By Liza Ayres, NFU Intern
Consolidation has long been one of the greatest challenges for family farmers and ranchers. Agribusiness mergers reduce innovation, limit choice and increase prices for farming inputs and make it increasingly difficult for farmers to receive a fair price at market.
A selective group of firms dominate the processing of every major commodity and coordinate much of the livestock production in the country. The four largest corn seed sellers accounted for 85 percent of the market in 2015, and the top four grain companies control nearly 90 percent of the global grain trade. Currently, the top four largest pork packers dominate 71 percent of the market, the top four beef packers control 85 percent, and the market share for the top four soybean crushers has reached 79 percent. These represent huge leaps from thirty years ago when pork controlled 36 percent, beef 32 percent, and soybeans 54 percent.
In response to these large-scale mergers, U.S. Senator Cory Booker (D-NJ) introduced the Food and Agribusiness Merger Moratorium and Antitrust Review Act of 2018 (S. 3404) on August 28th. Two weeks later, Representative Mark Pocan (D-WI) introduced the House companion H.R. 6800. If passed, the bill would enact an 18-month merger moratorium in the U.S. food and beverage manufacturing, grocery retail, and agribusiness sectors.
Booker is especially concerned with the chemical and seed company acquisitions within the past two years. The recent mergers of Bayer and Monsanto, Dow and DuPont, and Syngenta and state-owned ChemChina have given just three companies control of two-thirds of the crop seed and nearly 70 percent of the agricultural chemical markets. Pocan cites how “out-of-control consolidation” allows corporate profits to soar at the expense of family farmers.
In addition to the temporary merger moratorium, the bill would establish a federal commission to study the impacts of concentration on America’s food and agricultural economy. Notably, the commission would be tasked with reviewing current antitrust laws. Despite the dominance of a small number of companies in several food and agriculture sectors, current antitrust laws have not been sufficient in preventing alarming levels of merger activity over the past three decades.
This legislation comes at a time when family farmers and ranchers are coping with a long-term slump in the farm economy. The farmer’s share of the retail dollar is only 15 percent, while agribusiness conglomerates are reporting record earnings. Family farmers are increasingly forced out of business, causing wide-ranging impacts on the farming sector and rural communities.
While the merger moratorium is not a final solution, it would offer an opportunity to analyze and understand the impact of agribusiness and food mergers. The legislation could be the first step in reversing current market trends that increasingly disadvantage family farmers and ranchers. NFU encourages everyone to call their senators and representatives and urge them to support S. 3404 and H.R. 6800.
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