes running through your entire book. Joe doesn't care about animals. Joe,
Speaker 2: if I had.
Speaker 3: To thought of the thought of four thousand pigs in
Speaker 3: a metal cage that's designed for twenty five hundred pigs
Speaker 3: disturbs me.
Speaker 2: Let me put that on that never see the light
Speaker 2: of day. Yes, Joe's worst personality flaw, if I had
Speaker 2: to choose one, is that when I when I show
Speaker 2: him a picture of acute animal, he doesn't care at all.
Speaker 4: Good for me.
Speaker 2: That's actually a that's a compliment show. That's the worst
Speaker 2: thing I can think. Okay, So there is that incredibly
Speaker 2: sad aspect running throughout the book. There's also you know,
Speaker 2: you mentioned the manure problem. One of the things I
Speaker 2: was really interested to read in the book is that
Speaker 2: often these big companies are rewarded for coming up with
Speaker 2: solutions to problems that they essentially create. And I can't
Speaker 2: remember the specific name of the cow one.
Speaker 4: I want to Farros Farms and fair Life.
Speaker 2: Yes, yes, can you talk a little bit about that,
Speaker 2: like how companies are basically, you know, rewarded for doing this.
Speaker 4: Oh, that's such a it's almost it's so comical, it's
Speaker 4: so bad. So the big thing, any agricultures, like our
Speaker 4: second largest contributor to climate change, and especially with beef
Speaker 4: and dairy are driving it along with the fossil fuels
Speaker 4: used in food grain production. So dairy, this is getting
Speaker 4: in the weeds. But you know, normally used to be
Speaker 4: pastured family dairy farmers. You know they have sixty seventy cows.
Speaker 4: The cow defecates and you know, creates the fertilizer for
Speaker 4: its feet when you put them into a metal shed,
Speaker 4: they pull the manure. Well, when that manure breaks down
Speaker 4: in a pooled environment, it creates methane gas that's not
Speaker 4: produced when it's on land, and so you have all
Speaker 4: this additional, you know, climate change contributing gas being produced
Speaker 4: in this production model.
Speaker 2: So if the cows are in a field somewhere pooping
Speaker 2: the normal way, that manure would end up on grass
Speaker 2: and it would break down and there wouldn't be a
Speaker 2: lot of methane generated just from that process.
Speaker 4: Can go okay. So not only so when you put
Speaker 4: them inside you create this methane, this additional methane. You're
Speaker 4: also using philesip fuels to grow their feet inside. So
Speaker 4: what the industry is trying to do is create some
Speaker 4: these manure biogesters are called. You basically pool the manure
Speaker 4: and you try to capture the gas coming the methane
Speaker 4: gas coming off it. It takes an immense amount of subsidy,
Speaker 4: and that is USDA is big one of the big
Speaker 4: there're big solutions to climate change right now, is spending
Speaker 4: a ton of money on this. The problem with that
Speaker 4: is you're incentivizing a really destructive model. The dairy industry
Speaker 4: is fascinating to me. It's one of the most complex
Speaker 4: commodities in my opinion. The joke in the dairy world
Speaker 4: is only five people understand that the dairy system, and
Speaker 4: four of them are dead, but are Milk consumption is
Speaker 4: going down, but our dairy consumptions going up because we're
Speaker 4: eating more cheese and ice cream. Those aren't healthy things,
Speaker 4: and we're producing more. And we're also doing in regions
Speaker 4: that environmentally cannot sustain it, the Texas Panhandle in New Mexico.
Speaker 4: Like my favorite little cocktail chatter is that Mexico Dairy
Speaker 4: does three times more dairy than Vermont. And so you
Speaker 4: have this system, this is being sold as a solution
Speaker 4: to a problem it created itself that didn't exist before.
Speaker 4: And that to me is like, I mean, they're trying
Speaker 4: to put ethyl on the airplanes.
Speaker 2: Now.
Speaker 4: I thought that the conversation ethanol's over. But that's a
Speaker 4: sort of the modern agricultural system is we have all
Speaker 4: this money sloshing around, kind of corrupting an honest conversation.
Speaker 3: In your life and maybe even within the span of
Speaker 3: time that you've got interested in this specific subject that
Speaker 3: wrote the book, have you sensed a change in the
Speaker 3: politics of food because I feel like when I was
Speaker 3: a kid, that being anti factory farming as it was called,
Speaker 3: animal welfare, multinational corporations, many of these things I would
Speaker 3: have primarily associated with liberals or the left. And I
Speaker 3: get the impression that these days that actually, like the
Speaker 3: sort of debasing of the food system, the poisoning of
Speaker 3: the food system, et cetera, is actually migrating a little bit,
Speaker 3: and that you see more of this talk on the right.
Speaker 3: There's even something you've written about, which is that I
Speaker 3: think it was in like the nineteen ninety six primary,
Speaker 3: Pat Buchanan making a lot of hay, so to speak,
Speaker 3: by talking about thank you, not intentional changes in hog production,
Speaker 3: but that the dominant strain among mainstream Republicans was like
Speaker 3: pretty like safely on the side of the big business.
Speaker 3: Can you talk a little bit about that political evolution?
Speaker 4: Yeah, I mean that to me is like one of
Speaker 4: the most hopeful things about this the food system right
Speaker 4: now is the chance for a bipartisan reform movement. I
Speaker 4: mean a lot of the ideas in the book started
Speaker 4: in articles I wrote in An American Conservative. I mean
Speaker 4: that I was very intentional on that, but I mean
Speaker 4: I think a few things are contributing to that. Number One.
Speaker 4: I feel like when most Americans go abroad now, one
Speaker 4: of the first things you always hear from them is
Speaker 4: food is better and cheaper abroad.
Speaker 3: And I lost while I was traveling on Italian post
Speaker 3: that Yeah, yeah, that.
Speaker 4: And then also like the undercurrent two for a lot
Speaker 4: of these parents, I mean, especially in meat packing, they're
Speaker 4: not American companies the meat industry, these are state backed monopolies.
Speaker 4: I mean, they're they're intentional development strategies of like in
Speaker 4: the beef packing, my sladering Baron is a JBS. First
Speaker 4: of all, they became a monopoly through bribery. They admitted
Speaker 4: to it, and the fact that we let them keep
Speaker 4: their monopoly status is kind of incredible. But that was
Speaker 4: an intentional development strategy by the country of Brazil to
Speaker 4: have a dominant player. And so that's why, I mean,
Speaker 4: the beef farmers right now have just been an uproar
Speaker 4: the last few years because I mean, they're if I
Speaker 4: could include one graph of my book would be on
Speaker 4: what you're paying in the store for beef and what
Speaker 4: ranchers are getting. It is diverged so much.
Speaker 2: The margins basically yes.
Speaker 4: Say more on the So basically the family farm has
Speaker 4: died in dairy and hog production, beef is the last
Speaker 4: one standing. And you have you know, these animals are huge,
Speaker 4: you can't ship them far. So even though you know
Speaker 4: three companies might have let's say eighty percent market sure
Speaker 4: when you're in Montana, you really don'tly only have one
Speaker 4: or two packers. And so what they're trying to do
Speaker 4: right now, besides only having one or two options, is
Speaker 4: they're trying to kill the spot market, which in my
Speaker 4: head I compared to eBay. They want production contracts, and
Speaker 4: so you're having this combination of the US cattle herd
Speaker 4: is at the lows since nineteen fifties, and part of
Speaker 4: that's because of the drought and the Great Plains. But also,
Speaker 4: and this is where I think is super fascinating is
Speaker 4: GPS has it has production, it's slaughterers animals and all
Speaker 4: the beef production regions of the world Australia, Brazil and America,
Speaker 4: and so it just kind of shuffles based on currencies
Speaker 4: that beef you're seen in the store, So farmers are
Speaker 4: they just don't have a lot of buying power right now.
Speaker 4: The other thing too, with beef is they haven't quite
Speaker 4: figured out the industrial production model with it.
Speaker 2: They're starting to industrial production model of beef. Sounds delicious, No,
Speaker 2: no dystopian, thank you too. So there are a number
Speaker 2: of moments in this book that are disturbing in various ways.
Speaker 2: And one of the moments where I kind of gasped
Speaker 2: audibly had to do with the dairy industry and the
Speaker 2: checkof system. And a lot of people will never have
Speaker 2: heard of checkofs, but they will have heard of advertising
Speaker 2: campaigns like got Milk. So could you maybe explain what
Speaker 2: those are and how they tie into I guess the
Speaker 2: structural decision to over produce certain commodities and then you
Speaker 2: have to figure out ways to ramp up consumption.
Speaker 4: Yeah. No, I'm so glad you asked about checkofs because
Speaker 4: it's one of those things where I was so determined
Speaker 4: to put them in my book, but it's so hard
Speaker 4: to explain it to people. So checkofs go back to
Speaker 4: the nineteen thirties. They come out of Florida. It was
Speaker 4: basically these tiny little things of flora orange juice way
Speaker 4: to advertise a commodity. They were a little tax on producers.
Speaker 4: They rarely started ramping up in the nineteen eighties, as
Speaker 4: is what I call the Wall Street farm belt to cold.
Speaker 4: Where As them were over producing a few things, how
Speaker 4: do we stimulate demand became the goal of a check off,
Speaker 4: so farmers. I tell the story how farmers could vote
Speaker 4: to create one and they create one. There's a whole
Speaker 4: different conversation over farmers could vote in one, but the
Speaker 4: USDA won't allow it, and I kind of tell that
Speaker 4: story with hogs. They threw out the vote in the
Speaker 4: late nineties. But so you have this, most of them
Speaker 4: are kind of small. There's like twenty or thirty check
Speaker 4: offs Christmas Tree check off, popcorn check off there mostly
Speaker 4: so the.
Speaker 2: Christmas tree farmers basically got together and they say we're gonna,
Speaker 2: you know, pool like a certain amount of money, and
Speaker 2: that money is going to go to promoting Christmas trees
Speaker 2: and getting people to buy more.
Speaker 4: Yes, but dairy's a different one. Dairy we're talking about
Speaker 4: a six hundred million dollar annual budget, so you're taking
Speaker 4: at tax and dairy farmers and it was, you know,
Speaker 4: got milk is the famous thing. But they real My
Speaker 4: conversations with people is that didn't stimulate demand, or it
Speaker 4: didn't really work. So what I argue has happened is
Speaker 4: instead of trying to do advertisement, it's moved to financing
Speaker 4: junk science. A lot of this science over these minor
Speaker 4: digesters is being financed by these check offs, by the
Speaker 4: dairy chuck off. To me, it's filling the void as
Speaker 4: we privatize our colleges, universities of America, especially the land
Speaker 4: grants and all the country. The check off dollars have
Speaker 4: filled that void. And so that to means why the
Speaker 4: agricultural markets that partly have gotten so concentrated, is you
Speaker 4: have this whole pot of money collectively eight hundred billion
Speaker 4: dollars we don't even know, by the way, because USDA
Speaker 4: is atrocious that keeping track of it. There's tons of
Speaker 4: government accountability reports getting on them to do something. They
Speaker 4: don't do anything. But it's revolving door. So a lot
Speaker 4: of USDA officials go work at a check off, they
Speaker 4: come back. Secretary of Villsac did that. So between administrations,
Speaker 4: his job was he was an dairy export lobbyist. So
Speaker 4: his job was Canada has a supply management dairy system,
Speaker 4: so his job was basically gut it so we could
Speaker 4: dump our surplus cheese into their markets. But that me
Speaker 4: is such a key thing. So my dairy baron, I
Speaker 4: tell the story of how he actually first financed a
Speaker 4: lawsuit to in the check off because what he realized
Speaker 4: what happened with hogs in Iowa was he needs to
Speaker 4: have a branded thing or else he's going to die
Speaker 4: like the hog farmers. He tested out in Texas at
Speaker 4: the grocery store, hab like a bougie milk product, and
Speaker 4: he was upset, Why finance my competitor, this generic milk product,
Speaker 4: So he financed lawsuit Dennet and basically I tell the
Speaker 4: story of how he seemingly made peace with the check
Speaker 4: off and he was able to use some checkoff dollars
Speaker 4: to finance not only you know, these manure digesters, but
Speaker 4: also this branded drink he helped create called fair Life.
Speaker 4: If you got any GM in America, young men love
Speaker 4: it because it's super high protein content. If you got
Speaker 4: a plant fitness, it's just full of kids drinking that stuff.
Speaker 2: Something to replace celsium.
Speaker 3: Yeah, that sounds good. Yeah, that's that's my first thought.
Speaker 3: I was like, Oh, I'm going to try when tomorrow
Speaker 3: when I go to the gym. You mentioned that so
Speaker 3: much of the land in Iowa is not owned by
Speaker 3: Iowa anymore. You know, Like I said, I was born
Speaker 3: in Michigan. I lived for many years in Illinois, but
Speaker 3: I didn't want to stay in the Midwest. I wanted
Speaker 3: to come to New York City and be a professional podcaster.
Speaker 3: And I get like sentimentally, like I said, Oh, my
Speaker 3: idyllic family farm in Alligated in Michigan, it was so
Speaker 3: beautiful in the berries. But like, ultimately, like I didn't
Speaker 3: want to stay. You know, I never aspired to be
Speaker 3: a farmer. Like, how much of this is just like
Speaker 3: structural changes in people's preferences that are just sort of
Speaker 3: maybe even much bigger than food. And yeah, you know,
Speaker 3: we remember fondly these small farms, but the next generation
Speaker 3: doesn't want to stick around.
Speaker 4: I mean, that's a really key point to remember. And
Speaker 4: that's something I mean, I wrote this book over five years. Yeah,
Speaker 4: and the beauty of doing that is you write a
Speaker 4: little bit, you walk away, and we romanticize a Glorian
Speaker 4: pass a lot. Yeah. I don't want to go back
Speaker 4: to that new deal supply management system because in the day,
Speaker 4: I'm at the point now we junk the farm bill,
Speaker 4: take that money it's too corrupted put into conservation programs
Speaker 4: because every farmland is different. The way you do farmland
Speaker 4: connecticuts different than Hawaii than Iowa. Also, the growth of
Speaker 4: robotics in agriculture has been really underappreciated. You go to
Speaker 4: a farm show. Now, these things drive themselves. I mean
Speaker 4: they cost like six hundred thousand dollars and they're gonna
Speaker 4: happen before cars. So like most there's a very good
Speaker 4: chance that most Roe crops are going to be robotics
Speaker 4: very very soon. But to me, animals is the key
Speaker 4: thing here. I really want to put animals back on
Speaker 4: the land because the whole thing too to keep in
Speaker 4: mind is this model makes pretty bad tasting food. When
Speaker 4: I was writing this book, I was doing a little
Speaker 4: like I would do a milk tasting.
Speaker 2: This is how you get those steak officionados on board
Speaker 2: by saying you'll have more abundant, good quality meat by
Speaker 2: fixing the system.
Speaker 4: Oh like my wedding. My husband and I got married
Speaker 4: in Iowa, and I was insistent we had pastor meat
Speaker 4: and dairy. My mom's on a tow alve Irish Catholic,
Speaker 4: you know, tales all this time, and we serve pork,
Speaker 4: and the amount of people in my Iowa family is like,
Speaker 4: this is the best tasting pork. Was just like we
Speaker 4: kept hearing that, and it's just like, oh, you're used
Speaker 4: to like when animal sands inside the metal shuttle that
Speaker 4: needs corn from a ceiling, it's not going to taste
Speaker 4: as good as animal that does piggy things.
Speaker 2: So you mentioned scrapping the farmvillage just then what can
Speaker 2: be done at this point too, I guess reverse some
Speaker 2: of the structural decisions that have gone into producing America's
Speaker 2: agricultural system as it is now.
Speaker 4: Yeah, So one of the things that gives me hope
Speaker 4: is the movement to evs, electric vehicles and cars. It's
Speaker 4: going to kill ethanol. I think ethanol has been one
Speaker 4: of the most destructive things happened to the Middlewest. It
Speaker 4: actually pushed a lot of cattle farmers out, but you know,
Speaker 4: pushed them off their land. Instead of having cattle and pasture,
Speaker 4: they put in corn. And also, the thing to keep
Speaker 4: in mind is the single largest use of cornhouse ethanol.
Speaker 4: And that transition is going to happen fast. When it happens,
Speaker 4: and so how do we kind of start pivoting? So
Speaker 4: as you know, ethanol dies that we slowly phase out
Speaker 4: these industrial animal facilities, but animals back on the land.
Speaker 4: It's a good jobs program, you know, for rural America,
Speaker 4: because there's only so many animals one person can do.
Speaker 4: I think using school meals is a really good procurement
Speaker 4: way to like drive the supply chain. Like who does
Speaker 4: who doesn't want Wisconsin kids even drinking pasture milk? You know,
Speaker 4: stuff like that. And then what started this whole conversation
Speaker 4: over berries is that model of berry production is rooted
Speaker 4: in sharecropping and just ban that, like you can't.
Speaker 3: Explain more what is the specific berry model?
Speaker 4: So the berry model actually comes out chicken. I didn't
Speaker 4: even when I started writing this tournament. It's a tournament's system.
Speaker 4: So when the meat regulations were written in a century ago
Speaker 4: and response to the junkle and all that stuff, chicken
Speaker 4: wasn't written to the regulations, okay, because there wasn't. You
Speaker 4: didn't buy chickens at the store. You just had on
Speaker 4: in the backyard and you killed it. So this model
Speaker 4: comes out of the South. Where have you guys to
Speaker 4: find the trend system before I know? Or we need
Speaker 4: a new US? Yes, okay, so they call it the
Speaker 4: Southern model. If you're a chicken farmer in America, you
Speaker 4: don't actually own your bird. You're given the bird by
Speaker 4: the company, the feed toll it feed to use whatever.
Speaker 4: You basically babysit the bird. You then sell, you give
Speaker 4: it back to the company. They weigh it. You're paid
Speaker 4: on tournament systems. Whoever adds the most weights gets paid
Speaker 4: the most. So if Joe, you're not behaving badly, if
Speaker 4: I don't really like you as some company, I give
Speaker 4: you the run of litter, you get paid the lease.
Speaker 4: You know you're not making that much money. Also, you
Speaker 4: have a ton of debt. These stats are a little old,
Speaker 4: but it's like seventy percent chicken farmers on America live
Speaker 4: in poverty. And so you have this model take hold
Speaker 4: in the South with chicken production. And because of that,
Speaker 4: where you're shifting all the externalities and really abusing farmers
Speaker 4: in labor, chickens really cheap to produce, so it gains
Speaker 4: massive amount of market share in the protein markets. Well
Speaker 4: instead of us stay, instead of forcing chicken to behave
Speaker 4: like the other meats, what we see as a race
Speaker 4: to the bottom. Arding the eastern shore of North Carolina,
Speaker 4: the hog markets in the poor black areas starts doing
Speaker 4: this model. To me is the best example of structural
Speaker 4: racism in the food system is you have these poor
Speaker 4: black areas North Carolina full of these industrial hawk facilities,
Speaker 4: and because of the water table levels North Carolina, they
Speaker 4: can't and usually and I where they take them manure
Speaker 4: and they inject it into the field, and North Carolina
Speaker 4: they spray it in the air. You have all these
Speaker 4: stories of like you know, poor black churches having to
Speaker 4: repeat their steeples every few years or they're dry. You know,
Speaker 4: you can't do laundry outside, dry it out play. So
Speaker 4: this model then replicates across the food system, most notably
Speaker 4: the berries. And I tell this story how the Drisco
Speaker 4: brothers were They were smart to realize the rise of Walmart.
Speaker 4: Of Walmart wants one company to do four berries year round.
Speaker 4: So what they start doing is so most berries, berries
Speaker 4: are Strawberries are really fickle. Historically a lot of them
Speaker 4: are grown on the California.
Speaker 2: Coast, So they grow them on the coast, and they
Speaker 2: realize that it's more efficient to have that sort of
Speaker 2: outsourced labor.
Speaker 4: Right outsourced labor, Well, you have the cost of housing
Speaker 4: increasing in California. That's a very short growing window on
Speaker 4: the coast. Historically it would move up that I cannot
Speaker 4: remember if it moves up or down the coast, but
Speaker 4: it would. The production region was shifted from city to
Speaker 4: city for the berries. Well, they started moving production to
Speaker 4: like Morocco, to Baja California, to the point now where
Speaker 4: Driscoals grows berries on every single continent except Antarctica. But
Speaker 4: part of it is by moving off short there's less
Speaker 4: labor standards, there's less environmental standards. I spent a lot
Speaker 4: of time in the book talking about how a lot
Speaker 4: of berry production is in Baja California, in a region
Speaker 4: that is just as dry as Death Valley. They drained
Speaker 4: the aquifers, they and then they build a decalization plan
Speaker 4: on the ocean. A lot of these are indigenous workers,
Speaker 4: and no one really knows what goes on in these places.
Speaker 4: I mean, there's these you see stories here and there
Speaker 4: enough where it's like the tip of an iceberg where
Speaker 4: you see like I mean, there's a story in Reuters
Speaker 4: a few years ago how the gangs in Mexico gone
Speaker 4: to avocados. You just don't know what's going on when
Speaker 4: these supply chains get that long.
Speaker 2: This is part of the bitcoin avocado correlation conspiracy that
Speaker 2: the reason that correlation exist or used to exist because
Speaker 2: it's broken down, has something to do with financing Mexican mafia.
Speaker 3: I just have one last question. But since you brought
Speaker 3: up Walmart, and of course for years and even still,
Speaker 3: but for years, the sort of grocery store system in
Speaker 3: the US was famously fragmented. There really weren't any sort
Speaker 3: of dominant national chains. There were, you know, regional chains obviously,
Speaker 3: just sort of big picture like, what is the existence
Speaker 3: of this dominant nationwide grocery store, biggest grocery store company
Speaker 3: in America? What are the ripple effects in terms of
Speaker 3: you know, you mentioned berries, but in terms of creating
Speaker 3: concentration of power elsewhere across the food supply chain from
Speaker 3: the existence of this one powerful and seller.
Speaker 4: Oh, the Walmart chapter, that might be my favorite chapter
Speaker 4: of the book. It's twice as long as any other chapter.
Speaker 4: I mean, I also just love grocery stores. Let me
Speaker 4: start there, okay, but I also never thought of Walmart
Speaker 4: as a grocery store when I started this book, even
Speaker 4: though sixty percent of its sales grocery. I love this
Speaker 4: little anecdote where Sam Walng got the idea from Walmart
Speaker 4: from a French company car for if it have been
Speaker 4: to Europe, you see these car wars everywhere he saw
Speaker 4: on vacations, like I'm gonna copy that because it gets
Speaker 4: you in the story. You need grocery to every few
Speaker 4: days Walmart. At the same time Walmart's starting to rise,
Speaker 4: you see this whole framework Robertson Patman at collapse, These
Speaker 4: basically competition protections in the system between suppliers and vendors
Speaker 4: like Walmart. And so as Walmart's market power gets bigger,
Speaker 4: it's able to basically squeeze its supplier more and more.
Speaker 4: And to me, this little nugget I found. I love
Speaker 4: reading trade press and like these little regional business publications.
Speaker 4: You find the best nuggets. In Northwest Arkansas, there's a
Speaker 4: business publication I spend a lot of time with and
Speaker 4: they report how Walmart has a rule with its vendors
Speaker 4: then you cannot get more than thirty percent of your
Speaker 4: sales from Walmart, which I didn't understand at first. I
Speaker 4: had to ask around to the people in the grocery industry,
Speaker 4: why do they have that rule? And that's a supply
Speaker 4: chain risk management rule. Walmart knows is such a vult
Speaker 4: sure that it puts it more than thirty percent of
Speaker 4: your market. You know, sales come from Walmart. You're putting
Speaker 4: the company in the you know, into a fragile space
Speaker 4: at the same time too, So that really puts a
Speaker 4: lot of power in Walmart's hands. I kind of compare
Speaker 4: it to like supply and command. My husband rejected this idea,
Speaker 4: but I really want to kind of frame this around
Speaker 4: like the closest thing we've ever had to like an
Speaker 4: American Paula Burero, He's gonna laugh when he hears that.
Speaker 4: But the Walmart family, their power is just I mean,
Speaker 4: they're the richest family in the world. And this whole
Speaker 4: chapter's framed around Walmart and Amazon had been in this
Speaker 4: epic battle centered in grocery the last few years, and
Speaker 4: I kind of came away thinking Walmart's winning, and think
Speaker 4: about the Walmart To keep in mind is Jeff Bezos
Speaker 4: only owns like ten percent of Amazon. The Walmart family
Speaker 4: owns majority of Walmart. I mean, they've been selling some
Speaker 4: shares lately. I think it dipped finally below fifty percent.
Speaker 4: But Walmart's goal is like, when Walmart comes to town,
Speaker 4: you don't buy more milk, you just shift your production.
Speaker 4: So Walmart has this gold basically capture every dollar of
Speaker 4: America is under class. You know, they're putting these banks
Speaker 4: inside Walmart's, They're putting these healthcare clinics inside Walmart's. But
Speaker 4: they're also making vertical plays into the food system. They
Speaker 4: just announced two weeks ago that they're building their third
Speaker 4: dairy plant in Texas. They're making a big beef operation
Speaker 4: in the plains. And from my conversations with people is
Speaker 4: Walmart was so kind of fed up with being gouged
Speaker 4: by the other barons that it made these is making
Speaker 4: these vertical plays, so it has an insight in the
Speaker 4: cough structure. So that way when it bargains with companies
Speaker 4: and knows like no, no, no, don't don't toy us around.
Speaker 2: Yeah, tired of barons, so it became a baron and
Speaker 2: baron Joe, you and I went to Bentonville in Arkansas,
Speaker 2: and you definitely get a sense of Walmart's power in
Speaker 2: that particular town. Austin, that was so interesting and fascinating.
Speaker 2: Thank you so much for coming on all lots and
Speaker 2: listing your barons behind America's agricultural concentration. Thank you so much,
Speaker 2: Thank you for having me on.
Speaker 4: Jo.
Speaker 2: I want to ask if you enjoyed that conversation, but
Speaker 2: that doesn't seem like the right question. Let me ask,
Speaker 2: are you as are you going to be walking into
Speaker 2: grocery stores muttering about antitrust and concentration and the illusion
Speaker 2: of choice like I am Now.
Speaker 3: Maybe I think probably to some extent, I'm definitely going
Speaker 3: to pay more.
Speaker 2: You're gonna be dancing down the aisles going this steak
Speaker 2: is on sale.
Speaker 3: Well, so my takeaway from this conversation is that a
Speaker 3: lot of it is really about values. We can have
Speaker 3: a calorically abundant, hyper efficient food supply chain where maybe
Speaker 3: it's not the best tasting meat, but a lot of
Speaker 3: people can afford steak and hamburger meat and even fresh
Speaker 3: berries on a way that may not have been the
Speaker 3: case twenty thirty or forty years ago. But there are
Speaker 3: clearly environmental externalities. Someone is going to pay the cost,
Speaker 3: and there are big structural changes to society in the
Speaker 3: sense that do we want a handful of companies, say
Speaker 3: owning a huge swath of the land in Iowa or
Speaker 3: Michigan or elsewhere, Like, these are pretty legitimate debates to
Speaker 3: be having, and what is the optimal trade off and
Speaker 3: what is the optimal mix. So I do think there
Speaker 3: is a lot of fertile ground for figuring out, like, well,
Speaker 3: where do we want to like calibrate that dial.
Speaker 2: I think that's a totally fair way of putting it. Absolutely,
Speaker 2: it's a value judgment about what kind of system you
Speaker 2: want to see. I do think there is a tendency,
Speaker 2: not just with agriculture, but we talk about this all
Speaker 2: the time in finance, this idea that you kind of
Speaker 2: think certain things are inevitable, like the existence of money
Speaker 2: markets or euro dollars, that those kind of just happened,
Speaker 2: but of course they were the product of conscious decisions
Speaker 2: and there were reasons to do them. Same thing with agriculture.
Speaker 2: Something like the farm bill might have made sense when
Speaker 2: it was first proposed, maybe it doesn't make as much
Speaker 2: sense now. One thing I think about now, though, is
Speaker 2: I guess the experience of the past few years of inflation,
Speaker 2: so much of which was in food prices, and I
Speaker 2: can kind of see, on the one hand, okay, maybe
Speaker 2: that leads us to reevaluate things like antitrust, So maybe
Speaker 2: people start to wake up to the idea that, oh, well,
Speaker 2: companies are pushing through price increases because there's not as
Speaker 2: much competition as there used to be. On the other hand,
Speaker 2: if we want to get really cynical about it, it
Speaker 2: seems like people just really hate high food price, yes,
Speaker 2: and so you could also see people going like, well,
Speaker 2: we want to make those prices even lower, So let's
Speaker 2: have more efficiencies, let's have bigger supermarkets, let's do less
Speaker 2: environmental protection because that's expensive. So it feels like it
Speaker 2: could go either way totally.
Speaker 3: And you know, you mentioned, you know, or in the
Speaker 3: early part of the conversation, this gap between you know,
Speaker 3: fresh foods and fresh vegetables versus processed foods, and you know,
Speaker 3: on some level, it's not surprising, right Historically, I mean,
Speaker 3: if you went back a long time, there were like
Speaker 3: mass famines and food would cost infinite amount because the
Speaker 3: food did not exist. And so to some extent, we've
Speaker 3: reduced that volatility in the price of food by essentially
Speaker 3: reducing the amount that the end product is actually directly
Speaker 3: related to a food commodity at all. And so, you know,
Speaker 3: if you think about a Fredo there's some amount of
Speaker 3: corn in there, but mostly it's the process of an
Speaker 3: industrial process. But you don't have these big, you know,
Speaker 3: swings in the price of Freedo's the way you're going
Speaker 3: to have in swings in the price of corn, because
Speaker 3: it's the end product is only partially related to the commodity.
Speaker 3: There are some nice things about that, right Like, that is.
Speaker 2: The most impassioned defense of Freedo's I've ever heard. It
Speaker 2: actually makes a lot of sense.
Speaker 3: Right Like, it's like it's sort of like built in
Speaker 3: a built in price. But I do think a lot
Speaker 3: of these things, like I didn't want to, you know,
Speaker 3: stay in the Midwest. I was never really like there
Speaker 3: was no prospect of me ever, I don't think working
Speaker 3: on my grandmother's farm. But I think a lot of
Speaker 3: these like strike about like deep questions about our value,
Speaker 3: the values at a society. And I do think it's
Speaker 3: interesting that there is this sort of change, maybe a
Speaker 3: foot in the politics of food that is sort of
Speaker 3: maybe bipartisan or trampeological.
Speaker 2: Well that's my big question, because you feel like a
Speaker 2: lot of the environmental concerns, like depending on how you
Speaker 2: couch them, could have bipartisan appeal. So you know, there
Speaker 2: are a lot of people in Republican states that enjoy
Speaker 2: going out to the great outdoors and presumably don't want
Speaker 2: to see a manure lagoon when they do that, and
Speaker 2: so you feel like it could have wider appeal, just
Speaker 2: depending on how it's sort of presented. But Joe, you
Speaker 2: should come visit my place in Connecticut. I've got I've
Speaker 2: invited me.
Speaker 3: You probably have I have.
Speaker 2: It's just hard to get out there. I've got fruit trees, okay,
Speaker 2: I've got raspberries great. I've got strawberries which we'll be
Speaker 2: ready in June. And uh, I'm planning blueberries right now.
Speaker 3: Bring some in and I'll give it so I can
Speaker 3: give them to my kids and save some money.
Speaker 2: I brought you tomatoes last year, but I'll bring us
Speaker 2: stropperlicious here. All right? Shall we leave it there?
Speaker 4: Let's leave it there.
Speaker 2: This has been another episode of the Odlots podcast. I'm
Speaker 2: Tracy Alloway. You can follow me at Tracy Alloway.
Speaker 3: And I'm Jill Wisenthal. You can follow me at the Stalwart.
Speaker 3: Follow our guest Austin Ferrik. He's at Austin Frerek. Follow
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