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A Monopoly in Agriculture

The control of America's food supply is owned by an increasingly small number of corporations.

by Marika Alena McCauley

From the slaughter of hogs to the production of cheese, the control of America’s food supply is owned by an increasingly small number of corporations. Since the 1950s, the agriculture sector has been undergoing a fundamental transformation. By the turn of the century, the control of a few, rather than the contributions of many, was evidence of this profound transformation of the most productive food system in the world.

This trend raises major concerns for small farmers, rural communities, and urban consumers, and all people working for economic justice. Take a look at the shape of today’s agriculture markets:

• Large corporations produce 98 percent of all poultry in the United States;

• Just two percent of farms produce 50 percent of all agricultural products in the country;

• Four firms handle more than 80 percent of all beef slaughter. Just two decades ago, concentration in this sector was below 40 percent;

• Sixty percent of pork production in the U.S. is owned by just four firms.

This near-monopoly control of America’s food markeets by a few large firms runs contrary to the principles of competitive economics. According to these principles, markets are most effective when there is strong competition between a number of small, medium, and large firms. These firms compete to provide society a good or service at the lowest cost and with the highest quality. When these conditions are not present, the price and the quality of goods available to consumers may be compromised.

This is certainly the case for poultry in the United States: as you read above, large corporations control a whopping 98 percent of the market. What does this mean for consumers and farmers? The controlling poultry producers have the power and leverage to dictate various aspects of the market from poultry prices to levels of hormones and antibiotics fed to the chickens we eat. By producing poultry in industrial factory-style facilities, these large farms also pollute the environment, causing near-permanent damage to soil and waterways in rural areas.

Corporate farm control also impacts the lives of small-scale poultry farmers, whose sustainable and efficient operations are frequently pushed out of the market by large firms. In a letter to fellow members of Congress, Representative Dave Obey (D-WI) expressed his outrage about the “amazing concentration of economic power in the poultry industry, where giant corporations such as Purdue and Tysons are not only squeezing farmers to the edge - and over the edge of bankruptcy, but abusing workers and wreaking havoc on the environment.”

Corporate control of agriculture extends far beyond ownership of the land and livestock on America’s farms. In the quest to eliminate competition and increase their ability to dictate farm prices, corporations in many farm sectors have been buying railroads, shipping lines, packing facilities, and even supermarkets at staggering rates. The corporations that own farms are also entering into contracts with food retailers that serve to block smaller producers from access to the mainstream retail market. Controlling the market at all levels, a strategy called “vertical integration,” gives large corporations the ability to control food production, quality, and prices from the farm all the way to your dinner table.

Supporters of this concentrated farm system often claim that larger farms produce at a higher level of efficiency, which justifies their overwhelming levels of market control. This claim of higher efficiency doesn’t hold up when closely examined. The economic principle of ‘economies of scale’ maintains that larger firms are able to produce at a higher level of efficiency than smaller firms. This principle, however, has actually been disproved when applied to farms. When measuring for the total output per acre of a diverse array of farm products, small and medium farms are found to be more productive and efficient than large, industrial farms.

So, if large farms aren’t the most efficient and sustainable model, why are they so powerful? One of the answers to this question is found in our government’s support structure for agriculture, which is dramatically skewed in favor of large agribusinesses. Large farms receive nearly twice as much in government payments as small farms. According to current law, the subsidies are given based on farm size – the larger your farm, the more money you receive. As a result, rural communities and small, sustainable farms have been stripped of their economic lifelines. In Texas, for example, the top 10 percent of farm producers received 65 percent of subsidy payments. Corporate farms and their representative groups lobby aggressively on Capitol Hill to maintain this lucrative system.

Through support of its partners across the United States, Oxfam America is helping small farmers advocate for changes in government policies that give unfair advantage to large corporate farms. Oxfam’s partners are also carving out niche markets for their products, focusing on local sales and forming cooperatives to be able to compete in today’s marketplace.

For additional information:

Missouri Rural Crisis Center (Oxfam Partner)
Community Farm Alliancehttp://www.communityfarmalliance.com (Oxfam Partner)
U.S. Department of Agriculture, Economic Research Servicehttp://www.ers.usda.gov/briefing/foodmarketstructures/industryorg.htm
The New Rules Projecthttp://www.newrules.org/agri/
Cultural and Rural Developmenthttp://www.card.iastate.edu/iowa_ag_review/fall_01/concentration.html
Corporate Agribusiness Research Projecthttp://www.ea1.com/CARP/