Here's the Beef: How NAFTA Kissed the West Goodbye
Over the past 18 months the price of beef has dropped by as much as 50 percent. If hamburger eaters are exulting, they should also be aware that with this fall in beef prices has come a crisis for the nation's small ranchers as grave as that which put 80,000 of them out of business in the early 1980s.
As the small ranches go under, their land is either picked up by agribusiness giants like J.R. Simplot or millionaires playing cowboy like David Packard, or subdivided for the dreary ranchettes that disfigure southern Colorado.
Blame NAFTA. With the signing of the trade agreement came truckloads of Mexican calves, headed for the feedlots and slaughterhouses north of the border. The influx of these Mexican calves has produced a meat glut in the United States, driving the prices down to levels disastrous for marginal operations on the arid grasslands of the Interior West.
In an effort to help out the beleaguered ranchers the Interior Department has lowered the fees it charges ranchers to graze their cows on federal lands from $1.97 per cow per month in 1993 to $1.37 in 1996--the lowest level in 20 years. This fee amounts to a generous $100 million a year subsidy to public-lands ranchers, and is roughly one-fifth the amount charged on private lands. But in the wake of NAFTA even these subsidies won't save many of the small ranchers, who have always faced dire financial pressures.
The economics of small ranching on federal lands work as follows: In order to graze cattle or sheep on federal lands, ranchers must own what's called a base property. The base property must be at least 40 acres in size and situated adjacent to lands held by the Forest Service or Bureau of Land Management. The grazing permit allows the rancher to lease hundreds of thousands of acres of public lands at below-cost rates. The value of the ranch--and hence the approval of the bank or insurance company financing his mortgage--depends entirely on his access to publicly owned grass and water. Even if the rancher wants to reduce the number of cattle he's running to ease the stress on the grasslands, the banks will insist that he continue with the highest stocking rates permitted by the feds, since he will thus be a better risk. This is a primary reason America's rangelands are in such an impoverished ecological condition.
When the feds have tried to reduce the number of cattle on the public range to protect fragile riparian habitat for endangered trout and salmon, the U.S. government has been sued for breach of contract by the banks, notably the Farm Credit Bank of Texas, which holds half a billion dollars in loans that are tied to federal grazing permits.
As the falling beef prices beset small ranchers, the banks will simply foreclose on their property, either subdividing it or selling entire parcels to agribusiness or to mining companies. Even though the whole purpose of subsidized range-leasing was to help the small rancher, these days only 3 percent of the leasers hold 40 percent of all the grazing land leased from the U.S. government. The small rancher is giving way to the big corporation. This has yielded huge concentrations for companies such as Simplot, which holds a million acres in grazing rights on public lands, or the Metropolitan Life Insurance Company, which control 800,000 acres of public land, or Sierra Pacific Resources, an oil company, which has 600,000 acres in California and Nevada.
This trend toward consolidation is accelerating rapidly. It recalls the days of the American Cattle Trust of the 1870s, a ranching syndicate modeled on John D. Rockefeller's Standard Oil Trust. The American Cattle Trust consisted of a handful of ranchers and meatpackers backed by the railroads and English banking houses. Their goal was to strip western lands away from the small ranchers and homesteaders. Before succumbing to internal conflicts, a string of extremely harsh winters, and relentless overstocking of the ranges, the American Cattle Trust ended up controlling 80 percent of the grazing lands in states like Wyoming, Colorado, and Montana. The trust ran their vast herds hard on the land, leaving behind a permanently degraded range.
The new combination of interests consists of industrial agriculture giants such as Agribeef, Inc.; real estate developers; oil companies such as Chevron; and mining corporations such as Phelps Dodge. The key resource here is water. It has always been so. In the arid West, all political power flows from those who control the water. Traditionally, this power has resided with the rancher, whose grazing allotments encompass the mountain headwaters of the great rivers of the West. This is the main reason ranchers--who account for less than 1 percent of the population of western states--have received such devout attention from Congress.
Watching the impending ruin of many small ranchers with a keen anticipation are the mining companies. As the fortunes of the ranchers decline, those of the gold companies are on the rise. Small ranchers were always the mining companies' most irksome foes. Gold mines, in particular, consume enormous quantities of water. But ranchers have held the water rights on public lands, and have represented the most effective grassroots opposition to the mining companies and their noxious practices. Ranchers can certainly ravage the land, but big mining companies make even worse messes and end up with title (at $5 an acre, courtesy of the 1872 Mining Law) in the bargain.
Ironically, ranchers, under assault from environmentalists for destructive grazing practices, have reflexively aligned themselves with some of the more vicious incarnations of the Wise Use movement, such as the Colorado-based People for the West!, long funded by mining and
oil interests. These companies were glad to have the ranchers on their side, since the rancher puts a publicly pleasing, almost mythological face on the nefarious motives of their political movement.
The ranchers, the Wise Use groups, and the corporations that back them fanatically pushed for passage of NAFTA in 1993. It is worth noting that many of the mining companies now preying on western mountains, rivers, and deserts are Canadian firms (such as Echo Bay, Noranda, and Barrick) devoted to unrestricted transborder operations.
Some of the big environmental groups are also cheering. Anything that does down a rancher is okay with them. That's one of the reasons groups like the National Wildlife Federation and Natural Resources Defense Council shilled for NAFTA--they said the agreement would push inefficient industries out of business. Let them wait till the Interior West vanishes under ranchette driveways, toxic cyanide piles from heap-leach gold mining, or ends up in the hands of J.R. Simplot, now 92 years old and as of November 1995 a major stockholder of Boise-Cascade, the largest purchaser of timber from the national forests.
Into this fray now strides Senator Pete Domenici (R-N.M.), brandishing legislation that will lock in many of these trends. Domenici claims his bill is meant to be the salvation of the family rancher. In reality it will seal their fate and doom the public lands at the same time. The bill exempts ranchers from compliance with environmental laws and even goes so far as to exclude the public from access to national forests leased for grazing. The measure also mandates that ranchers keep a maximum number of cows on their allotments, a disastrous scenario that during times of glut will merely feed the foreclosure frenzy. This is not surprising. Domenici, the chairman of the Senate budget committee, has long labored for the banking and mining industries. Among his biggest campaign contributors are Phelps Dodge and the Texas Farm Credit Bank.
So the bills for NAFTA are coming due. Under its stipulations polychlorinated biphenyls (PCBs) are now being trucked into the U.S. from Canada and Mexico for the first time. Imported Mexican tuna, caught with fishing techniques deadly to dolphins, will lead to the probable destruction of the dolphin-safe tuna labeling legislation passed in the U.S. in 1989. Canadian forests are being logged at a vicious pace at subsidized rates by multinational corporations such as James River, Champion International, and MacMillan Bloedel. This lumber is being dumped on already depressed U.S. markets, resulting in the loss of 35,000 mill jobs. Lead-spewing trucks from south of the border are now legal, thanks to a ruling from the GATT tribunal.
Claims of job gains north of the border are transparent fictions. South of the border two-thirds of the Mexican population are far worse off than they were four years ago. The environment? It has been ravaged from the Yukon to Chiapas.
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