06/21/2009 05:12 am ET Updated May 25, 2011

Message to Obama: Bust-up the Agribusiness Trusts

Beyond the thirty-year experiment in free-market ideology having been judged a failure in financial markets, one thing is clear: as Kerry Trueman reminded us in a recent post, unfettered capitalism has also been bad for our health, and indeed the safety of our food.

Last week, The New York Times reported that this administration has said it will take a harder line on anti-trust legislation, in diverse sectors of the economy including agriculture. Perhaps its premature to tell what this will look like, but enforcing the laws that we already have on the books would be a great start to building a better food system.

This is because the largest sectors of the agribusiness world (grain, meatpacking, biotechnology, etc) are monopolizing food from seed to supermarket shelf and thereby deciding what we can (and can't) buy and eat across this country, and by extension, the world.

These are the companies that are trying to efficiently process tens of thousands of cows per day -- cows that have been lined up in Concentrated Animal Feeding Operations (CAFOs) and fed grain (more efficient than using land to feed them their natural diet of grass), pumped with hormones and other antibiotics to keep them from dying, which means a glut on the market of cheap (anti-biotic-filled) beef. And these are the companies that are creating the seeds -- those seeds that the farmer can't even save for fear of litigation -- to grow the crops that require the use of their pesticides, and which produce a proliferation of fast food.

Yes, efficiency is the bottom line in our current agricultural system. Not safety, not health, or least of all taste; no, for a corporation that is beholden first to it's shareholders, its all about the quickest way to get to the bottom line. Besides exacerbating obesity, heart disease and diabetes cases, this kind of thinking can only be limited in its long term ability to maintain itself, because it refuses to take a holistic approach to creating goods for the common good. In other words, we know it can't be sustained, and therefore it is not sustainable.

But these mega-companies aren't fully to blame, because this is what our economic system has been set up to do for thirty years or more: build a conflagration of trusts.

Will Obama pull a Teddy Roosevelt and begin a new era of trust-busting? Here's hoping he will, and that he begins with Big Ag.

Last week on The Leonard Lopate Show, when he was asked how taking a harder line on anti-trust law could effect the food industry, Michael Pollan responded:

"It's very significant, actually, because you have more concentration in the food industry than in just about any other industry. Most anti-trust experts say that if 4 [or fewer] companies control 40% or more of a marketplace, it's not competitive. And in food we have that in meatpacking, [where] there are 4 companies that control 85% of the beef, [and in] seed production, fertilizer production... there is this tight little hourglass in the food industry, [which means] lots of farmers, very few buyers, which forces farmers to take prices, they have no control over prices at all. So if indeed we were to push an anti-trust agenda in the food industry, it would be the best thing for farmers and the best thing for consumers."

In other words, there are only a handful of people pulling the strings of our food system. And something as fundamental as food should not be so minimally represented, for food safety and health reasons, but because it also violates our human rights.

To this I ask, is this food system not an oligopoly, a market form most at risk for collusion? all the more reason to investigate the mega-firms that form through the process of mergers.

That "hourglass" concept Pollan mentioned comes from William Heffernan and Mary Hendrickson's report Consolidation in the Food and Agriculture System (1999) [PDF], which revealed the "food chain clusters" forming through constant mergers within the food system, and also gave the first comprehensive data on concentration ratios of each firm in the food sector. (An updated version from 2007 is here [PDF].)

One of the biggest fall-outs of this phenomenon has been the price paid in rural America. From Heffernan and Hendrickson's report:

"In the past when family businesses were the predominant system in rural communities, researchers talked of multiplier effects of three or four. Newly generated dollars in the agricultural sector would circulate in the community, changing hands from one entrepreneurial family to another three or four times before leaving the rural community. This greatly enhanced the economic viability of the community.

Large non-local corporations... see labor as just another input cost to be purchased as cheaply as possible. The "profits" then are allocated to return on management and capital and are usually taken from the rural community. They go to the company's headquarters and are then sent to all corners of the globe to be reinvested in the food system. One can ask the question, why were agriculturally based rural communities, with an ample natural resource base, more economically viable than mining based rural communities which also had an ample natural resource base? The answer lies primarily with the economic structure of the major economic base. Increasingly, our agriculturally based communities, like regions with major poultry operations, are looking like mining communities."

Having an hourglass of production power also means the creation of giant facilities to produce our food as fast as possible. E coli bacteria present in a giant shared sink with thousands of servings of spinach has the potential to do more harm than a similar, isolated incident on a small farm would. In creating factory-like facilities to process and package our food, we are exponentially increasing the risks of food contamination. This is the single best argument for decentralizing the food system.

But yes, there is still yet another reason to bust up these trusts: agribusiness has had excessive influence on our government. Represented by a billion dollar lobby in Washington, agribusinesses have maintained a revolving door bringing lobbyists, lawyers and board members into powerful public positions. One of the other problems that arises when mega-companies begin to influence government in this way is that they then become "too big to fail," when we should be asking ourselves (to quote Mike Lux) if they were "too big to exist" in the first place.

However it happened, the facts are clear: Cargill, ADM, Monsanto, Tyson and Smithfield are probably breaking the law, and that law needs to be enforced. It may be that the government for too long has been complicit in creating predatory pricing via billions of dollars in subsidies handed out to the factory farmers of mostly genetically modified corn and soy, but I would like our new administration to take a good look at possible price fixing; aggressive marketing, especially to children; intimidation practices, including Monsanto's intimidation of farmers who have been found to have GMO contamination in their fields, also their intimidation of seed cleaners, and of previous governments; barriers to entry, for example, the assumption of massive amounts of debt on the part of the farmer to build CAFO facilities and thus getting trapped in a contractual agreement with Smithfield, Tyson, etc; and tying, for instance, Round-Up Ready seeds require the use of Round-Up pesticides, meaning that both markets are cornered by Monsanto.

It's time to admit that hyper-efficiency is not working. It may seem counter-intuitive, but being a little less efficient creates room for checks and balances. We need redundancy, and some fostered competition. It is the only way to assure the health of our nation and the safety of our food supply.

Originally published on Civil Eats