Monopolists control nearly every part of the food production process
Monopolies are slowly killing rural America—and driving up the price you pay for food.
Just four firms control 85% of all beef, 66% of all pork, and 54% of all poultry. This degree of monopolization is hurting farmers—and you.Monopolists control nearly every part of the food production process, from selling feed to farmers, to packaging the meat and poultry for supermarkets. Half of all chicken farmers report having just one or two processors to sell to.
Farmers are
essentially forced to buy from and sell to monopolies at
whatever price the corporation wants – often
taking on crushing debt to do so. They are trapped in
long-term binding contracts, with no way out but losing their livelihood
altogether.
[Either I sign it
or I ain't got no chickens. Without any chickens, I can't pay any bills.]
Meatpackers used
to compete at cattle auctions for what ranchers produced –
which helped ranchers get a reasonable return on their investment. Now, with so
few buyers, ranchers have no
choice but to sign contracts with meatpackers, and sell their
cattle for a lower price than if the market were truly competitive.
In 1980, 62 cents of
every dollar consumers spent on beef went to ranchers. Today, only 37 cents do. Most of the
profits are going into the pockets of the
monopolists.
And here's the
kicker: Even though farmers are getting squeezed, the ag monopolists are also
charging you higher prices. During the pandemic, beef prices
rose nearly 16%—and the four biggest beef companies' profits rose more than
300 percent.
These corporations are using their monopoly power to fix prices. Just recently, beef giant JBS settled—without admitting guilt, of course—a beef price-fixing case for $52.5 million.
Monopolization
is happening across the food sector. In corn, soybeans,
dairy, pesticides, and farm machinery. The result is the
same: lower pay to farmers, bigger
profits for the monopolists, higher prices for you.
A better way to
hold these monopolies accountable would be to break them up, and stop future
mergers. But it won't be easy. They flex their political muscle through
powerful lobbies like the North
American Meat Institute, and maintain a
revolving door with regulatory
agencies like the US Department of Agriculture.
Well, I say,
take them on. Rural America is hurting, farmers are getting squeezed, and
consumers are being shafted. Notwithstanding the power of food monopolies, taking them
on is wildly popular—especially in Rural America.
But don't just
listen to me, listen to what farmers are saying about this:
"I'm here
to tell the powers at be to enforce the antitrust laws for the world of
agriculture."
"The laws
are on the books. We have to strengthen those laws and do what Teddy Roosevelt
did to break up the monopolies."
"Don't let
these boys who come to Washington with pockets of money set there and bribe our
congressman year after year after year."
"Who will
stand up for me if you don't?"
For the good of us
all, America needs to enforce antitrust laws, and break up
Big Ag.
Robert Reich, is the Chancellor’s
Professor of Public Policy at the University of California, Berkeley, and a
senior fellow at the Blum Center for Developing Economies. He served as
secretary of labor in the Clinton administration, for which Time magazine named
him one of the 10 most effective cabinet secretaries of the twentieth century.
His book include: "Aftershock"
(2011), "The Work of Nations"
(1992), "Beyond Outrage"
(2012) and, "Saving
Capitalism" (2016). He is also a founding editor of
The American Prospect magazine, former chairman of Common Cause, a member of
the American Academy of Arts and Sciences, and co-creator of the award-winning
documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's
co-creator of the Netflix original documentary "Saving Capitalism,"
which is streaming now.