Study reveals how consolidation affects food prices and market competition
A recent report, "Kings Over the Necessaries of Life," sheds light on the negative consequences of agribusiness monopolies for farmers and consumers alike. It reveals that decades of consolidation have drastically reduced competition, leading to increased costs for agricultural products and services throughout the United States.
Basel Musharbash, the report's author and principal attorney for the Antimonopoly Counsel, points out that the lack of enforcement of antitrust laws since the 1980s has allowed a few large companies to dominate the market. These monopolies now have the power to manipulate prices and suppress competition across various sectors of the food system, from seed and pesticide production to grocery distribution.
The report outlines numerous troubling practices, including the deliberate creation of shortages to keep prices elevated. For instance, while beef prices have soared, the portion of the consumer dollar going to cattle farmers has dropped from 70% in the 1970s to 30% today.
In the fertilizer industry, consolidation has led to three major firms controlling the market, allowing them to dictate prices and limit access to essential materials.
Fertilizer prices have skyrocketed, with increases of 60% in 2021 and 132% in 2022. Though these companies often cite supply-chain issues as the cause, Musharbash's analysis of their financial reports suggests otherwise, pointing to monopolistic practices as the real issue.
The report also features an Agriculture Consolidation Data Hub, providing insights into various sectors affected by consolidation, such as crop insurance, farm machinery, and the seed industry.
Four major firms now dominate the seed market, causing prices to rise more rapidly than any other agricultural input over the past two decades.
Musharbash insists that the nation must renew its commitment to enforcing antitrust laws in agriculture. He argues that the current state of affairs is not a foregone conclusion; past government interventions successfully dismantled monopolistic structures, leading to a competitive market. With the right approach, it is possible to restore fairness and equity for farmers and consumers in the agricultural sector.