In These Times – Rural America
Death of a Sales Barn: How Corporations Took Over Our Food System
A new report explains how a handful of agribusiness firms came to dominate U.S. agriculture, how they’re ruining rural America, and how we can stop them.
Zoe Pharo January 26, 2022
Joe Maxwell, a fourth-generation hog farmer in Mexico, Missouri, used to sell his pigs at the Mexico sales barn, which held livestock auctions almost every day of the week. Today, the barn only hosts a sale once a week. Maxwell remembers the decline this way: “When we got ready to sell our pigs, there got to be fewer and fewer people wanting to buy,” he says, “until there was just about one.”
The death of the small-town sales barn, not to mention other local businesses, illustrates the dramatic changes that have consumed U.S. agriculture in recent decades. These changes have transformed farming from a decentralized model largely in the public arena — with local livestock auction houses and publicly-funded agricultural research — to a highly-concentrated model in the private arena — in which seeds, research, and equipment software are seen as intellectual property and guarded by dominant agribusiness firms.
As of 2020, 2 million farmers and 21 million food and farm workers stand on one side of the U.S. food system while 325 million eaters stand on the other. In between them are a handful of multinational companies — Tyson, JBS, Bayer, to name some of the biggest — who manage nearly every step of how food gets from producer to consumer.
But if this concentrated, corporatized food system seems inevitable or inescapable, it isn’t. In a new report, titled “Bigger Is Not Better: The High Cost of Agribusiness Consolidation,” the international human-rights federation ActionAid explains how we got here and details the nearly 70 years of policy decisions that created our industrial food system.
Today’s consolidation, according to the report, can be traced back to the post-World War II period, when politicians worked to dismantle the New Deal Agriculture framework. This included programs like the Agricultural Adjustment Act, Roosevelt’s economic recovery program, which paid farmers to limit their crop production. The legacy of the New Deal model is complicated — it discriminated against Black farmers and encouraged mechanization and consolidation — but it did set up generations of farmers for success.
In the 1950s, inspired by technological innovation, business groups worked to address the “inefficiencies of farming,” and according to the report, they saw the primary problem as an excess of labor — in other words, too many farmers. These groups aimed to replace a third of family farms, which numbered in the millions, with a few larger farms, capable of producing commodities with less labor and more technology. As Earl Butz, Nixon’s secretary of agriculture, famously put it, “get big or get out.”
A series of federal farm bills brought more acres into production and lowered price floors (the lowest legal price that can be paid for a good) which allowed agribusiness companies to pay less for farm goods than they cost farmers to produce. As farmers scrambled to make up for lost revenue and increase their volume, federal enforcement of antitrust laws, which prevent unlawful mergers and business practices and encourage competition among buyers, declined under both the Carter and Reagan administrations.
In 1996, the U.S. Farm Bill, known as the “Freedom to Farm Act” (or, to many farmers, as the “Freedom to Fail Act”) put the nail in the coffin of small holders. This law ended the last vestiges of supply management, once the dominant farm policy in the United States.
Supply management, says Gary Hoskey in a video by ActionAid, can be described as “don’t raise more than what can be consumed.” Its necessary components are a floor price for commodities based on the cost of production, a commodity reserve that fluctuates depending on crop success, and conservation programs that take agricultural land out of production — allowing farmers to remain in production during long periods of low prices.
Instead, the new farm bill further entrenched industrial farming practices by encouraging farmers to plant chemical- and machinery-dependent monocrops like corn and soybeans. Around this time, meatpacking companies began investing in hog confinement and moving to vertical integration. According to the report, their model was that of Don Tyson, the former president of Tyson Foods, in which his company owned all parts of the supply chain except the riskiest: the farm.
These days, the largest food retailers are getting into livestock and dairy markets themselves, cutting out farmers altogether. For example, in 2019, Costco opened its own, fully vertically-integrated meatpacking plant in Nebraska to produce its $4.99 rotisserie chickens. As firms grow, according to the report, they prefer to source from fewer companies in their supply chain, as this simplifies ordering, transport, and other processes.
Even cooperatives, “farmer-run organizations formed to give farmers a better shot against big corporations,” the report says, “now too often look like corporations themselves.” Many now own processing facilities as well, making them both the buyer and seller, which undercuts farmers in the same way as vertically-integrated companies. In the late 2000s, farmers filed two class action lawsuits against Dairy Farmers of America (DFA), the nation’s largest dairy cooperative, but settled out of court.
As processors have concentrated, sales have shifted from open cash markets — like sales barns — to contract arrangements between processor and grower. “While contracts can guarantee a secure future price for a farmer,” the report notes, “the reality is that the buyer generally sets the terms, which can be extremely restrictive for and unfavorable to the farmer.” For livestock, for example, the company supplies specific feed, medicine, and other inputs.
As a result of these forces, farms these days are fewer and bigger, and mid-sized farms have been the hardest hit. A quick measure that economists use to see whether a market is freely competitive or subject to manipulation is to look at the percentage controlled by the top four firms. When four companies control over 40%, the market is considered uncompetitive, and over 70% indicates a monopoly. Today, the top four companies control 85% of the beef market, 85% of the corn seed market, and 90% of grain trade. Meanwhile, 20% of farms control nearly 70% of U.S. farmland.
Political Promises to Farmers
In 2008, when Barack Obama campaigned on enforcement of antitrust rules and breaking up agribusiness power, the message resonated in rural areas and farming communities. During his campaign, Obama said he planned to “reinvigorate antitrust enforcement.””As president, Obama allowed for the continued consolidation of corporate power in the food system. This is a large part of why Trump won Dunn County decisively in 2016 and in 2020.”
After he was elected, Obama’s Department of Justice (DOJ) and Department of Agriculture (USDA) launched a landmark, year-long investigation into the issue in 2010. Thousands of farmers testified and submitted public comments, the ActionAid report says, often at great risk to their livelihoods. However, the inquiry ended quietly: the release of a 24-page memo in which the federal government simply reiterated its “commitment to vigorous antitrust enforcement in the agricultural sector” but took no serious action.
In fact, in the decade since, agribusiness consolidation has only increased. According to ActionAid, the DOJ has since greenlighted many major agribusiness mergers, including those that shrank the “Big Six” seed and chemical companies down to the “Big Three” and those that further consolidated the meatpacking industry.
Democrats’ failure to address agribusiness consolidation, some argue, has real political consequences. Bill Hogseth, who lives in a rural Wisconsin county that went for Obama twice before swinging to Trump in 2016, put it this way in an essay for Politico: “Rural voters appreciated Obama’s repeated campaign promises to challenge the rise of agribusiness monopolies. But as president, he allowed for the continued consolidation of corporate power in the food system…. [T]hese moves signaled that his administration did not have the backs of family farmers. This is a large part of why Trump won Dunn County decisively in 2016 and in 2020.”
Politicians on both sides of the aisle have reason not to push policies distasteful to agribusiness. The largest multinational corporations — including Bayer, Smithfield, and grain dealer Archer Daniels Midland — spend millions in direct lobbying and political donations, according to the report.
These corporations have cleverly styled themselves as the “farm lobby” and have a great deal of influence in Washington, D.C. and state capitals, using farmers as a front to push their agenda. The Farm Bureau, for example, has state-level chapters in all 50 states and claims to be “the voice of agriculture,” but its real business is selling insurance through FBL Financial Group.
The Farm Bureau is not the only group claiming to represent family farmers while supporting big businesses. ActionAid reports that almost two dozen commodities have research and promotion boards funded by “checkoffs,” a mandatory tax collected from farmers, for every animal or pound of raw goods they sell. Though not explicitly political, these boards have financial connections with trade groups that lobby for specific state laws — for example, those that exempt concentrated animal feeding operations (CAFOs) and other large-scale operations from environmental regulations.
The Environmental Impact of Consolidation
The corporate consolidation of farming also has devastating environmental impacts, according to the report. Industrial livestock production, one of the most consolidated and technology-dependent parts of the food system, is responsible for 14.5% of total global greenhouse gas emissions, which is comparable to the entire global transportation sector.
“You couldn’t design a better system to breed deadly diseases.”
Pesticides, herbicides, fertilizers and manure from CAFOs can also damage water and air quality. Four companies control 70% of the global agrochemical market, and the chemicals they manufacture are linked to water contamination and serious health effects — and are often banned in other countries. U.S. regulatory oversight generally depends on voluntary self-monitoring and manufacturer reporting, and decisions are driven by cost-benefit analyses that place a monetary value on health weighed against the financial benefits of chemical use.
With climate change making water and arable land even more scarce, investors and multinational corporations have identified farmland as a lucrative asset class and are buying up farmland around the world. For example, TIAA, the retirement fund manager with close to $1 trillion in assets, is now the world’s largest land investor, with holdings from Brazil to Illinois. The report says these farmland investments are often more subtle than traditional land grabs, in which a corporation or government simply seizes land from its original owner or steward without negotiation or payment, but raise many of the same ecological, legal and human rights concerns.
In addition to damaging the land, industrial agriculture is a major public health hazard. According to evolutionary biologist Rob Wallace, farming monocultures of genetically similar animals and plants, increasing deforestation and the spread of antibiotic-resistant bacteria via the widespread use of antibiotics in CAFOs all make people more vulnerable to future epidemics. “You couldn’t design a better system to breed deadly diseases,” Wallace says in the report.
This system locks countries into the production of particular goods for export — in the United States, corn and soybeans — which undermines each country’s own food security and sovereignty. The report notes that a highly specialized and concentrated supply chain is vulnerable to shocks and bottlenecks. During the pandemic, for example, shuttering just three pork packing plants impacted 10% of the nation’s pork supply — hog prices plummeted and farmers had to euthanize their animals, while shoppers faced shortages.
In April 2020, Trump invoked the Defense Production Act to force meatpacking plants to reopen but did not mandate any worker protections. According to the report, by September 2020, more than 44,000 plant workers had tested positive for Covid-19 and at least 210 had died, with rural areas becoming some of the worst virus hot spots in the nation.
How We Can Really Feed the World
Farming in the United States, once dependent on diversification and complex ecosystem knowledge, is now highly mechanized and dependent on fossil-fuel based technology, ranging from chemical fertilizers and pesticides to genetically-modified seeds, GPS-guided precision agriculture techniques, and automated climate-controlled barns. 70% of the world’s population still successfully relies on small-scale or peasant farmers for their food.
Agribusiness frequently promotes these innovations and consolidation as the only way to feed the world, but this system still fails us: at least 720 million people, including 42 million in the United States, still go hungry, according to the report. And, despite the reach of consolidation, 70% of the world’s population still successfully relies on small-scale or peasant farmers for their food. The report puts it this way: “It is actually a network of localized and regionalized farmers and markets that most efficiently feeds the world, community by community.”
Though agriculture has great potential to support ecosystems and benefit the environment — by raising fewer animals, using cover crops, rotationally grazing, saving seeds from year to year and using food waste as feed, to name a few regenerative methods — these practices are generally discouraged by the current agricultural regime. Instead, agribusiness has so far responded to climate change by proposing market-based mechanisms, like soil carbon markets and “green finance,” that, according to the report, do not protect against further consolidation.
To begin undoing the consolidated power block that is corporate agribusiness, the report has a few suggestions. First, an immediate moratorium on agribusiness mergers and on all mergers and acquisitions for agribusiness companies. Revisiting the Food and Agribusiness Merger Moratorium and Antitrust Review Act, last introduced in 2019 by Sen. Cory Booker, would be a start, and would allow time to develop new, stricter procedures for mergers and acquisitions.
Other helpful steps, according to the report, could include creating land trusts to provide land access to young and marginalized farmers, ensuring living wages for farmers and farmworkers, establishing incentives for conservation practices and developing a new federal farm program that guarantees farmers a fair price based on the costs of production. ActionAid adds that the USDA and EPA must enforce protections for farmers, workers and the environment, including stronger Grain Inspection, Packers and Stockyards Administration (GIPSA) rules.
A sustainable future for agriculture may not look like a return to the days of the sales barn but, as this report makes clear, it doesn’t look like corporate control, either. Instead, ActionAid’s report makes the case that we need to move towards a decentralized food system with re-localized economies, and quickly.
Zoe Pharo is a Chicago-based writer and In These Times editorial intern. She holds a degree in political science from Carleton College.