OPEC would be illegal if replicated by a band of American companies, no? I think it's only "legal" because the sovereign entities running it transcend any laws of commerce as we understand them in America. Not dependent upon the industry so much as the scale of the participants and the laws those participants are beholden to.
Cartels violate antitrust laws. Labor unions in particular have an antitrust exception. But both of them are solving the problem from the wrong end.
The question isn't how to negotiate with an existing monopolist that can screw you over with monopoly power, it's how to break their monopoly. "Get your own monopoly" not only doesn't fix it, it just makes it worse for everybody else. Congratulations, humans who eat food, there are now two monopolies in your supply chain.
That's a duopoly, which is hopefully better than a monopoly. It forces competition and will at least keep the independent people solvent. Hell, you can structure it where the processing fee is set and the producers set their own sale prices.
You misunderstand. It's not that there was one monopoly wholesaler and now there are two. It's that there was one monopoly wholesaler, and there still is, but now it's negotiating with a new cartel of manufacturers. That's not better.
Don't form a new cartel, break up the old monopoly.
I see the confusion, you're the OP and you're talking about what you suggested instead of what azemetre suggested.
The independents creating their own meat packing plant is a fine idea. Increase competition. It's like a co-op in reverse. They could even accept third party jobs. If they were even smarter they'd open one, sell it as a going concern, use the money to open another one, and repeat until the concentrated market is good and thoroughly disintegrated.
Having the independents come together to form a cartel to negotiate with the existing concentrated market of meat packing plants is the bad idea.
1 - https://guides.loc.gov/oil-and-gas-industry/organizations