Slate | Biden Needs to Bust Big Ag Immediately

Reposted from: https://slate.com/business/2021/01/biden-big-food-agribusiness-rural-states-antitrust.html

During the contest for the 2020 Democratic presidential nomination, Sens. Elizabeth Warren and Bernie Sanders ran on a message of progressive rural populism. Among other things, they vowed to break up the handful of seed, pesticide, and meat companies that dominate U.S. agriculture. This agenda seemed to resonate with Democrats in the rural state par excellence, Iowa, with its blanket of corn and soybeans and concentration of teeming factory-scale hog facilities. Sanders finished in a virtual tie for first place in February’s caucus, and Warren ended a strong third.

Together, they claimed 46 percent of the state’s delegates, nearly three times the haul of the eventual Democratic nominee and now president-elect. Joe Biden took gentler approach to corporate power in farming, in line with the wisdom of his top rural adviser, Obama-era U.S. Department of Agriculture chief and dairy-industry executive Tom Vilsack (now Biden’s official agriculture secretary pick). The former Iowa governor argued that the bust-’em-up approach isn’t a “winning message” in rural areas because of the “substantial number of people hired and employed by those businesses here in Iowa,” as he told a political podcast nearly a year before caucus.

As Biden forms his Cabinet and prepares to govern, a new paper commissioned by the Farm Action Fund Alliance makes a strong case that Big Ag consolidation actually harms working-class and farmer livelihoods in rural areas. The authors—University of Missouri rural sociologist Mary Hendrickson, Michigan State University professor Phil Howard, Farm Action Fund Alliance’s Emily Miller, and Sam Houston State University’s Douglas Constance—detail how virtually every aspect of our food system, from retail to distribution to meatpacking down to seeds and pesticides, has fallen under control of an ever-smaller number of ever-larger companies, with benefits that accrue mainly to their shareholders.

For consumers, the paper shows, this hyperconsolidation means that the array of choices we see at the supermarket is largely an illusion. Despite all the creative and varied bottle and box labels on display, four companies—led by Gallo and Constellation—are behind nearly half of the wine sold in the United States. Beer is even more concentrated—four conglomerates own almost 80 percent of the market, including many “craft” brands. Three companies—General Mills, Kellogg, and Post—peddle 83 percent of the cereal in the breakfast aisle. Bagged salad greens? Chiquita and Dole make up more than a quarter of that market.

Fast-food options proliferate, but three big ones, KFC, Pizza Hut, and Taco Bell, belong to one company, Yum! Brands. Together with McDonalds, Wendy’s, and Subway, just four companies grab nearly 40 percent of the booming U.S. fast-food market. And the burgers they sell likely come from JBS, Marfrig, Tyson, and Cargill, which process 3 of every 4 beef cattle grown in the United States. Chicken nuggets and other poultry delicacies by and large emerge from farms under contract with Tyson, JBS, Perdue, and Sanderson, which control more than half the chicken market.

One reason federal antitrust authorities greenlighted the mergers that led to such concentration, the authors note, is the idea that allowing a few companies to dominate a particular market is more efficient, leading to lower costs and thus lower prices for consumers. But that’s not really the case. “Consumer prices are ‘sticky,’ rising when costs for powerful processors and retailers increase, but less likely to fall when prices paid to farmers decrease,” they write. And markets dominated by a few huge competitors provide fertile ground for collusion to raise prices. They point to a barrage of recent lawsuit and criminal cases alleging just that among the beef, pork, and chicken giants.

Market power translates to political power when conglomerates invest a share of their profits in lobbying and campaign donations—which then often help them operate in a friendly regulatory environment. Workers suffer the consequences. As the authors note, regulatory authorities have largely been absent as more than 50,000 meatpacking workers have tested positive for COVID-19 and about 262 have died.

Here’s where we get to Vilsack’s claim about how taking on Big Ag is not a “winning issue” for politicians trying to win elections in rural areas because they’re such big job creators. In reality, agribusiness corporations aren’t major employers in Iowa, and the meatpacking jobs they provide tend to be low-paying and highly dangerous. And consolidation results in job losses, not gains. When German chemical giant Bayer took over U.S. seed and pesticide behemoth Monsanto in 2018, the combined conglomerate shed 12,000 jobs globally.

Farmers aren’t really benefiting from the consolidation of agribusiness either. It has helped drain people from the landscape in places like Iowa, as farmers either exit the business in droves or scale up dramatically so they can make a living from tight profit margins. These charts from the report tell the tale: Fewer and fewer—and ever larger—farms are producing more and more crops and meat.

The report’s findings raise a stark question: Why should politicians tread lightly around companies that don’t employ many people in rural areas, and whose market power doesn’t serve the interests of those they do contact, like meatpacking workers and farmers?

There are indications that Biden is considering this question. His transition team announced “agency review teams” that included fierce advocates for taking on corporate power. Andy Green of the think tank the Center for American Progress has a seat on the Treasury team. Green is the co-author of a scathing 2019 paper calling for a “temporary moratorium on mergers in the agriculture sector, a statutory cap on concentration in various agriculture markets, and more broadly restoring the powerful tools of antitrust enforcement that have been eroded over the past four decades.”