Bust the Trust! – The Department of Justice Takes on Agribusiness

March 15th, 2010

By Annie Shattuck

Agribusiness has become the new class of robber barons, but these monopolists have suddenly found themselves under some uncomfortable public scrutiny.

Friday the Department of Justice began its series of listening sessions on concentration in agribusiness. The DOJ is investigating corporations like Dean Foods for gouging dairy farmers and manipulating prices. They are looking into companies like the Brazilian meatpacking giant JBS for dominating the notoriously concentrated and increasingly dirty meatpacking industry. They are even taking on the ultimate agricultural Goliath: Monsanto.

The U.S. created anti-trust laws at the turn of the last century to ensure competitive markets and protect consumers from price gouging. This legislation was most famously used to break up the control of the robber barons – the industry fat cats who owned monopolies on America’s railroads, oil and steel, including the chokehold Rockefeller’s Standard Oil wielded on America’s energy supplies.

Fast forward 80 years and we are in a similar situation: a handful of companies keep a stranglehold on our food supply. Over 80% of US beef is packed by just four companies. Monsanto’s patented traits are on some 80% of US corn acres. One company controls 40% of US milk supply, and five companies sell about half of US groceries, which ensures that the low prices paid to farmers aren’t necessarily passed onto consumers.

At a town hall meeting Thursday night in Iowa, Southern Iowa family dairy farmer Jerry Harvey summed up the situation of many of America’s family farmers “What was the American dream turned out to be the American nightmare the last 15 months…We haven’t even made enough money to pay our feed costs the last 15 months. We’ve borrowed $5-6,000 a month. My kids that work with me – they are going to be gone too because we just can’t keep going like this.”

The price of paid to farmers for milk has dropped by nearly 50% in the past 15 months, while retail milk prices have not come down nearly so far.
Action by the Department of Justice would have an immediate impact on farmers. Arkansas farmer Harvey Howington summed up the situation, “We have the same problems with the seed companies…they want to squeeze us on our inputs, they want to squeeze us for every dollar they can get out of us.”

But while gouging farmers is bad enough, these monopolies have found another way to gouge consumers: by using their sheer size and political weight to get at government handouts.

The teeth in America’s nearly century old anti-trust laws are about protecting consumers at the cash register. But corporations have figured out how to increase costs to consumers indirectly. Take WalMart for example. The retail grocery chain controls some 10% of the US grocery market. The top five firms control nearly half the market – not exactly the capitalist ideal of free and competitive. Where do we see the effects of this concentration? Not at the checkout line, but in other, more subtle ways. The State of California shells out $86 million yearly in public benefits like Medicare and Food Stamps to active WalMart employees making sub-poverty wages. Management routinely encourages employees to seek public assistance to beef up their wages.

Where else might we see it? In the broken immigration system, in shifting environmental costs (From 2003-2007, US taxpayers shelled out nearly $200 million to clean up after industrial dairy and hog operations), in the ability of firms to secure subsides (ADM, one of the top three global grain traders has been called the “biggest recipient of corporate welfare in US history” by the conservative Cato Institute), and in the lost opportunities for real entrepreneurs to ever get ahead.

The Obama administration’s choice to investigate the barons of agribusiness is historic. But it cannot stop there. The Justice Department is holding listening sessions all over the country to hear about how people are affected, and what they are about to hear is yes, farmers are being gouged, along with everyone else.

To find out more or learn how to request a hearing where you live, visit bustthetrust.org.

http://www.foodfirst.org/en/node/2823