|I keep hearing about "concentration" in farming. What does that mean and how does it affect me? |
Dear Farm Aid,
I keep hearing about "concentration" in farming. What does that mean and how does it affect me?
Well, Matthew, you've asked me one doozy of a question for my first column! But I can't say I'm not grateful for it—your question hits at the heart of several problems in today's food and farm system as well as new opportunities that have appeared this year to shake things up for the better.
What does concentration mean?
The short of it is this: growing concentration in the farming industry is pushing you and the more than 300 million eaters in the United States farther and farther away from the family farmers who grow our food.[1, 2]
People use the word concentration to describe the control that a small number of corporations have over the whole of food production and consumption in our country. Our farming sector suffers from abnormally high levels of concentration and the consequences have been rather nasty. The trend has forced thousands of independent family farmers off the land and has caused serious damage to rural economies, public health and our environment.
To illustrate just how out of whack it's gotten, consider what economists call the "four-firm concentration ratio." Most economic sectors have concentration ratios hovering around 40%, meaning that the top four firms in the industry control 40% of the market. Anything beyond this level is considered "highly concentrated," where experts believe competition is severely threatened and market abuses are likely to occur.
Two researchers at the University of Missouri, Mary Hendrickson (this month's featured Farmer Hero) and Bill Heffernan, have studied these ratios in agricultural markets. The situation doesn't look good. As of 2007, four companies owned 83.5% of the beef market—that's more than 40 percentage points above the "highly concentrated" cut-off! Similarly, four firms owned 66% of the hog industry and 58.5% of the broiler industry. At the same time, 93% of soybeans and 80% of corn grown in the United States were under the control of just one company, Monsanto, through their patents.
Are your eyebrows raised yet? These are astronomically high numbers! As one researcher put it, "[n]ever before have the safety and sustainability of our food supply depended on the decisions of so few companies." I couldn't say it any better. It's nearly certain that something's a little fishy in our curiously concentrated farm sector.
What it means for farmers…
It's helpful to consider the structure of our food system, where farmers supply the raw goods for the many products that are collected, processed, packaged, and distributed by numerous other businesses before they reach us. Each of these stages represents a different link in the supply chain that moves food from farm field to kitchen table.
As a key link in this chain, farmers rely on both buyers and sellers, and concentrated markets squeeze them at both ends. Sellers with high market power can inflate the prices of machinery, seeds, fertilizers and other goods that farmers need for their farms, while powerful buyers suppress the prices farmers are paid for what they grow and raise.[6, 7]
The resulting razor-thin profit margins that farmers and ranchers are forced to endure often push them to either expand into mega-operations or exit the business altogether. Even tiny movements away from a fair and competitive market price have choked farmers' bottom lines, siphoning money into the hands of the corporations that dominate the market and away from the rural economies that house and support our nation's farms and ranches.
What it means for eaters...
Family farmers are clearly getting the short end of the stick, but the current system isn't doing a heck of a lot for us eaters either.
Despite the promise of cheaper food that is supposed to result from increased concentration, USDA data shows that the cost of food to consumers has risen steadily since the 1980s. The system also narrows consumer choice and presents barriers to accessing locally-grown, organic, sustainable, and family farm-identified food. For example, if you or I want more local food in our supermarket aisles, we'll run up against giant supermarket chains with a single, national buyer that supplies thousands of stores. This structure is generally inaccessible to small and mid-sized independent family farmers who lack power to get a fair price for their goods.
So who benefits? Well, if I do my math right, this leaves the corporations that act as middlemen and, let's see, only the corporations that act as middlemen.
So what can we do about it?
Actually, we already have most of the tools we need. Concentration generally happens through two avenues: via consolidation from mergers and alliances or through vertical integration, where one company controls most or all of the businesses along the supply chain.
A few laws—namely the Sherman Antitrust and Clayton Acts—exist to prevent excess power in the marketplace. However, particularly in the agricultural sector, enforcement of these laws has been virtually nonexistent, especially in the last 10 years. What's more, they generally don't address vertical integration and are blind to the peculiar nature of some agricultural markets, where one firm can dominate in a rural area or region, even if it doesn't control a large share of the market nationally.
Another law, the Packers and Stockyards Act (PSA), was created to regulate packers, livestock and poultry dealers, swine contractors and other middlemen in our livestock industry. The PSA does have the power to address vertical integration in agricultural markets. However, there has been a long history of mismanagement and poor enforcement that is only starting to be addressed by our current administration.
But that's where we come in.
You may have heard that the United States Department of Agriculture and the Department of Justice are scheduling public workshops throughout 2010 to address the issue of concentration, antitrust violations and competition in agriculture. This presents an unprecedented opportunity for positive change, and a massive challenge.
Have no doubt that a fight is brewing between those of us interested in growing the Good Food Movement and those that are interested in maintaining their power and safeguarding the status quo. Farm Aid intends to be heavily engaged in these workshops and will keep all of our readers informed of key developments and opportunities to take action. The workshops will only create the change we need if farmers AND consumers get involved. Stay tuned.
In the meantime, I can't stress enough how important it is to make your voice heard. This may be the best shot we'll see in a while to make transformative change in our food system. If we do it right, we could make major strides in rebuilding a food system that works for farmers, eaters and everyone in between—offering stable and fair prices to farmers and delivering fresh, healthy and safe food for us all.
So Matthew, I hope you have some fight in you. This issue is a matter of survival to our country's family farmers and control over the food that nourishes our bodies. I encourage you all to send more questions and comments our way on this complicated, but extremely important subject.
Many thanks to you and, as always, eat well,
1.Starmer, E. (2007). Corporate Power in Livestock Production: How it's Hurting Farmers, Consumers, and Communities-And What We Can Do About It. Leveling the Field-Issue Brief #1, Agribusiness Accountability Initiative.
2.Food and Water Watch (December 31, 2009). Public Comment to USDA and Department of Justice Re: Agriculture and Antitrust Enforcement Issues in our 21st Century Economy. Washington, D.C., USDA and Department of Justice.
3.Food and Water Watch (December 31, 2009).
4.Hendrickson, M., Heffernan, William D. (2007). Concentration of Agricultural Markets. Columbia, MO, Department of Rural Sociology, University of Missouri. April 2007., and Food and Water Watch (December 31, 2009).
6.Wilson, M. (2009). Curbing Concentration: an uphill climb. OCM News. Lincoln, NE, Organization for Competitive Markets. December 2009.
7.Domina and Taylor (2009).
9.Ibid. Data is adjusted for inflation.
10.Food and Water Watch (December 31, 2009).
11.Varney, C. A. (2009). Merger Guidance Workshops. Third Annual Georgetown Law Global Antitrust Enforcement Symposium, Washington, D.C., U.S. Department of Justice.
12.Food and Water Watch (December 31, 2009).
Your thoughtful comments are encouraged, but all comments are held for moderation to protect against spam. Farm Aid does not censor or refuse comments for content unless they are spam or a personal attack.
A New Farm Economy Rises from Tobacco’s Ashes - August, 2014
10 Things the New Census of Agriculture Tells Us About Family Farmers and Our Food System - July 2014
How will the Keystone XL pipeline affect our farmers and farmland? - April, 2014
Parched: What the West shows us about our water future - March, 2014
What does Farm Aid do with the money that it raises at the annual concert? - October 2013
I live in New York and dairy farmers seem to be struggling. What can I do to help? - September 2013
I have heard horror stories about the dead zone in the Gulf of Mexico this year. How can farmers better support our waterways? - July 2013
I finally got around to watching "Food, Inc." I was floored to see what poultry producers actually go through. Is this really what's behind the chicken on my plate? - May 2013
Why is it so difficult for farmers to find affordable farmland these days? - March 2013
The PBS documentary about the Dust Bowl was amazing – what a disaster of epic proportions and a reminder of how important the soil is to our lives! How do today’s farmers care for the soil? - November 2012
The other day, I came across "grassfed beef" in the supermarket. Aren't all beef cattle fed grass? If not, what do they eat? Is this something I should feed my family? - October 2012
How do I find a university that values family farmers and the Good Food Movement? - September 2012
I'm a big supporter of organic agriculture, but some of my friends say it isn't a practical way to feed the world. Is that true? - August 2012
How does someone with no experience get into farming? - August 2012
How is climate change affecting family farmers? What are they doing about it? - April 2012
Is the USDA truly supporting local and regional agriculture? - March 2012
I'm concerned about the use of antibiotics in farm animals and would like to find antibiotic-free meat and poultry products. Any suggestions? - February 2012
How does the occupy movement relate to farmers? - January 2012
What can you tell me about family farm turkey? - November 2011
How will labeling genetically engineered food do anything for family farmers? - October 2011
Word is big cuts are in store for farmers in the upcoming Farm Bill. What is the Farm Bill and what will budget cuts mean for family farmers? - September 2011
I've been seeing a lot of farm plots spring up around the city. I didn't even realize people could farm in cities—how can I get involved in this! - August 2011
This year’s weather has been a nightmare and lots of farms in my area are struggling. What help is there available for farmers struck by disaster? - July 2011
I watched "Food, Inc." recently and was surprised by how animals were treated and meat was produced in America. This seems crazy to me. Why can’t we get meat from better sources? - June 2011
A lot of farmers in my area are leasing their land for hydraulic fracturing — is it good or bad? What do farmers say? - June 2011
What's a food hub? How can they help me? - April 2011
High farm prices are in the news — are farmers getting rich? - March 2011
I know the U.S. government just allowed a few new GE crops on the market — should I be worried? - February 2011
How can I find food from local farmers during the cold winter months? - January 2011
A year-in-review on corporate concentration in agriculture. - November 2010
Can you tell me about starting farm to school programs? I’m a farmer and I’d love to provide schools in my area with healthy food. - October 2010
No offense, but what has Farm Aid really done all these years aside from put on a good concert? - September 2010
I really want to get local meats, but they don't seem to be available. Why is that? - August 2010
Answering reader questions with our report, "Rebuilding America’s Economy with Family Farm-Centered Food Systems" - July 2010
I just read an article that anticipates 200 dairies will go under in my state by the end of 2010. Why are dairy farmers in so much trouble right now? - June 2010
How is credit affecting family farmers right now? - May 2010
What exactly is a family farm? How does it differ from a factory farm? - April 2010
What's up with food safety? Could new laws hurt family farmers? - March 2010
How can a food system that offers so much variety be constricting consumer choice? - February 2010
I keep hearing about "concentration" in farming. What does that mean and how does it affect me? - January 2010
What’s Farm Aid’s grant program all about? Where does all the money go? - December 2009
Why are you thankful for family farmers? The Farm Aid staff responds. - November 2009
What are some ways people can get involved in farm activism? - October 2009
I've been seeing a lot of interest lately in seed saving. It seems like a lot of work, why bother? - September 2009
Are factory farms still a threat to America’s family farmers? - August 2009
Do you have any tips for how to fit a farmers market into my busy life? - July 2009
What’s the best way to get more farm fresh food into my child’s school cafeteria? - June 2009
How do I get involved in the dairy crisis at the grassroots level? - May 2009
How can we fix the food safety system without hurting family farmers? - April 2009
How exactly are GE crops regulated? And how can I be sure that I am protected? - March 2009
Dairy farmers are struggling for survival right now - why? - February 2009
Is there a reason why Farm Aid doesn’t grant more to individual farmers? - January 2009
How is the credit crisis affecting farmers and agriculture in America? - December 2008
What does the change in administration mean for family farmers? - November 2008
Where do John McCain and Barack Obama stand on agricultural issues? - October 2008
Does Farm Aid know of any programs that help young people start their own farm? - September 2008
Just how does Farm Aid decide where to host the show each year? - August 2008
Laura looks back on three years answering your questions - July 2008
I try to buy local and from family farmers whenever possible. Why is it so hard to find meat from area farmers? - June 2008
How do you decide who is and isn’t a family farmer? How many family farmers are there in the United States? - May 2008
I see raw milk from time to time at my local grocery, some folks say it’s good –others say its dangerous- what’s the deal? - April 2008
I seem to be spending more and more at the grocery store these days. Is it true that corn prices and ethanol are making my food cost more? - March 2008
I feel like I used to see a lot more in the news about GMOs. I haven’t managed to keep up to date and now I’m not really even sure what’s out there. Could you give me a little update on GMOs? - February 2008
What’s going on with the Farm Bill? Didn’t it pass recently? Is there anything good for family farmers in it? - January 2008
What do farmers do in the winter? - December 2007
What are you serving for Thanksgiving? - November 2007
How did Farm Aid replace the typical concert foods at Farm Aid 2007 and what were the criteria? - October 2007
What do Farm Aid folks do during the winter? - September 2007
Can you suggest some ways to drink locally or seasonally? - August 2007
Is it legal and humane to keep chickens in the city? - July 2007
Is it possible to compost in the city? - June 2007
Should everyone who wants to lessen their impact on the environment consider giving up meat? - May 2007
Can you suggest farm related activities for kids to do? - April 2007
Am I supporting family farmers when I purchase a product labeled organic? - March 2007
Can you help me simplify my food shopping in a way that still supports my values? - February 2007
What New Year's resolutions can I make that will support family farmers? - January 2007
How does Farm Aid help family farmers, where does the money go? - December 2006
How can I find a family farm turkey for Thanksgiving? - November 2006
Is it possible to shop locally on a budget? - October 2006
Why can't I get any of this "delicious food from family farmers" at the Farm Aid concert? - September 2006
Do you have any advice for developing classroom activities involving good food? - August 2006
Who are the farmers in the United States? - July 2006
What kind of work is Farm Aid doing with biodiesel? - June 2006
When will tomatoes be available in farmers markets? - May 2006
Are factory farm birds safer than outdoor birds? - April 2006
Could you tell me a little about the food in New Orleans today? Can you even get local foods in the city? - March 2006
What is biodynamic farming? - February 2006
Why do different companies promote different kinds of pasteurization for milk? - January 2006
How can I eat seasonally year-round if nothing is growing in my area? - December 2005
With all of the devastating elements that farmers have to face, who can help them when a disaster comes? - November 2005
Why is it so hard to find fresh, locally grown produce in my area of Staten Island, NY? - October 2005
What is a "family farm food system"? - June 2005
How can I find a farm near me? - May 2005
What does April on the farm mean in different states? - April 2005
Who are the corporate players in the meat industry? - March 2005
What questions can I ask my grocer? - February 2005
An Introduction to Ask Laura - January 2005
What is grass roots organizing? - August 2005
Where does school food come from? - July 2005