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04.20.2020

J.D. Scholten on Coronavirus in Iowa

On Sunday I spoke by video chat with my friend J.D. Scholten, who is running for Congress in Iowa's 4th district. J.D. is a retired baseball player who rose to national prominence in 2018, when he came within three points of unseating Steve King in what had until then been considered a safe Republican district. Sioux City, where J.D. lives, is just down the river from Sioux Falls, South Dakota, where nearly 650 workers have been diagnosed with COVID-19 at a Smithfield pork processing plant. I asked J.D. to talk a bit about the rural economy, the role the giant agricultural companies play, and how his district is preparing for the pandemic.

Full disclosure: I fundraise for J.D.'s campaign, and I'm going to ask you for money at the end of this interview!

How are things going in Iowa? For a little while you were at the intersection of three states that didn't even have a state of emergency. What's the situation like now?

Out of the three states I think South Dakota is the one that is completely being mismanaged. We see this with the Smithfield plant in Sioux Falls. I believe last night they were reporting 650 people who tested positive for COVID-19 just from that plant alone. A high school classmate of mine who is a nurse in South Sioux City, Nebraska, just across the river, messaged me last night to say they had 19 new cases.. You can tell it's just starting. And as I’m talking to you, an alert popped up that we had nine new cases in our county today. So it's just starting to come here.

A weird thing about being in the tri-state area is that we have three different governors saying three different things. Our head is on a swivel. Just a week or two ago, you could still dine in at restaurants across the river. It was probably one of the few places in America you were still allowed to do it.

Because it's a rural area, I relate it a lot to how music would take a while to get here when I was growing up, so we were stuck listening to Richard Marx when everybody else had moved on.

Don’t you say a word against Richard Marx! He went to my tiny school.

No no, I love him! My sister and I joke that every time we come home, there’s Richard Marx on the radio.

We're at a crossroads moment now when the pandemic is starting to get politicized. You live in a Republican leaning district—how are people approaching this crisis that’s on the horizon? Do they think it's really going to affect them?

It's a mixed bag. What really did it was right away when major-league baseball in the NCAA canceled everything. That's millions and millions of dollars. That really drew people’s attention. We have certain leaders here—there's a church pastor who's pretty vocal, for example, he's "anti" a lot of different things. He still wants to hold church services here, have people show up in person and everything.

If you drive past Menards (for folks who don't know, it’s a big local hardware store like a Home Depot), their whole parking lot is completely full. It's weird. Because it's more rural of an area, and we're not on top of each other, people feel a sense that it’s okay to do things like go to the grocery store, go here or go there.

A lot of people still go to work, but when they come home, their social life is completely gone. I think there’s an extra layer of frustration and some degree of depression as well that comes from that.

You mentioned the Smithfield plant. One of the striking things about the reports is the sheer number of employees who work there to begin with. Can you tell us what these places are like and how this economy works?

When my grandparents were thriving on our farm, which is 250 acres, they had livestock and they had row crops. It was pretty basic at the time. In the 70s there were almost 10,000 slaughter houses in the US. A lot of local ones. What we're seeing now, and this is why I talk about antitrust so much, is concentration. If you look in the hog industry, 66% of the market is controlled by just four companies. With beef, those giant companies control 85% of the market.

Any time you have above 50% market share with four or fewer companies, that's considered a monopoly. These are heavily market consolidated industries.

Because we have so few of these operations, they are big, and they either work full tilt or not at all. There's no middle position. You can’t go to three on a scale of one to ten all of a sudden. At most of these factories, it’s either zero or 100%.

In order to slow down production from hog farmers, we would've had to have taken steps 10 months ago. For cattle I think it's a little bit longer, maybe a two year lead time. So here's all these hogs that are ready to be slaughtered, and there's not a market for them now. Once that shuts down, I don't know if it's Sioux City or other plants, but everyone’s already running at max capacity. They just want to get ‘em in, get ‘em in, get ‘em in. So that’s one issue were having right now, is what do we do with all these animals that are ready for slaughter.

And these meatpacking plants, they're kind of three steps: the buying, the processing and the selling. So one thing we saw when everyone on social media was abuzz about places running out of toilet paper, meat was also flying off the shelves. The retail price of meat went up. So you saw the price of meat go up, and the supply all leave. But farmers, who have been hit hard because of market consolidation, are being squeezed on the input side, it's being dictated to them how the animals are being raised, and then they're being dictated to on the market side. They didn’t see any of these windfall profits.

All along the way, you see the farmers being squeezed. What we saw especially in cattle is that farmers and ranchers weren't getting a very good price, in fact the prices went down when the demand went up. The laws of supply and demand should've been there. The farmers should be making a decent profit right now. But because of the concentrated power of the ag monopolies, farmers are being squeezed instead.

If I am a hog farmer and I have animals ready for slaughter in the slaughterhouse I'll take them does that mean I'm losing money out of pocket keeping them and feeding?

That’s right. And you only have a short window before they get too big. There's a lot of factors.

What we're seeing in the dairy industry is that big multinational corporations are dumping about 1,000,000 gallons of milk every day. Schools aren’t open right now, which is a lot of their market. The supply chain is highly optimized and rigid. If there's any interruption, it's very hard for them to be flexible. They are not resilient. Even before COVID-19 we needed a more regional and more localized food system.

Here in the fourth district, we’re the second most agriculture producing district in America. But at the same time, we only have two farm-to-table restaurants. Sioux City is the biggest city in a tristate area surrounded by agriculture, and yet we don't have a single co-op or a farm-to-table restaurant. It's kind of mind blowing.

Meanwhile, our farmers aren't making a dime, and our small towns are being gutted. Dollar General is coming and undercutting our local grocer. If they won't provide fresh meat or fresh produce, and farmers aren’t making a dime, you have to wonder—who are we doing this for? That's one reason I'm really hoping there's a spotlight on rural America because of this concentration, because instead of having a bunch of localized companies now there's just one big one in Sioux Falls.

In Denison, a meatpacking town in my district, they used to have three plants running, very manageable, sustainable, but they're down to just one. There's not just one easy fix with this. Because there's fewer companies, there's fewer jobs. As a result, the money just gets sucked out —it doesn't stay in the community. That's the huge issue especially with Dollar General who are undercutting our independent local grocers. That money goes to their headquarters in Wall Street. It doesn’t stay in Iowa. An employee at Dollar General makes eight or nine bucks an hour, and then they have to go on government subsidy for health care and other basic needs. That's not adding to our society.

What impact is the pandemic having on small business? Is any of the relief money getting out to the towns? People were already having a hard time before this happened; what does it look like now?

In rural America, especially this district, we still haven't recovered from 2008. That's the scary part. The first-come, first-served Paycheck Protection Program (PPP) of $349 billion was meant to ease the financial burden for the nation’s small businesses owners, who are the backbone of our economy.

[Businesses could apply for up to 250% of their monthly payroll: If your payroll is $100,000 per month, you could apply for a $250,000 loan. The loans would be forgiven if 75% of the money went to pay employees.]

When the program was set to begin, many banks were late to open the portal to collect applications due to delayed guidance from the Treasury Department. Folks reported technical glitches, sites reaching capacity, and little feedback and instructions.

At the end of last week, the program was already out of money. There are numerous accounts of small business owners applying multiple times for a loan and still not getting their funding. Big banks favored their wealthiest clients. According to COVID Loan Tracker, fewer than 6% of applicants have received their PPP loans. There's a lot of frustration that we ran out of money so fast.

I know a lot of people have been having issues with their personal $1200 check that is in the process of coming or was supposed to come. There just doesn't seem to be a plan. That's the biggest issue we face-an absence of leadership. With agriculture, what we've seen so far in rural America is that they gave out a chunk of money without any oversight.

So basically the Secretary of Agriculture, Sonny Perdue, gets to say this money is going to go here, and that money is going to go there. Trump announced his Reopening Council, and he’s filled it with all these concentrated monopolies.

We have a choice right now: we can either level the playing field and help the farmers out, or we're going to accelerate market consolidation and give more power to the monopolies. To be honest, I don't have much faith in DC leveling the playing field right now.

Were you surprised that Congress sent themselves home?

I wish there were options. There should be something in place so that in a time of emergency, in a time of a global pandemic, maybe they can vote from home or have an option to do something. I don't know. Zoom wasn’t here when George Washington and all those folks got together and decided to create this nation.

One thing that folks might be interested to hear about is how the tightly-coupled supply chain is affecting everybody else. Ethanol plants have been hit really hard by this administration.

I know maybe coastal people aren't that thrilled about ethanol. There are several reasons why we still need it. One is that we haven't figured out how to replace marine and aviation fuel. I think there's a lot of potential for biodiesel and ethanol in those sectors. Even if we went all electric right now, it's going to be 17 years until the last car burns the last tank of gas. So we have a window of time there too.

But I also met with CARB, which is the California Air Resources Board. Their executive director told me that all their studies show that we won't get to carbon neutral or decarbonizing without renewable fuels. It may not be what we have today—these may be next-generation biofuels. But we need them to decarbonize. That's my pitch for ethanol.

Now, look at what's happening. Under this administration, ethanol simply hasn't been profitable. We've had plants shut down, we have several that only go six months a year; some have gone idle indefinitely. This was all before COVID-19. As a result, we have too much corn, and when we have too much corn the price goes down, and things just get harder. Right now with COVID-19 and this, the combination of the two, for every gallon an ethanol plant makes they're losing $.20. It goes through their reserve money and so things are really really bad.

The oil industry is constantly talking to Trump, and with the economic recovery, he has yet to talk to renewable fuels. Now, here's the interesting part—I know it took a long way to get here. There are two other products these ethanol plants make. One is DDG (dried distillers’ grains), which is used to make livestock feed. There's actually a livestock feed shortage right now that I believe is related to ethanol.

A second product that comes out of ethanol plants is CO2. We use the CO2 to make dry ice for our freezers for cold storage. If we don't continue to produce ethanol, then we don't have the CO2 to freeze the meat that’s being processed. So you see how all these supply chains are connected.

That CO2 also goes to our water plants, where it helps purify our water. We need it because of all the runoff from agriculture and a lot of different things, we need that, otherwise we would have lots of chemicals in our water. So we're scrambling right now on many fronts because all the ethanol plants are shutting down. What do we do? It's just a mess.

There's another component to livestock now as well pork and beef. We don't have country of origin labeling laws here anymore. These are referred to as COOL—country of origin labeling. Your shirt will say where it's from on the label. Most vegetables and fruit and food say where they’re from, too. But for some reason, when it comes to pork and beef, there’s no such requirement. Beef that is raised in Mexico or Brazil can be shipped here and then repackaged in the United States. And as long as it's repackaged here, they can label it as made in the USA.

It's often very inferior meat, and it forces the prices down for our own farmers. If I'm eating a steak made in Iowa, I want it to be made in Iowa.

Here in the Midwest, we like to say we are a secure nation because we are a food secure nation. If you look at what happened with the ventilators and masks that we needed but were made in China, we're getting dangerously close to not being a food sovereign nation anymore, one that has lost the ability to grow its own food.

Even before COVID-19 I was saying that we need regional food hubs to create markets. These could be farm-to -nursing home, farm-to-college, farm-to-school, even farm-to-prison. Set up these markets and let them grow from there. Don’t forget that agriculture is policy-driven. If we make good policy, create the infrastructure, and then allow the market to run, it would be more sustainable and more diverse than what we have today. I think there's a huge potential for that and a huge need for it.

My understanding is that there are two crops you can grow in Iowa—soybeans or corn. It’s not that farmers particularly love these two crops, but it's just not possible to grow anything else economically. Why is that?

All the policy shapes for that. This corn we grow is not corn that we eat, it's corn for either ethanol for fuel, or animal feed, or other things. Again, we’re the second most agriculture producing district in America, but we have a tough time feeding ourselves. 85% of the food we eat in Iowa is imported. 60% of our apple juice is made in China. We have orchards here. We have an applefest here. How are Iowa kids not drinking Harrison County apple juice? But we don’t prioritize it. For some reason, it's made over there and shipped over here.

I want to ask you about the workforce. Who works at the Smithfield plant? Is this migrant labor? Is it local workers? What kind of jobs are these?

It's mostly migrant labor. To be honest I don't know the percentages. But it tends to be an immigrant workforce.

One of the first people I met with when I ran last cycle was a member of the Winnebago nation, a family friend across the river in Nebraska named Frank LaMere. Frank was a member of the DNC and the Native American caucus chair. He was just a great activist. I asked him how he got political. He told me about a visit Jesse Jackson made in 1987 to Dakota City, Nebraska, which is right over the river. This was one of the first giant beef plants in the US. As of 2016, I believe it processes most of the beef in the country. They had been unionized, and in 1987 they had just de-unionized all the workforce.

Jesse Jackson held a rally there, even though it was on the Nebraska side, and had nothing to do with the Iowa caucuses. He went over there one morning as they were heading into work, and held a rally for the folks who were striking. All the new workers were lined up in their white suits and their hats, waiting to go in. Frank tells the story: “Jesse gets up there and I've never heard a speech like that before. ‘To all your scabs over there,’ he says, ‘you took these people's jobs. They were getting eight dollars an hour. Now you're working for seven dollars an hour, and soon someone's going to come and take your job for six.’”

Right before I launched my campaign in 2017, there was an article in the New York Times that talked about a guy who worked at a meat packing plant in the early 80s. Back then he was getting 16 bucks an hour. They de-unionized like every other meatpacking plant in Iowa, and the pay immediately dropped by at least half.

The guy retired after 30 some years in this job, and when he retired, he was back to earning the same 16 bucks an hour he’d earned in the eighties. Folks who are working these lines are in one of the most demanding jobs. It is hard, hard work. They're doing a 10 hour day, six days a week. Farmers wouldn't have a place to go if it wasn't for these folks. They work in close proximity to each other for 16 or 17 bucks an hour, and that's all they have. They come here and fill these jobs that are always hiring. People are constantly getting hurt on the job site because it's such grueling work.

It's so frustrating and heartbreaking to see these stories right now, and they're popping up everywhere. We had the first outbreak in Columbus Junction in Iowa, then Smithfield up in Sioux Falls. We don't know officially, but we assume the 19 that happened across the river are from the plant. I woke up this morning and heard they’re having their first little blowup at a plant in Perry, Iowa. There's one I believe in Waterloo as well. These people are working their tails off for not much. Art Cullen [a Pulitzer Prize winning Storm Lake journalist whose book you should read] wrote a beautiful editorialon Wednesday calling them patriots—they’re packing house patriots.

What happens if these places close? People go home and what are they supposed to live off of?

A lot of them don't have that great benefits to be honest. For folks who aren't from the Midwest, what we have here right now is, if you want a $12 an hour job with no benefits, we have thousands of them. As Democrats we talk about raising the minimum wage, and that's great. But what we need in this district are jobs that pay $60,000 a year, 60-70 80,000 a year jobs. Which are very reasonable. We could be bringing those jobs in, if we could offer people things like local health care.

We talked back in January about how hard it is to get even basic health care, let alone mental health care, in rural Iowa. What does that look like now with the arrival of this disease, where the medical system is going to be stretched to the breaking point?

One of the nice things about being in a rural district is that we have time to prepare. I think we are as prepared for this as anybody. This isn't going to sneak up on us. That being said, if there's an outbreak in some of the smaller towns, it's going to be really tough because of years of consolidation of our hospitals and our healthcare facilities. We have folks here who have to travel an hour to give birth. There’s a county in this district that has only one ambulance for the entire county. It's an average size county, probably a half hour drive east to west or north to south. Those are the realities of what's happening here.

One thing I'm hoping that comes out of COVID-19 is that we’ll no longer have our health insurance connected to our job. With the rise of the gig economy, we need a more modern version of our healthcare system. What we have now isn’t working. Stop at almost any gas station in this district and you’ll find a donation box for someone who just got sick, or someone who's in the hospital. We have so many GoFundMe sites, so many pancake breakfasts, for medical bills. We're better than that.

I relate this to baseball. In baseball, I’m only as good as my left fielder. If we have a horrible defensive left fielder, the ball is going to get hit there eventually. The ball finds your worst player. Viruses find the people who are uninsured or who have to go to work. One of the heartbreaking things that I saw a local blogger write about this morning is that starting in March, if you felt sick at one of these meatpacking plants, you were able to go home. But that was only starting in March. So back in February, even if you were sick you still had to show up to work.

What does the epidemic mean for the harvest in Iowa and getting the harvest in? We're talking about this emergency stretching for months.

We're about a month away from planting season. You look at the corn, with ethanol the plants going down, there's really not a good price we can get for corn right now. We have about half of last year's harvest still in storage because there was no market for it last year. That's scary.

The other option, beans, well, we're not currently selling them in China right now. And China is looking elsewhere for theirs. That's why the Amazon rainforest is on fire, China is going down to Brazil and asking them to grow soybeans there. Farmers in Iowa are stuck between a rock and a hard place.

That's one thing if we had real leadership we would have a secretary of agriculture laying out exactly what’s going to happen, what we’re going to do. Maybe this year we just do a lot of conservation, and pay farmers not to farm. Those are options. The lack of vision or planning is really frustrating.

Here's the other thing about calling it the “Chinese virus” or the “China virus” or whatever the rhetoric has been. Why are we poking fun of the people we’re trying to get an agreement on a trade war with? Why are we poking at the folks that have the ventilators? Or make our masks? It makes no sense. When we talk about antitrust ,we had a plan in place in 2008 to have these ventilators made by a small company in Southern California. But there's a big multibillion dollar medical device company which now does their taxes overseas. they bought off this company in a killer acquisition. They bought them just to kill the company. [here we got cut off]

What’s it like trying to run a political campaign right now? You have an opponent who likes being a controversial guy, so he has some controversial opinions on the epidemic, too.

One of the things with who the current congressman is, we know that has a bare minimum you need to put informational links like the CDC on your website and get that out there. He's doing that. I feel like that's a low bar to clear. But we have a law in Iowa, that was actually passed because of him, back when he was in the state house, that says Iowa's official language is English. There are almost 150,000 Spanish-speaking residents in the state of Iowa. What we're realizing is there's not a lot of information getting to them—definitely none coming from the state.

So last night, we held an event where we had an infectious disease doctor from Des Moines who is originally from Honduras and a council member from Storm Lake who are both fluent in Spanish. They did a Q&A in Spanish and we put it on our website and really pushed it out. We're going to continue to push it out. We're trying to fill in gaps. We have a COVID-19 link on our website for finding information—anything from the CDC to domestic abuse numbers and hotlines to call—not just in English but in Spanish as well. We're doing our best to fill in the gaps and be helpful.

We still have a campaign to run, and our focus is still November. We are blessed to have probably the only race in the nation where the incumbent has a primary and the challenger doesn't. We're still building. We had our third-quarter fundraising and we outraised not only King but the entire Republican field for the third straight quarter. For that I'm grateful to everybody out there who supported us.

It was a pretty terrifying fundraising quarter at the end. Everything stopped nationwide.

It's still tough. You don't know what people are going through. I only know what I am experiencing and I'm trying to help out locally. That's one of the things we’re telling folks. If you only have a buck, give it to someone local. Give it to your local hairdresser, or your local restaurant, someone you want still around after this is over.

If you have two bucks, well, we’ll definitely take one, because we still have to uphold this democracy. We can't lose this election just because of something unforeseen happening in the future. Fundraising always stinks, but it especially stinks in these uncertain times.

So there you have it. If you are reading this and have two bucks, won't you please take a moment to support J.D. and three of his fellow candidates on the Great Slate? We're working not just to elect terrific people to Congress, but to put up a fight in these tougher districts in a way that can help us win four contested Senate seats. You can donate up to $5,600 per candidate, must be a U.S. citizen or green card holder, and may not be a Federal contractor. Every donation, big or small, makes a difference!

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