Is corporate consolidation condemning farmers to crippling servitude?

Agriculture has undergone an incredible consolidation of the companies that farmers rely upon.

The global chemical/seed industry has collapsed into four giants; most meat industries are ruled by two or three packers, who often also play in the genetics, feed, production and management fields; Western Canada is utterly dependant upon two railways; two giant regional grain companies dominate the Prairies, with a third international player owning much of the rest of the business; fertilizer production is run by cartels.

Does that make the thousands of scattered, unconnected farmers who have to deal with these giants powerless and subject to their ability to set prices and wring profits out of producers?

It’s a critical question in the wake of mega mergers like 2018’s Bayer-Monsanto and the radical consolidation that occurred in the Prairie grain handling system in the 2000s and 2010s.

I looked at this question in some depth about a year ago in these stories.

The bottom line conclusion I got from this work, which involved speaking with economists and farmers, was that while worrisome, consolidation actually seemed to have more upsides than downsides and simplistic assumptions that fewer competitors meant less competition and worse results for farmers didn’t necessarily match what was going on in farm country. That was a pleasant surprise for me, and as a journalist, I love when reality turns out to be different than my preconceived notions.

I got another side to the story and a welcome refresh to the same topic this Christmas when I read analyst Jonathan Tepper’s and Denise Hearn’s The Myth of Capitalism, which takes the opposite tack to what I’d found in my previous work. This book, published in November and getting a lot of buzz, does not focus on agriculture, but substantial sections of the book deal with agriculture and farming as one of the sectors most affected by corporate consolidation. Their work is a passionately argued denunciation of the domination of much of the American and advanced West’s economy and society by oligarchies, which governments have allowed, ignored and even facilitated.

Where the economists I quoted in my previous stories measured the impact of monopolies, monopsonies, duopolies and oligarchies in terms of their affect on “consumer welfare,” considering their existence benign if they offer consumers cheaper prices, more choices or improved access to products and services, Tepper and Hearn see profound dangers and damage in concentrated control of any sector of the economy by vested interests, and they demand governments take actions to control, restrain and break-apart these interests.

It’s a bracing read, with no attempt to take the sort of “one the one hand . . . on the other hand” approach and the it-dependsianism that is so common in books on economics topics. There’s a lot in it that is relevant for farmers, and you can read my summary of the most ag-specific elements here in this story we just published.

Have Tepper and Hearn convinced me that major consolidation and concentrated ownership is almost-always or generally bad? Not really. I still see good justification for the argument that a handful of major, integrated players can offer consumers and farmers a far more efficient, cheaper and more dynamic set of choices than having many more but smaller, less integrated and less capitalized competitors. I’ve seen this in the slaughter and food processing businesses. Bigger grain companies produced by mergers seem to be offering much more than the smaller, poorer companies they emerged from. And I understand the argument that companies like Bayer and Monsanto have made about needing even greater size in order to fund the enormously expensive biotechnology and chemical innovations that are what farmers need, that are possible with enough resources, but which are so dauntingly expensive and such a gamble that even the giant companies of five years ago back away from trying to develop them.

But they have offered a refreshing rejoinder to the economists who (possibly) too easily accept a limited justification for the existence of concentrated ownership. There is such an extreme level of concentration now that none of us should be blithely accepting the idea that everything’s fine and we don’t have anything to worry about. Tepper and Hearn highlight the risks that lie before us, and might already be in play. It’s a worthy addition to a discussion we should be having, but generally ignore.

As a farmer, what’s your experience? Have the mergers and consolidation of your supplier and buyer “partners” helped or hindered you? Do you feel your situation today is better or worse than it was in the past? Are you worried about where things are going, or hoping they advance even more quickly? By looking at all the sides to this issue, hopefully you’ll end up with a well-rounded understanding of the situation you are in, and really cannot escape from.

 

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