The economic cost of U.S. food monopolies

In an economy dominated by monopolies, the food industry goes to extremes

In an economy dominated by monopolies, the food industry goes to extremes

From a new Food & Water Watch fact sheet:

The agriculture and food sector is unusually concentrated, with just a few companies dominating the market in each link of the food chain.

In most sectors of the U.S. economy, the four largest firms control between 40 and 45 percent of the market, and many economists maintain that higher levels of concentration can start to erode competitiveness.

Yet according to data compiled by the University of Missouri-Columbia in 2012, in the agriculture and food sector, the four largest companies controlled 82 percent of the beef packing industry, 85 percent of soybean processing, 63 percent of pork packing, and 53 percent of broiler chicken processing.

Consolidation is not isolated to farms and processing. In 1998, the four biggest food retailers sold about one-fifth (22 percent) of groceries. By 2010, retail concentration had more than doubled and over half of grocery sales went to the four largest companies. Walmart became the nation’s largest food retailer within a dozen years of opening its first supercenter in the late 1990s.

The concentration of economic power in every segment of food and agriculture can harm both farmers and consumers. Farmers can pay more for supplies when only a few firms sell seeds, fertilizer and tractors. They also sell into a highly consolidated market, and the few firms bidding for crops and livestock can drive down the prices that farmers receive. Consumers have fewer choices at the supermarket, and food processors and retailers are quick to raise prices when farm prices rise (as is anticipated as a result of the 2012 drought) but are slow to pass savings on to consumers when farm prices fall.

Continued here (pdf)


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