A handful of corporations control our food system from farm to fork. This concentration of power leaves eaters with fewer options to support good food from family farmers, while pushing droves of family farms out of business. Corporate concentration in the food system has caused serious damage to rural economies, public health and the environment.
What does corporate concentration in agriculture mean?
In a healthy economy, multiple firms can sell their goods to multiple buyers in an open, competitive market. But this isn’t the case in agriculture, where most farmers are forced to buy their inputs from just a handful of companies and have very few places to market their goods. The term corporate concentration describes the control that a small number of corporations have over food production, distribution, marketing and consumption through their share of the marketplace.
How bad is it?
The U.S. agricultural sector suffers from abnormally high levels of concentration. Most economic sectors have concentration ratios around 40%, meaning that the top four firms in the industry control 40% of the market. If the concentration ratio is above 40%, experts believe competition can be threatened and market abuses are more likely to occur: the higher the number, the bigger the threat.
The concentration ratios in the agricultural sector are shocking.
- Four companies own 83.5% of the beef market.
- The top four firms own 66% of the hog industry.
- The top four firms control 58.5% of the broiler chicken industry.
- In the seed industry, four companies control 50% of the proprietary seed market and 43% of the commercial seed market worldwide.
- When it comes to genetically engineered (GE) crops, just one company, Monsanto, boasts control of over 85% of U.S. corn acreage and 91% of U.S. soybean acreage.
What does concentration mean for farmers?
Because farmers rely on both buyers and sellers for their business, 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, such as processors, suppress the prices farmers are paid. The razor-thin profit margins on which farmers are forced to operate often push them to "get big or get out"—expanding into mega-operations or exiting the business altogether.
Our Farmer Heroes have something to say about corporate power:
- Mike Weaver, a poultry grower in West Virginia, and The Crutchfields, poultry growers in Arkansas, reveal how corporate giants are able to abuse farmers’ rights.
- Mary Hendrickson, a professor at the University of Missouri, discusses the effects of corporate power in the food system.
- Jim Gerritsen, an organic farmer in Maine, speaks out at The Farmers March on Occupy Wall Street.
What does concentration mean for consumers?
For all of us who eat, unchecked corporate power leads to higher prices and less choice. Despite the promise of cheaper food that is supposed to result from "economies of scale," USDA data show that the cost of food to consumers has risen steadily since the 1980s. Over the same period, the farmer's share of the retail food dollar has plummeted. Because of their market power, giant food processors and retailers reap the largest share of our food dollars and have no incentive to pass their savings on to consumers.
- Read our Ask Farm Aid column to learn more: How does corporate concentration constrict your choices at the grocery store?
- Read Farm Aid President Willie Nelson's Occupy the Food System op-ed in The Huffington Post and look at our answer when a reader asks How does the occupy movement relate to farmers? Check out our interview with Occupy Wall Street's Food Justice Group on what motivates them and what it means to Occupy the Food System.
What is Farm Aid doing about it?
Farm Aid has a long history of fighting corporate abuse. Since 1985, Farm Aid has rallied alongside farmers, testified to Congress, and organized the public around the threats that corporate concentration pose to family farmers and eaters alike.
- On June 18, 1987, Willie Nelson and John Mellencamp joined Senator Tom Harkin to testify before the U.S. Senate about the family farm crisis and corporate monopolies expanding in agriculture.
- In 1990, Farm Aid offered financial support and media coverage for dairy farmers who suffered a devastating drop in milk prices and were struggling to survive. That year, Farm Aid joined Ben & Jerry's Ice Cream in a consumer campaign to help save family farms.
- On April 1, 1995, Willie Nelson joined farmers to protest a huge factory hog farm in Lincoln Township, Missouri. The event was a rallying cry for farmers and communities angered by corporate abuse in agriculture, threats to food safety, pollution, and the loss of family hog farmers. The event launched the Campaign for Family Farms and the Environment, a multi-state collaborative to stop factory farming.
- In March 1997, Willie Nelson led a rally in Des Moines, Iowa that drew hundreds of farmers to the doorstep of the National Pork Producers Council chanting "Family Farms — Yes, Factory Farms — No".
- In 1999, the Farm Aid concert ventured into greater Washington D.C. and became a rallying point for hundreds of farmers and advocates who came to the nation’s capitol in protest of the failed "Freedom to Farm" bill — a bill that resulted in record profits for multinational grain traders and food companies while leaving family farmers bankrupt.
- Crisis hit American dairy farms as milk prices plummeted in 2009. In response, Willie Nelson and Farm Aid staff met with Secretary of Agriculture Tom Vilsack, bringing him more than 13,000 petitions from farmers and eaters across the country. Farm Aid teamed up with dairy farmers from eight states to hold a rally to call attention to unfair dairy prices at the Manchester Livestock Exchange in Manchester, Iowa.
- In 2010, USDA and the Department of Justice (DOJ) conducted public workshops to investigate concentration, antitrust violations and competition in agriculture. Farm Aid heavily engaged in each workshop, working with farm groups and family farmers across the country to make sure farmers’ voices were heard. Following the workshops, Farm Aid Board Artists Willie Nelson, John Mellencamp, Neil Young and Dave Matthews called for immediate action by the USDA and DOJ to address antitrust violations.
- In 2011, Farm Aid attended a series of meetings with White House officials and a forum in Iowa with President Obama requesting fair credit access, antitrust enforcement and protections for farmers facing corporate abuses.