Washington, D.C. — Almost every step of America’s food supply chain has grown more concentrated in the past few decades, and growing corporate power has left relatively small farms and ranches vulnerable to exploitation at the hands of the oligopolies with which they do business. Recent mergers and acquisitions continue the relentless trend toward increasing corporate concentration across many agricultural markets. With 1 in 5 rural counties dependent on farming, rural America cannot afford depressed farm earnings.
A new report from the Center for American Progress highlights the transformation of the agriculture sector over the past few decades, resulting in a food supply chain characterized by high market concentration at nearly every segment. Two case studies—one on the market for corn and soybean seeds and one on the hog sector—illustrate the implications of corporate concentration and vertical integration for farmers, and suggest that corporate concentration and anti-competitive practices in these markets have put considerable market power in the hands of agribusiness, to the detriment of America’s farmers and ranchers.
“Across the economy, America is facing a crisis of concentrated economic power. Few have felt the kitchen table impacts of that more sharply than America’s independent farmers,” said Andy Green, managing director of Economic Policy at CAP and co-author of the report.” Washington has an important role to play in countering the anti-competitive squeeze and rebalancing power so that farmers—and rural America—can secure a fair share of the American dream.”
“Rebalancing the playing field for farmers requires tackling corporate power with meaningful antitrust enforcement and empowering farmers to bargain for fair prices and terms,” said Zoe Willingham, research assistant for Economic Policy at CAP and co-author of the report.
“In agriculture, there’s a thumb on the scale of fairness and it’s not on the farmer’s side. I am glad to see CAP not only raise awareness of this issue but also offer solutions. We need leaders to stand up to these ag monopolies to enable that when we pass the farms to the next generation, they’re thriving,” said J.D. Scholten, a fifth-generation Iowan and advocate for rural communities who joined CAP for a news conference call today to release the report.
CAP’s report outlines policies that aim to increase competition; empower farmers to secure their fair share; and protect farmers from an array of unfair, deceptive, and abusive practices in these markets. These policies include:
- Restoring competition in agricultural markets: Reviving strong antitrust enforcement across the agricultural sector is the starting point for protecting farmers and ranchers. Specific steps include 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. Antitrust enforcers must also take affirmative steps to break up monopolies and monopsonies, while federal policy should proactively support the growth of new competitors.
- Guaranteeing a fair share for farmers: Farmers must be empowered to receive a fair share of the fruits of their labor. Policymakers must implement alternative tools such as pricing models that guarantee farmers a percentage share of the ultimate returns on their commodities, as is the case today in some agricultural markets such as that of wine grapes. Alternative bargaining models can also be deployed to help farmers and workers receive a fair return, including farmer fair share boards made up of farmers, workers, and processors to facilitate farmer and worker collective bargaining with large buyers over commodity prices.
- Codifying contract reform to protect farmer rights: The dramatic trend in many agricultural markets toward production under contract, rather than the sale of product on the spot market, means it is essential that contracts be regulated to protect farmers from unfair, abusive, and deceptive practices by large buyers. Farmers must also be empowered to better protect their interests under the law when they suffer violations of their rights.
- Creating an Independent Farmer Protection Bureau (IFPB): America’s independent farmers deserve to have a dedicated, independent champion fighting for their interests against highly concentrated agribusiness. Modeled after the Consumer Financial Protection Bureau, which was created to protect consumers from the predatory financial practices that helped cause the 2008 financial crisis, an Independent Farmer Protection Bureau should be empowered to investigate and stop abuses of market power; protect farmers’ contract rights under laws such as the Packers and Stockyards Act; combat anti-competitive practices in seed and other input markets; and more. The IFPB should have backup authority to review and block mergers in markets that affect farmers.
Click here to read “A Fair Deal for Farmers: Raising Earnings and Rebalancing Power in Rural America” by Zoe Willingham and Andy Green.
For more information or to speak with an expert, contact Allison Preiss at email@example.com or 202.478.6331.