wheat on dollars

Corporate Power | January 16, 2025

Fair & Competitive Markets for Family Farmers & Our Food

Our food belongs in the hands of many

A handful of corporations control our food system from farm to fork. Unchecked corporate power leaves eaters with fewer options to support good food from family farmers and pushes independent family farms out of business. Learn more about corporate control here.

The U.S. agricultural sector suffers from abnormally high levels of concentration, giving just a handful of corporations a virtual chokehold over food production and consumption. This has forced hundreds of thousands of independent family farmers off the land and damaged rural economies, public health and our environment. Efforts to restore fairness and competition in agriculture are long overdue and could transform the landscape of our food system for the benefit of all, not just a few.

American Agriculture is Severely Concentrated

Farmers have never seen as consolidated a market as the one today, both for the inputs they need to keep their farms running and the markets where they sell their goods. Most economists state that if the concentration ratio (CR) for an economic sector – or the market share of the top four firms in an industry – is above 40 percent, competition is threatened and market abuses are more likely to occur. The higher the CR, the bigger the threat. In agriculture, concentration ratios far exceed this level for nearly every commodity.1Monroe, M. (2009) Milk brand choices slim as skim: Sanders calls for Dean Foods, DFA probe. St. Albans Messenger. St. Albans, Vermont. August 8, 2009.

Unchecked corporate power distorts markets and leaves farmers and ranchers vulnerable to abuse and unfair practices. For consumers, unchecked corporate power means higher prices and less choice in the grocery store. Even as food costs and spending on food have risen steadily over the past three decades, the farmer’s share of the retail food dollar dropped by 20 percent between 1993 and 2024.2USDA Economic Research Services. Food Dollar Series. 2023. https://www.ers.usda.gov/data-products/food-dollar-series/documentation/ Because of their market power, corporations can push down the prices paid to farmers without passing on their savings to consumers. We’ve seen the effects of this market power in recent years; about 50 percent of inflation in 2023 can be attributed to corporate profits. Corporate profits are also responsible for inflationary pressure that led to price spikes in 2020 and 2021.3Errol Schweizer, “Why Your Groceries Are Still So Expensive.” Forbes, August 2024. https://www.forbes.com/sites/errolschweizer/2024/02/07/why-your-groceries-are-still-so-expensive/

The Packers And Stockyards Act

At the turn of the 20th century, the U.S. passed a series of groundbreaking laws to address monopolies, anticompetitive conditions and abusive practices in the marketplace. These laws – the Sherman Antitrust Act and Clayton Antitrust Act – were written in the time of oil barons and railroad tycoons when it became clear that laissez-faire capitalism was threatening the public good and laws were needed to prevent companies from accumulating and exerting excessive power. While these laws are critical for several economic sectors, they don’t address specific factors in agricultural markets and the dynamics farmers face in the marketplace.

In 1921, the Packers and Stockyards Act (PSA) was created to regulate meatpackers, livestock and poultry dealers, swine contractors and other middlemen in the livestock industry. The PSA addresses industry-wide concentration and anticompetitive practices in the livestock sector, but also contains several provisions that protect individual farmers and ranchers from abuse and unfair practices. Almost every transaction that occurs between farmers and meatpackers is influenced by the PSA, meaning that the vast majority of meat and poultry we consume is touched by this law.

The PSA is meant to level the playing field and rein in the power of corporate meat giants, but implementation and enforcement of the law has been severely lacking for decades, and more recently, thwarted by the lobbying muscle and deep pockets of corporate meatpackers.

Antitrust Enforcement At The USDA

The Packers and Stockyards Division (PSD) is responsible for enforcing the PSA, but its efficacy has varied over time as the USDA has a checkered history of regulatory inaction. The PSD is charged with enforcing the PSA to foster fair competition in agriculture, protect farmers from deceptive and fraudulent practices and curb corporate abuse.

After decades of farmers’ calls to address unfair contracts and practices, the 2008 Farm Bill gave PSD more authority to issue stronger protections for farmers and ranchers. In 2015, Congress allowed the USDA to move forward with groundbreaking rules – guidelines that specify how policies are carried out – that would protect farmers in the livestock industry, but the first Trump Administration delayed the enactment of these rules and gutted PSD, greatly hindering its ability to enforce the PSA.

The Biden administration pledged to strengthen the PSA and its enforcement. It made good on this promise by passing a series of rules to address unfair practices in the poultry industry, protect producers from discrimination and retaliation, and provide other protections for farmers that aim to increase competition and transparency in the livestock sector.

The second Trump Administration has promised an agenda of deregulation, which would be at odds with antitrust policy and would once again put enforcement of the PSA at risk, ceding power back to corporate meatpackers and away from livestock producers.

Livestock Poultry Markets

At the turn of the 20th Century, the meatpacking industry was so concentrated that just a few firms held a monopoly on the sector. Concern about the power that these firms held over America’s food supply led to Congress passing the Packers & Stockyards Act. For a time in the mid-1900s, a larger number of independent meatpackers processed livestock in rural communities throughout the country, decentralizing meat production in the U.S. However, technological advancements combined with a lack of antitrust enforcement by the government led to the eventual concentration of the livestock market in the hands of just a few corporations.

Poultry

The vast majority of U.S. poultry farmers work under contract with an integrator – a company that owns or controls most or all aspects of poultry production. In this system, farmers do not own the livestock they raise; the integrators provide the animals and all other inputs and farmers are paid on a per-pound basis when the animals are sent to be processed. More than 60 percent of the national live poultry market is controlled by four integrators — Tyson Foods (25 percent), Pilgrim’s Pride (20 percent), Wayne-Sanderson Farms (8 percent), and Perdue Farms (7 percent). 4Basel Musharbash. “Kings Over the Necessaries of Life: Monopolization and the Elimination of Competition in America’s Agriculture System.”  September 2024. Accessed at: https://farmaction.us/wp-content/uploads/2024/09/Kings-Over-the-Necessaries-of-Life-Monopolization-and-the-Elimination-of-Competition-in-Americas-Agriculture-System_Farm-Action.pdf The lack of an open market means that farmers have no alternative to the integrator system, leaving them tied to one exclusive partner and vulnerable to abuse. In this system, integrators capture value for themselves: Between 1988 and 2016, the wholesale price of chicken increased by 17.4 cents a pound for consumers while the average pay of poultry growers rose by just 2.5 cents. 5Isaac Arnsdorf. “Chicken Farmers Thought Trump Was Going to Help Them. Then His Administration Did the Opposite.” ProPublica (June 5, 2019). Accessed at https://www.propublica.org/article/chicken-farmers-thought-trump-was-going-to-help-them-then-his-administration-did-the-opposite

Hogs

Historically, hogs were raised by independent farmers and sold to packers but in the 1980s, the hog industry adopted the integrator model, similar to poultry. Hog farms shifted to specializing in specific stages of production, raising animals provided by integrators, and selling to packers who slaughter and market pork. Under this system, consolidation in the hog industry has grown, as has the size of hog operations, forcing smaller farms out of business. Between 1997 and 2022, the U.S. lost 50,000 operations, or about 45 percent of its hog farms. 6USDA National Agricultural Statistics Service, Census of Agriculture. 2022. The CR4 for hog processing was 70 percent as of 2021. 7Saitone, et al. Consolidation and Concentration in U.S. Meat Processing: Updated Measures Using Plant-Level Data. 2023. https://www.usda.gov/sites/default/files/documents/schaefer-et-al-2023.pdf Today, JBS-Swift, WH Foods-Smithfield, Tyson Foods and Hormel control the hog processing market.

Cattle

The livestock industry operates differently: Ranchers independently breed and raise cattle before they are sold to feedlots and then to packers who slaughter and process animals and market the meat. Today, four vertically-integrated corporations control roughly 80 percent of national cattle processing: JBS USA, Tyson Foods, Cargill and National Beef/Marfig. 8Musharbash, 2024. While ranchers benefit from operating independently instead of needing a contract, like hog and poultry producers, this level of concentration gives corporations the ability to minimize the prices they pay ranchers via collusion and market manipulation.

The Situation Today

High corporate concentration in the livestock and poultry industries has hurt farmers and consumers alike, with low profits for producers and price gouging at the supermarket. Opposition to the PSA rules has come from major meatpackers and poultry processors like Tyson, Perdue, Cargill and JBS, as well as trade associations and corporate front-groups like the American Meat Institute, National Pork Producers Council and the National Chicken Council. In 2024, Congress attempted to pass legislation that would nullify recent PSA rulemaking efforts. It remains unclear which, if any, new PSA rules passed under President Biden will stand under the new Trump Administration.

The Dairy Industry

Several dynamics make the dairy industry ripe for manipulation by corporate players and make dairy farmers particularly vulnerable to unfair pricing. The forces of supply and demand have little to do with the price dairy farmers receive from processors. The price is also unrelated to what consumers pay at the grocery store, nor is it based on a farmer’s cost of production or the supply of milk on the market. Instead, fluid milk prices are dictated by a convoluted formula based on the price of block cheddar cheese on the Chicago Mercantile Exchange (CME), even though less than one percent of U.S. cheddar is traded there.

Dairy farms cannot quickly respond to market changes in demand for milk (cows must be milked daily), which means farmers can lose substantial money when prices fall below their cost of production. The commodity price of milk dropped to some of the lowest levels in 50 years over the past several years, partly due to price fixing by processors. Many dairy farmers are approaching the brink of bankruptcy or have gone bankrupt. Between 1987 and 2007 the number of U.S. dairy farms decreased from 202,000 to 70,000 farms – a 65 percent decline. 9USDA ERS. Per-acre seed costs from Commodity Costs and Returns. http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. The trend continued through 2023: America currently has fewer than 30,000 registered dairies. The rural economies that depend on dairy farms and consumers cannot afford to see more farmers leave the land.

Today just one cooperative, Dairy Farmers of America (DFA), processes about 30 percent of the U.S.’s raw milk from 14,000 dairies, while eight large cooperatives produce 54 percent of milk annually. 83 percent of milk sales are marketed by three cooperatives – DFA, Land O’Lakes and California Dairies. 10Food & Water Watch, The Economic Cost of Monopolies: The Dirty Dairy Racket. (2023)

This consolidation means less and less of our milk is being produced by small-scale dairies; according to the 2023 Census of Agriculture, 2.5 percent of dairies – 843 operations with herds of more than 2,500 cows – produced 45 percent of our milk. 11U.S. Summary and State Data, 2022 Census of Agriculture, USDA NASS. https://www.nass.usda.gov/Publications/AgCensus/2022/Full_Report/Volume_1,_Chapter_1_US/st99_1_017_019.pdf Dairies with large herds are considered “mega dairies” and are a huge source of pollution and greenhouse gas emissions compared to small-scale, grass-fed dairies.

The Situation Today

A handful of factory farms, exporters and large cooperatives dominate the dairy industry. Farm Aid and several of our partners advocate for dairy pricing reform and antitrust investigation into the dairy sector. Dairy farmers, especially organic dairy farmers, need a price floor that covers their cost of production, not one based on the easily manipulated Chicago Mercantile Exchange. They need the government to investigate anti-competitive behavior by dairy processors and follow up on the investigations it has started or completed without comprehensive action.

The Seed And Agrochemical Industries

Consolidation in the seed and agrochemical industries has largely been driven by the creation of intellectual property rights for plant varieties and traits. Starting in 1930 with the Plant Patent Act, plant breeder rights for new varieties of seed and asexually produced crops expanded to apply to biotechnology and genetically modified (GM) traits through a series of court cases in the 1980s. A Supreme Court ruling in 2001, JEM Ag Supply v Pioneer Hi-Bred, solidified patent protections for plants as well as biotechnology and GM traits. This creation of patents shifted the seed and pesticide markets from the hands of small firms to a small number of large biotech companies within a matter of several decades.

Patents are now key to furthering the power and profits of biotech companies. Mergers between companies that sell pedicides, seed treatments and seed traits have further concentrated the sector. Hundreds of independent seed dealers have gone out of business or been bought out and today three companies control almost 60 percent of the seed and agrochemical markets. 12Musharbash, 2024.

This concentration has made a huge dent in farmers’ profit margins. USDA data show that the average price of seed between 1990 and 2020 rose by 270 percent, while the price of commodity crops rose by only 56 percent. 13James M. MacDonald, Xiao Dong, and Keith Fuglie. “Concentration and Competition in U.S. Agribusiness.” ERS, June 2023. Accessed at https://www.ers.usda.gov/publications/pub-details/?pubid=106794 Because these costs far outpaced the market price farmers received for corn and soy, farmers have had tighter margins on which to run their farms.

The use of commercialized GM crops has expanded widely since their introduction in 1996; as of 2020, about 55 percent of all U.S. cropland was used to grow GM crops. Farmers who buy patented seeds must pay licensing fees and sign contracts that dictate how they can grow the crop – and even allow seed companies to inspect their farms. GM seeds are expensive, require specific pesticides and other inputs, and farmers must buy them each year or else be liable for patent infringement. And while contamination can happen through no fault of their own, farmers have been sued for “seed piracy” when unauthorized GM crops show up in their fields.

In 2017, the major chemical and biotechnology firms Dow and DuPont merged. In 2018, ChemChina acquired Syngenta and Bayer acquired Monsanto. As a result, between 2018 and 2020, two companies, Corteva and Bayer, accounted for more than half of U.S. retail sales of corn, soybeans and cotton seeds. 14USDA Economic Research Services. “Two Companies accounted for more than half of corn, soybean, and cotton seed sales in 2018-20.” October 2023. Accessed at https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=107193

The Situation Today

Four multinational firms – Bayer, Corteva, ChemChina-Syngenta and BASF dominate the seed and agrochemical sectors. Extreme consolidation in these industries has also coincided with the decline of public investment in traditional seed and breed development. Traditional breeding strategies can be very effective for complicated traits like drought resistance that involve more than one gene. At a time when farmers need more options, not fewer, these programs need to be bolstered.

The Fertilizer Industry

Fertilizer is a critical component of our food system, as plants require nitrogen, phosphorus and potassium to grow. Commodity crops are primarily grown using synthetic fertilizers derived from ammonia, a form of nitrogen, as well as potash (potassium fertilizer) and phosphate. The fertilizer industry has a history of anti-competitive behavior: In 1939, two companies controlled 90 percent of the U.S. synthetic nitrogen output. Antitrust policy created after World War II allowed international companies to begin competing in the U.S. market. However, lobbying efforts by domestic fertilizer producers in recent years have resulted in the sidelining of major foreign players in the U.S. market.

The fertilizer industry has become highly concentrated both within the U.S. and internationally. The U.S. is a net importer of nitrogen fertilizer, and as of 2021, it became the world’s largest importer of ammonia fertilizer. In the U.S., the CR4 is 100 percent for potash and phosphate and 77 percent for nitrogen. 15Fischer et al. “Concentration and Competition in the U.S. Fertilizer Industry.” Agricultural and Food Policy Center, Texas A&M University. March 2024. Accessed at https://afpc.tamu.edu/research/publications/files/725/BP-24-1_AFPC-Fertilizer-Markets-May-2024.pdf

The average price of fertilizers increased between 2007 through 2020 to about twice the price in 1999, despite the cost of fertilizer inputs dropping from 1990s levels. 16Musharbash, 2024. The war between Russia and Ukraine in 2022 resulted in a spike in the price of natural gas, which is used to produce nitrogen fertilizer. This spike resulted in an expected rise in the price of nitrogen fertilizer, but also an unexpected leap in the profits of the top fertilizer companies, which saw a 36 percent rise in profit margin due to the monopoly power wielded by these companies. 17Institute for Agriculture and Trade Policy. “A corporate cartel fertilizes food inflation.” May 2023. Accessed at https://www.iatp.org/corporate-cartel-fertilises-food-inflation High fertilizer prices mean that farmers have had to cut their fertilizer usage, leading to lower production rates and a spike in food prices as well as increases in farmer debt.

The Situation Today

Today, the production of each major fertilizer component is dominated by one corporation: Mosaic controls the phosphate market, producing over 64 percent of mined phosphate and controlling over 90 percent of phosphate fertilizer sales. CF Industries dominates the nitrogen sector, accounting for over 50 percent of domestic ammonia and nearly 40 percent of domestic urea production. Nutrien controls approximately 55 percent of domestically mined potash in North America and 40 percent of potassium fertilizer sales. 18Musharbash, 2024. However, the USDA does not have a mandate to report fertilizer prices, making exact estimates of corporate concentration and market power difficult. Monopolistic control over the fertilizer industry has led to high prices for farmers, chronic shortage, and suppressed innovation in an industry that is a leading emitter of greenhouse gas emissions.

What We Can Do About It

A few powerful corporations control most of our food and farming system. This concentration has hurt farmers and consumers alike, driving family farms out of business while increasing food prices for consumers. Solutions to restore freedom and fairness to our markets exist: It’s vital that the U.S. pursue antitrust enforcement through the Packers & Stockyards Act, USDA be given resources to collect data and information on agricultural markets and commodities and that we enact policies to protect the small, diversified family farmers threatened by monopolies.

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