Open Markets Institute

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Memorandum - Stop Agricultural Monopolies

The Open Markets Institute issued the following memorandum on how the next administration can and should reverse course to stop the handful of powerful, vertically integrated corporations from controlling entire agricultural markets, exploiting workers, and mining the countryside.


MEMORANDUM

TO: Interested Parties
FROM: Open Markets Institute
DATE: Nov. 13, 2020
RE: Legislators must listen to rural America and stop agricultural monopolies
____________________________________________________________

For a generation, America’s leaders have failed to protect America’s farmers, agricultural workers, and rural communities from rapacious and abusive monopolists. Absent action now, the problem will only grow in the years ahead, making it that much harder to fix the fundamental problems in America’s economy and society.

The biggest cause of growing regional inequality isn’t technology or natural market forces. Changes in public policy, embraced by both parties, have largely been behind enabling predatory Wall Street-backed corporations to strip wealth away from rural communities.

How agricultural consolidation has affected America’s farmers since the 1980s:

  • The number of dairy farms has dropped from 640,000 in 1970 to only 34,000 licensed dairies in 2019. In 2002, half of dairy cows lived on farms with 275 cows or fewer. Just 10 years later, half of dairy cows lived on farms with 900 cows or more.

  • Since the mid-1990s, 70% of U.S. hog farmers have gone out of business, as massive factory farms replaced small ones. In 1987, half of all pork came from farms with 1,200 hogs or fewer. By 2017, half of all pork came from farms with 51,300 hogs or more. In 1993, 87% of U.S. hogs were sold into competitive markets, but today that figure is less than 7%.

  • Nationally, the top four beef packers slaughtered 25% of cows in 1977; today, that’s up to 84%. In many regions, ranchers find only one potential buyer in the local market.

  • Half of chicken farmers work in regions dominated by only one or two processing monopolies. Worse, these farmers are subjected to extortion and manipulation by corporations that force them to engage in “tournaments” against one another.

  • In 1994, the top four seed companies controlled only 21% of the globin factal seed market. By 2013, just the top three controlled 55%, with Monsanto alone controlling more than one-quarter. In many U.S. markets, the concentration is even greater. USDA data shows that the per-acre costs of soybean and corn seed spiked between 1995 and 2014 by 351% and 321%, respectively. Altogether, the average farmer spends three times more on inputs per acre today than in the 1990s.

How agricultural consolidation has affected working people in rural areas:

  • Wages are down. As recently as 1979, meatpacking workers’ wages were roughly $28 per hour, which was 14% more than the national manufacturing average. In 2018, meatpacking workers’ average annual salary was $28,450, just above the poverty line for a family of four.

  • Jobs are less safe. In the 1970s, typical line speed for the beef industry was around 175 cattle per hour. Now, some plants slaughter more than 400 animals per hour. In the chicken industry, the Streamlined Inspection System line speed standard is 70 chickens per minute, but new inspection systems increased this limit to 140 birds per minute, and the Trump administration proposed a rule in 2020 that would allow plants to run at 175 chickens per minute. In hog processing, the USDA lifted all limits on line speeds in 2018, which can reach 1,300 animals per hour.

  • In four independently conducted surveys by the Southern Poverty Law Center, Midwest Coalition for Human Rights, Nebraska Appleseed, and Human Rights Watch, workers cited increased line speeds as the top or most notable complaint in regard to workplace safety. The Food Chain Workers Alliance reports that 65% of meatpacking and food processing workers have been injured on the job.

How agricultural consolidation has affected the public, both in rural areas and across the nation:

  • It’s bad for the climate. The Institute for Agriculture and Trade Policy estimates that as of 2019, the top 20 corporations worldwide that produce meat and dairy contribute more emissions (greenhouse gases) than all of Germany.

  • It’s bad for the environment. Agriculture is the leading known cause of water pollution in the U.S. and second-largest known cause of wetland contamination. Pollution from animal feeding operations threatens or impairs more than 13,000 miles of U.S. rivers and streams, 60,000 acres of lakes and ponds, and feeds into our major waterways such as the Chesapeake Bay, the Great Lakes and the Gulf of Mexico – contributing to algal blooms and dead zones that impact drinking water supplies, aquatic systems and ecosystems.

  • It’s bad for the economy. Water pollution by industrial agriculture hurts people’s livelihoods by harming everything from recreation to commercial fisheries.

  • It’s bad for public health. Manure from factory farms emits a slew of toxic pollutants such as ammonia, hydrogen sulfide, and particulate matter that cause respiratory health issues. Factory farms are also correlated with increases in childhood asthma rates. In the second-largest hog producing state, North Carolina, these polluting concentrated animal feeding operations are clustered in low-income communities of color.

  • It’s bad for families’ pocketbooks. A recent federal investigation of poultry processors for price-fixing scandals shows how these corporations may have cheated the average American family of four of some $330 per year, just for higher priced chicken.

  • It’s bad for main street businesses. From 1990 to the early 2000’s, Walmart went from selling no groceries to commanding a quarter of grocery sales. Walmart drives out local competitors by selling goods at a loss, relying on Wall Street backing to make up the difference. This particularly harms rural independent grocers, who said Big Box stores were their biggest threat to survival, in a survey. In 2018 Walmart sold more than half of all groceries in one out of ten cities and one out of three “micropolitan” areas. In 38 regions, Walmart captured 70% or more of grocery spending and in many small towns.

These facts only touch on the harms of food and farming consolidation. Rural communities are also deeply oppressed by many other forms of monopoly. These include the closing of local hospitals bought out by giant corporate chains; the takeover of locally owned financial institutions by taxpayer-subsidized “too big to fail” banks; the loss of connectivity to the global economy that results when airlines cut off service to “flyover country”; and the paucity of essential broadband internet when monopolized telecoms refuse to service rural areas.

The executive branch has the power to address these issues by enacting fair competition policy rules through the Justice Department, Federal Trade Commission, Agriculture Department, and more.

The next administration can and must reverse course to stop the handful of powerful, vertically integrated corporations from controlling entire agricultural markets, exploiting workers, and mining the countryside. 

The new administration should immediately take the following actions to remedy agricultural consolidation:

  1. Reinstate the Grain Inspection, Packers and Stockyards Administration as a stand-alone agency with independent authority and additional resources.

  2. Restore the USDA Cooperatives Program to a fully independent division, as it was until 1994. The USDA should also provide significantly more resources to support critical cooperative research, education, and technical assistance. This includes supporting the growth of farmer- and worker-owned food businesses and promoting democratic governance at existing co-ops.

  3. Enact new USDA rules to improve enforcement of the Packers and Stockyards Act, building upon rule-making proposed in 2010. These reforms include, but are not limited to, banning packers from owning livestock, abolishing abusive tournament payment systems, requiring packers to demonstrate that the prices they pay to farmers are based on fair market value, explicitly protecting farmers from retaliation and discrimination for speaking in public about the actions of packers, and granting farmers greater legal standing to sue meatpackers without proving harm to industrywide competition.

  4. Enact new FTC rules to define fair competition and ban the harmful practices of exclusive dealing that shuts out small food businesses from key markets and predatory pricing that allows dominant firms to sell goods below cost.

  5. Revoke all line speed increases and waivers implemented under the New Poultry and Swine Inspection Systems, and return critical meat inspection and spot-check duties back to federally trained inspectors, not plant employees.

  6. Conduct a comprehensive study by OSHA of all working conditions in plants, including workplace hazards associated with the use of knives, repetitive motion injuries, handling of live animals, safety risks during the evisceration of carcasses, and chemicals used in meat and poultry processing. Based on this study, OSHA must establish new safety standards for the food processing industry, including line speed limits informed by worker and food safety.

The new administration should also immediately begin to work with Congress on the following actions to remedy agricultural consolidation:

  1. Ban factory farms and pass bright-line merger rules to block harmful agricultural takeovers and undo past mergers to break up monopolies.

  2. Double the funding for federal food safety inspectors and expand the federal inspector workforce. Raise the salaries for the positions of Food Inspector and Consumer Safety Inspector, to reduce vacancy rates.

  3. Provide new federal supports and grants for small- to midsized food processing facilities, to build local and regional processing capacity and to make up for decades of industry consolidation and foul play.

The call to break up Big Ag is growing stronger as agribusiness monopolies grow larger. The pandemic revealed that the impacts of consolidation span much further than rural America. It’s time for elected officials to meaningfully respond.

Signed,
Open Markets Institute


Additional Resources: 

Obama’s Game of Chicken, Lina Khan, Washington Monthly, November-December 2012

How to Close the Democrats’ Rural Gap, Claire Kelloway, Washington Monthly, January-March 2019

Food and Power: Addressing Monopolization in America’s Food System, Claire Kelloway and Sarah Miller, Open Markets Policy Report, March 2019

Restructuring America’s Meat Industry for Worker and Consumer Safety and Farmer Prosperity, Policy Brief by Open Markets, Family Farm Action Alliance, and Food & Water Watch, May 2020