What’s the Problem?
Agriculture is one of the most concentrated sectors of the US economy. As tens of thousands of independent family farmers have gone out of business in the last few decades, their land and operations have been bought up by ever-larger farms. Today there are 70 percent fewer hog farmers than in the mid-1990s, while just four companies control two-thirds of hog slaughter. Nearly 17,000 cattle ranchers have gone out of business each year since 1980; 85 percent of the beef market is now controlled by the top four meatpackers. Trends are similar across agriculture: the top four companies in each industry control 85 percent of the corn seed market, 90 percent of grain trading, and 63 percent of food retail. Twenty percent of farms control nearly 70 percent of US farmland.
Consolidation has reduced competition in farm markets and lowered prices paid to farmers, ranchers, and fishers. Farmers used to have multiple buyers to market their goods, allowing them to negotiate the best possible price. In many regions today, farmers have only one or two buyers, making it impossible to negotiate and forcing them to accept whatever the buyer offers.
Making matters worse, seed, chemical, machinery, and other farm input companies have also consolidated. Farmers used to be able to shop around for the best price for the supplies they need to farm, but now there is often just one seller, which might be an hour’s drive away.
Squeezed on both sides by the dictates of massive corporations, farmers today have increasingly little control over their own businesses. And these companies take such a cut that farmers get on average 15 cents on the consumer dollar.
Mechanisms of Corporate Control
Corporate consolidation drives farmer income down and gives farmers less autonomy. Besides there simply being fewer markets for farmers to sell and buy from, agribusiness wields its power over farmers in several other ways.
NFFC member organizations are leaders in organizing to expose and end these specific practices.
Many agribusiness companies have grown by buying up all the parts of the supply chain. For example, a network of independent hog farmers, feed mills, veterinarians, and the like used to contribute to the operations of a meatpacking plant, which spread wealth around the community and gave the town a real investment in the company. Today, a company like Smithfield has integrated feed, breeding, slaughter, and nearly everything else under its own umbrella (often buying up smaller companies in the process). Vertical integration allows the company to have total control over quality and price, and this means that all profits come back to itself, rather than being distributed throughout the community.
Read more: How the Meat Industry Keeps Chicken Prices High, Christopher Leonard
Nearly all chickens raised in the US are under production contracts between poultry processors and farmers. The contracts dictate everything about how the farmer must raise the birds, from feed to housing to medical care. The farmer must pay to build the barns and other infrastructure, according to the processor’s specifications. Once committed, they often find that the contracts are deeply unfair: while they are now on the hook for millions of dollars of debt, the processor can stop delivering chicks at any time, effectively cutting off their income. Poultry processors have been known to punish farmers by stopping deliveries, leaving them to face bankruptcy or loss of the farm.
Read more: Obama’s Game of Chicken, Lina Khan
Since the 1800s, dairy farmers have formed cooperatives to get a better price for their milk from dairy processors. Unlike corporations, whose goal is shareholder profit, cooperatives are supposed to work for the good of their members and return any profits to those members – in this case, the dairy farmers whose cows produce the milk. Today, however, the largest dairy coops have become vertically integrated and often act more like corporations. By owning processing facilities, they act as both buyer and seller, and often focus more on their own profit than the interests of their farmer members. In 2014, NFFC members were part of a lawsuit in which Dairy Farmers of America, the largest dairy coop in the US, paid $50 million to settle allegations that it had conspired to monopolize the Northeast milk market.
Read more: How Rural America Got Milked, Leah Douglas
Farmers of most commodities, including beef, milk, pork, and many others, must pay a tax, called a checkoff, on the goods they produce and sell. The funds are supposed to go to research and promotion of their products (“Pork: The other white meat” and “Got Milk?” were developed with checkoff funds.). Instead, the money is used by trade groups that represent agribusiness, who use it to lobby for policies that benefit big meatpackers, corporate dairy coops, and others – not the independent family farmers who pay the tax.
Read more: Big Beef, Siddhartha Mahanta
- Food and Power: Addressing Monopolization in America’s Food System [pdf]. Open Markets Institute, March, 2019
- Foodopoly: The Battle Over the Future of Food and Farming in America. Wenonah Hauter, 2013
- Concentration and Consolidation in the U.S. Food Supply Chain: The Latest Evidence and Implications for Consumers, Farmers, and Policymakers [pdf]. Federal Reserve Bank of Kansas City, 2017.
- Census of Agriculture. US Department of Agriculture National Agricultural Statistics Service, 2017.
- Big Beef, Washington Monthly, January/February 2014.
- Understanding Contract Agriculture. RAFI-USA.
Restoring Local Control
Decades of pro-business farm policy have given us a corporate-run food and farm system. To return control to all of us – farmers, ranchers, fishers, workers, and consumers – we must both work to rebuild the alternative farm and food system that we want to see in our own communities, and organize for changes in federal and state policy. We support measures to:
- Break up agribusiness corporations.
- Oversee and regulate foreign and corporate investments in US grazing allotments, fishing quotas, and farm land. (Read more about land and other resource grabs at https://nffc.net/what-we-do/land-resource-grabs/).
- Reinstate and strengthen government authority over meatpackers, including rules to ban meatpackers from owning livestock; stop ranked payment systems, require transparency in contracts, and make it easier for farmers to sue meatpackers.
- Establishing strong Country of Origin Labeling (COOL).
- Ensure that agricultural cooperatives represent the interests of their farmer members.
- Reform commodity checkoff programs.
- Guarantee farmers the right to repair their own equipment and own their own digital data.
- Re-establish supply management policies for agricultural products.
- Stop state-level tax breaks and other policy and regulatory giveaways for factory farms.
- Pass strong measures at the state, county, and town levels to guarantee local control and sales of locally-produced food.