CORPORATE AGRIBUSINESS: MONOPOLIZING SUSTENANCE

PCDForum Column #63,  Release Date October 8, 1993

by A.V. Krebs

The production, preparation, availability, distribution, and quality of food the sustainer of life have shaped human cultures in fundamental ways throughout history. We have good reason to be concerned when our food production, distribution, and preparation system commonly known as the agribusiness system becomes dominated by powerful and increasingly monopolistic corporate interests that see food only as a source of profits and power. More than 95 percent of the food consumed in the United States is today manufactured processed, packaged and advertised by such a corporate system.

The destruction of the small farmer, the inhuman condition of many farm workers, the hunger and starvation that result from the maldistribution of food, and the nutritional disorders related to the use of heavily advertised but nutritionally inadequate processed foods are all consequences of this system that raise a range of heretofore unaddressed social, economic, political, environmental and moral questions. The growing reach of these transnationalized corporations as they extend their control over an ever growing portion of the world's food production and distribution within a globalizing world economy make these questions ever more urgent.

In the United States most people are today well-fed and take ready access to food for granted. This may account for the fact that few Americans are aware of the concentration of monopoly power in the U.S. food system and its consequences. A few statistics reveal the extent of that concentration.

Cargill, the largest private (family owned) corporation in America, is also the world's largest grain trader. Cargill and Continental Grain together control 50% of all grain exported from the United States. Cargill has also become the second largest meat packer in the country. Cargill, Iowa Beef Processors, and ConAgra together slaughter close to 80 percent of all the meat slaughtered in the United States. Four companies General Foods, General Mills, Kellogg's and Quaker Oats dominate almost 90 percent of an ever growing cold cereal market. When four companies control 40 percent or more of the market, economists usually consider the market to be oligopolistic.

This enormous market power has made agribusiness corporations the most profitable industrial sector in the United States over the past five years, as measured by returns to stockholder equity. One way in which they have used this power has been to push down the prices received by the independent farmer, who now functions merely as a producer of raw materials for a corporate dominated food manufacturing system. Unable to make a fair return, farmers are forced to rely on borrowed money and government handouts. Resulting bankruptcies have led to a massive consolidation of U.S. farmland. Less than 2 percent of all farms now account for nearly 40 percent of the value of U.S. farm output. Of course the largest holders are agribusiness corporations including most of those named earlier. Most remaining family farms earn only 15 percent of their income from farm sales. They survive on their earnings from off farm work. Agribusiness corporations have also been effective in holding down the wages of farm workers, who earn far less than their urban counterparts and often endure dehumanizing working and living conditions.

It is commonly maintained that American consumers benefit handsomely from this system because they pay only 11.7 percent of their income for food, nearly the lowest in the world. This statistic reflects high average incomes more than low food prices and masks the fact that poor Americans must spend as much as 35 percent of their incomes on food and many go hungry even in the land of plenty. The figures used in this calculation also fail to take into account the taxes these same consumers pay to cover expensive farm programs that subsidize the profits of the agribusiness corporations. They also omit the health costs associated with consuming nutritionally inadequate processed foods, and being exposed to the toxic chemicals, hormones, and additives used in food production and processing that remain in the food we eat and pollute the water we drink.

Agribusiness corporations are now working to reshape the international trading system through the North American Free Trade Agreement (NAFTA), the General Agreement on Trade and Tarriffs (GATT), and other trade agreements to further the extension and concentration of their economic power. European and Japanese farmers have mounted a strong opposition to their proposals under GATT, because they realize what will happen to them if corporate agribusiness gets its way. It is time for farm groups from all around the world to join with consumer, environmental, and labor coalitions to counter this monopolization of the global food system and return control of our food to the people who depend on it for sustenance and livelihoods.

A.V. Krebs is research director, Prairie Fire Rural Action, 550 11th St., Des Moines, IA 50309, U.S.A., fax (515) 244-6732. This column was produced and distributed by the PCDForum based on his book The Corporate Reapers: The Book of Agribusiness (Washington, DC: Essential Books, 1991), which is available from Prairie Fire.

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