Shining a Light on Local Farming:

Consumers called key to reversing mega-farm trend

By Jennifer Gish, quotes Mary Hendrickson, PhD

York Dispatch News

March 7, 2004

Online at: http://www.yorksundaynews.com/Stories/0,1413,137%257E30717%257E2002021,00.html

Sunday, March 07, 2004 - Paul Sauder leaves egg farming to the farmers.

For the most part, the president of Lancaster County-based Sauder's Eggs considers himself a marketing guy.

He designs his own packaging. Created a line of ready-made hard-boiled eggs in three flavors. And persuaded a couple of grocery stores to improve eggs' appeal by stationing several dozens in their produce departments, flanked by tantalizing photos of vegetable omelets offering themselves up for dinner.

So when one of his buyers requested organic eggs, he contracted with some local organic farmers to produce them.

And when customers began questioning how chickens were being treated, Sauder had the farms supplying him reduce the number of hens housed in each cage.

"If there's a need out there and people are willing to pay for it, we figure out ways to do it," Sauder said.

Nationwide, the pressure to provide uniform, low-cost ingredients and meet the demand for convenience and prepackaged foods has led the agricultural industry to look for ways to improve efficiency to turn a healthy profit.

In some cases, farms began using antibiotics and growth hormones to speed live- stock production. Mega-farms -- called Concentrated Animal Feeding Operations -- became a common part of the industry.

But in the process, thousands of farms across the nation merged or died off, leaving a small group of suppliers who now dominate the market and keep squeezing the remaining independents.

According to a study by the University of Missouri, four companies control 81 percent of the nation's beef packing industry and nearly 60 percent of the pork business. About 260 companies produce 95 percent of the eggs consumed in the United States, down from 2,500 egg producers in the 1980s, according to the American Egg Board.

Local producers such as Sauder are battling back with marketing campaigns, pressuring grocery chains to buy local, and putting stock in a new state program that should make it easier for consumers to find food raised in Pennsylvania.

They're trying to make money at a time when the gap between what the farmer receives for his product and the price consumers pay has widened dramatically, according to the U.S. Department of Agriculture.

Failed rescue: Federal legislation like the Freedom to Farm Act of 1996 was supposed to save small agriculture by providing $73.5 billion in federal funding to farmers for expanded trade programs, marketing and rural development, said Mary Hendrickson, associate professor of rural sociology at the University of Missouri.

But she said it subsidized corporate agriculture instead, better positioning the companies to drive smaller farms out of business.

For example, two of the nation's biggest food producers were among the top five federal subsidy recipients in 2002.

Cargill Inc., which ranks among the four largest beef, pork and turkey packers in the United States and is the No. 1 soybean and corn exporter, received nearly $11 million in USDA subsidies in 2002.

While Pilgrim's Pride, the third largest broiler chicken and fourth largest turkey producer in the nation, received $15 million in federal farm subsidies.

Yet in a briefing paper on food market structures, the USDA warns that "high concentration may harm agricultural producers and consumers, without providing offsetting benefits to society."

Consumers drive trend: Russell Redding, executive deputy secretary of the Pennsylvania Department of Agriculture, told public officials at the Farm Show last month that consumers are responsible for the trend toward mega-farms.

"The reality is you and I in our purchasing decisions every day are driving the change to CAFOs," Redding said.

Prepackaged food producers require massive quantities of uniform ingredients, he said, which lends itself to large-scale production rather than small, local farms.

So if consumers want to reverse the trend, Hendrickson said, they must change their eating habits.

"Consumers can vote with their dollar, but they can also demand better," she said.

People need to demand government reform, she said, such as enforcement of anti-trust laws and food-safety regulations that don't favor large-scale enterprises.

She said some in agriculture claim consolidation is simply progress, and the movement in support of local farms promotes antiquated agriculture.

"It makes me cringe every time I hear, 'Oh we're going to go back in time,'" Hendrickson said, adding that new varieties of crops that naturally resist disease and drought without the use of chemicals and other additives are being developed all the time.

Newer doesn't always mean better, she said.

Old becomes new: Egg producers actually went back in time when they reduced the number of hens housed in each cage.

Producers who initially balked at recommendations to allow for more cage room soon discovered that roomier quarters reduced stress in the chickens. The animals were sick less often and produced more eggs than before, Sauder said.

Driven by consumer concerns, the industry group United Egg Producers recommended allowing 67 square inches of cage space per bird, rather than the standard 48 square inches. The change reduces the number of birds in each cage from as many as 10 to seven.

Despite reservations, more than 80 percent of egg manufacturers have participated in the voluntary national program and can stamp their products with the "Animal Welfare" seal.

But despite consumer demands, the grocery market hasn't always been friendly to local producers.

Some major grocery chains have contracts with their suppliers, which prohibit the stores from selling competing local products, said Aaron Heindel, general manager of H.E. Heindel and Sons' farm in Chanceford Township. The farm is hoping to have its Hope Acres dairy products available in small grocery stores by the summer.

Sauder said pricing is often the biggest obstacle to putting local products on store shelves. He said many grocery store and restaurant owners aren't willing to pay even two to three cents more per dozen for his eggs.

So the president of the third-generation, Litiz-based egg business tells them about Pennsylvania's food-safety program for egg producers, which requires farmers to monitor environmental conditions in the chicken houses, disinfect between flocks and control rodents.

Small advantages: He explains that the Pennsylvania Egg Quality Assurance Program ranks among the most stringent food-safety programs in the country, and has reduced the frequency of salmonella outbreaks by more than 70 percent since the program started in 1992.

He also reminds restaurant owners that other eggs may be a little cheaper, but it only takes one case of salmonella to put a restaurant out of business.

Take the Chi-Chi's case earlier this year, he says, when the restaurant chain lost customers because some green onions from Mexico carried Hepatitis A. Last week, the chain announced it was closing 26 restaurants in part triggered by a slump in business after the outbreak.

His eggs, he argues, are also more fresh than those shipped in from Iowa or Ohio, the other top egg-producing states. He said he once saw out-of-state eggs on a supermarket shelf that were 97 days old, compared to his eggs, which typically arrive in the store a few days after they've left the chicken house.

Armed with these arguments for his product, Sauder successfully convinced two local grocers -- Weis Markets and Shurfine Markets -- to sell Sauder's Eggs. The company also processes the store-brand eggs for both retailers.

In an effort to make their products more appealing to grocers, the Heindels recently devoted $100,000 to marketing research and developing new packaging so they can get their milk onto big retailers' shelves. They stress their natural production methods and the family's agricultural tradition by using their labels to explain how their grandfather started the farm.

Sales at their Brown Cow Country Market along the southern stretch of Route 74 are strong, Heindel said, but not substantial enough to cover the expense of running their own manufacturing and bottling operation.

Admittedly, he said, their 3,000-cow farm can afford $100,000 in marketing and development work, while a smaller dairy could not.

But if Hope Acres is successful, it may able to use smaller farms as suppliers and allow those farmers to make a living while contributing to the local economy.

Help for local farms: Sauder said he expects the state's new Pennsylvania Preferred program, which allows shoppers to identify local products more easily, to increase business and provide new opportunities for all Pennsylvania farmers.

Pennsylvania Preferred was initiated by a group of chefs in the Philadelphia suburbs who wanted to support local agriculture.

The state Department of Agriculture picked up on the program as a way to meet consumer demand for locally produced food and to give Pennsylvania farmers a way to capture more control in an increasingly consolidated industry.

For instance, Pennsylvania is well known for dairy production, yet the two biggest milk suppliers here are Land O' Lakes and Dairy Farmers of America, said Deputy Secretary of Agriculture Cheryl Cook.

On one hand, Pennsylvania farmers who supply milk for those cooperatives don't incur as high production costs, but on the other hand, much of the profit goes to the out-of-state companies and farmers don't have much control over their own farms, Cook said.

Giant and Weis were among the first local grocery chains to sign up for Pennsylvania Preferred, Cook said, and as participants have promised to carry at least 50 items with the Pennsylvania Preferred label and promote those products in their stores.

But there's more to the program than product labeling. The department will also start "produce terminals" where Pennsylvania growers can have their produce weighed and packaged. The terminals then serve as a distribution center for grocery stores.

Interest in organic foods, safety concerns and better marketing of local products on the part of farmers encouraged the state to invest in Pennsylvania Preferred.

People also worry about preserving the rural landscape here, Cook said, particularly in southeastern Pennsylvania, where farms are disappearing at an alarming rate.

A recent study revealed that more than 90 percent of Pennsylvanians polled said they would buy local and state products if they could be easily identified.

And the majority said they'd be willing to pay anywhere from 5 percent to 10 percent more for those products if they were supporting local farmers, she said.

Pennsylvania Preferred will be running full force by July, Cook estimated, and the future of agriculture may be told by its success.

"This whole thing really depends on consumers to follow through on what they're telling us," Cook said.