Improve efficiency. Increase production. Add global competition.
Stir vigorously until prices drop. Repeat. Serves increasing number
of people, and requires fewer cooks over time.
Farmers in the United States have been eating that recipe for decades.
It has meant that as farm productivity has increasednot only
in the United States, but worldwidefewer farmers have produced
a growing pot of food for the world.
As their numbers steadily decline, and prices continue at low ebb, numerous
farming trends and policies have come under intense scrutiny and criticism.
Some of the strongest rhetoric today is focused on agribusiness concentration
on both sides of the farmer. In a recent poll of 680 North Dakota farmers,
70 percent said agribusiness concentration was a major cause of the current
farm recession, and 20 percent said it was a minor cause.
Consolidation and concentration in agribusiness has molded an
inverse hourglass structure where farmers have fewer places to buy
inputsseed, fertilizer, livestock feedand fewer outlets
to sell their grain, cattle and hogs.
"Commodities have been squeezed everywhere," according to Paul
Strandberg, program director for the Minnesota Department of Agriculture.
Concentration, he said, has "given upper levels (in the food chain)
some degree of control of profit margins that lower levels don't
"Farmers are the shock absorbers for the whole system," Strandberg
Because low farm income is really the root issuerather than
high farm costsmost of the attention and criticism has been
directed at first-level food processors-meatpackers and flour millers,
for example-rather than input suppliers.
The coincidence of greater concentration and low prices for grain
and livestock has nurtured a festering suspicion that the two must
be connected, and made poster children for corporate greed out of
meatpacker IBP, grain giant Cargill and other multinational food
companies assumed to be killing an American tradition.
Minnesota Sen. Paul Wellstone drew nationwide attentionand
applause from farm advocatesfor his proposal to place a moratorium
on agribusiness mergers and acquisitions. Similarly, farmers and
lawmakers from agricultural states are looking for the Justice Department
to "do a Microsoft" on agribusinesses to keep these companies from
supposedly low-balling farmers on commodity prices.
The statistics are enough to raise some eyebrows: Concentration
at the processor level exists in virtually all major crop and livestock
commodities. In beef packing, four companies control about 70 percent
of the U.S. market.
"There are real good reasons to look at this," said James MacDonald,
an expert on concentration with the U.S. Department of Agriculture.
"I'd be concerned if I were a farmer."
But what, exactly, is the connection between processor concentration
and commodity prices? Does high market share by a handful of processors
automatically mean they canand dotake advantage of that
position, making for a less competitive market and putting a choke
hold on local farmers? Is consolidation and concentration in commodity
food processing a uniquely U.S. phenomenon?
As the stories in this issue show, some view ag concentration
as a problem, while others see it as the only means of survival
for many in the industry. Also, this question is not limited to
the U.S. economyCanada and Europe have experienced a similar
move to agribusiness concentration in recent years.