View from the Hill

Some might say that American agriculture has the best food-production system in the world. Food costs are comparatively low. According to the American Farm Bureau Federation, a mere 37 day’s worth of labor is required to purchase an entire year’s supply of groceries for an average family.

Others say agriculture is facing a deepening crisis, created in part by our own successes and the rising dominance of a new world order.

Still others say it makes no difference to them. Food can be reduced to simple commodities to be traded across the borders and across oceans. Cost, taste and quality are all that matters.

In her Feb. 7 article “Sustainable Ag: Concentration in Ag” Keesia Wirt, DTN commodities editor, included these facts;

Five companies dominate the world’s seed market-Bayer (Aventis), Monsanto, DuPont, Dow and Syngenta(Novartis and AstraZeneca).

Four firms control 81 percent of the beef packing industry-Tyson (IBP), Cargill(Excell), Swift & Co. (ConAgra) and Farmland National Beef.

Nearly 59 percent of the pork packing industry is controlled by four firms-Smithfield, Tyson, Swift & Co. (ConAgra) and Cargill.

Four companies control 50 percent of the chicken industry-Tyson, Gold Kist, Pilgrim’s Pride and ConAgra.

Sixty percent of the terminal grain handling facilities are controlled by four companies-Cargill, Cenex Harvest States, Archer Daniels Midland (ADM) and General Mills.

ADM, Cargill, Bunge and Ag Processing Inc. control 80 percent of the soybean-crushing industry.

Cargill, ADM and Zen Noh export 64 percent of the soybean oil and 65 percent of the soybeans.

Outside America’s borders, ADM, Bunge and Cargill control 64 percent of the soybean oil processing in Brazil

In the food service industry, in 2000, Krogers, Wal-Mart, Albertson’s, Safeway and Ahold control 42 percent of the market, and that number is projected to increase to 54 percent by the end of 2003.

And finally, Wirt’s report mentioned a little known fact: three foodchain clusters have been identified, but it is believed that five or six foodchain clusters will ultimately control the world’s entire food supply. Foodchain clusters are companies that control the product from genetic development to when it lands on the grocer’s shelf.

These numbers, when translated into raw dollars, are mind boggling. Their combined economic power influences every aspect of our lives. When consumers are in the market to buy groceries, they have no choice but to buy from those companies.

When farmers purchase inputs for raising crops or feeding livestock, they must do business with them. When farmers market their grain or livestock, they must sell to them.

It seems that consumers and agricultural producers are on the receiving end of tremendous market forces that threatens their ability to make independent choices in the marketplace. In my opinion, the threat of monopolistic behavior by free enterprise is the greatest it has ever been.

Perhaps the question still remains unanswered. Why should the consumer or the farmer care?

1. Because of diminished competition in the marketplace, one never knows whether the price of a pound of chicken or protein supplement is a fair price, because the price discovery process has all but disappeared from public view.

2. One never knows if the selling price of grain is a fair price. The underlying futures contract may not merely reflect the supply/demand factors because of diminished competition in the marketplace ( with fewer businesses wanting to buy the grain). And, not only do the surviving companies dominate our national grain trade, they also dominate the world’s grain industry.

3. After Sept. 11, 2001, the American consumer became aware of the strategic importance of homeland security, not to mention the vulnerability of our economic structure in the wake of such a disaster.

That vulnerability extends to agriculture as well. A concentrated agricultural industry presents a larger target than a dispersed industrial counterpart, its infrastructure is more vulnerable to attack, its food products are in greater danger of being contaminated.

The challenge in diminishing our vulnerability is two-fold. The first is motivating the consumer and the farmer to become a proactive force, to have a say in developing a viable strategy for homeland security. We (farmers and consumers) cannot allow others to make these decisions for us. We must take part in the debate.

The second challenge is making sure we have a diversified, safe and secure food industry. American agriculture serves its consumers best when the industry is dispersed, both geographically and economically.

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