The concentration of economic power in every segment of food and agriculture can harm both farmers and consumers. Farmers can pay more for supplies when only a few firms sell seeds, fertilizer and tractors. They also sell into a highly consolidated market, and the few firms bidding for crops and livestock can drive down the prices that farmers receive. Consumers have fewer choices at the supermarket, and food processors and retailers are quick to raise prices when farm prices rise (as is anticipated as a result of the 2012 drought) but are slow to pass savings on to consumers when farm prices fall. The agriculture and food sector is unusually concentrated, with just a few companies dominating the market in each link of the food chain. In most sectors of the U.S. economy, the four largest firms control between 40 and 45 percent of the market, and many economists maintain that higher levels of concentration can start to erode competitiveness. Yet according to data compiled by the University of Missouri-Columbia in 2012, in the agriculture and food sector, the four largest companies controlled 82 percent of the beef packing industry, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of broiler chicken processing.
Rural communities often bear the brunt of agribusiness consolidation. For nearly 80 years, academic studies have documented the negative impact of agriculture’s consolidation and industrialization, which aligns farms more closely with food manufacturers than their local communities. The rising economic concentration has contributed to the decline in the number of farms and the increased size in the farms that remain. Communities with more medium- and smaller-sized farms have more shared prosperity, including higher incomes, lower unemployment and lower income inequality, than communities with larger farms tied to often-distant agribusinesses.
Agribusiness concentration works in many ways, all with same objective: to move income from farmers and rural economies to Wall Street. In this report, we examine five case studies of agribusiness concentration: Iowa’s hog industry; the milk processing and dairy farming in upstate New York; poultry production on Maryland’s Eastern Shore; organic organic soybean farming and soymilk production; and the California processed fruit and vegetable industry.
For decades, the U.S. Department of Justice and the U.S. Department of Agriculture (USDA) have taken a hands-off approach to consolidation in the food system. The economic harm caused by the concentration of the food system is real, but often neglected. Federal regulators must strengthen the oversight of this highly consolidated sector that affects every member of society every day. Fair markets will require new rules and better oversight that:
Download and read the Economic Cost of Food Monopolies report or the fact sheet.
Links
[1] http://foodandwaterwatch.org/sites/default/files/Food%20Monopolies%20FS%20Nov%202012.pdf