Slowing down consolidation in the agribusiness sector is the main goal of a new bill introduced by Sen. Cory Booker (D., N.J.). The bill would put an 18-month moratorium on large agribusiness, food and beverage manufacturing and grocery retail sector mergers and acquisitions.
S. 3404, The Food & Agribusiness Merger Moratorium and Antitrust Review Act of 2018, is aimed at the "unprecedented concentration in the agriculture and food sectors," which Booker said is “squeezing small family farmers, driving down wages for workers and hurting rural communities.”
In just the past two years, chemical and seed company acquisitions and mergers have resulted in just three companies controlling two-thirds of the crop seed market and nearly 70% of the agriculture chemical market. Meanwhile, net farm income for U.S. farmers has fallen by more than half in just five years.
Over the last three decades, the four largest multinational corporations have gained control of 71% of the pork market, 85% of the beef market and 90% of the grain market.
“Today, a small number of giant companies control every link of our food chain,” Booker said. “Consolidation has now reached a point where the top four firms in almost every sector of the food and agriculture economy have acquired abusive levels of market power. As a result, the U.S. is losing farmers at an alarming rate, agricultural jobs and wages are drying up and rural communities are disappearing.
“These challenges can be mitigated by more active use of our antitrust laws and allowing an opportunity for U.S. farmers and ranchers to compete in fair and open markets,” Booker continued. “This bill would put a much-needed pause on the largest, most consequential acquisitions and mergers in the food and agriculture sector and give Congress an opportunity to update our antitrust laws in order to better protect America’s farmers, workers, consumers and rural communities who are being harmed by the ever-increasing levels of corporate concentration.”
The bill -- modeled after a similar proposal introduced 20 years ago by the late Sen. Paul Wellstone (D., Minn.) -- would also establish a commission to study ways to strengthen antitrust oversight of the farm and food sectors and recommend improvements to merger enforcement. The commission specifically would be required to review how vertical integration, packer ownership of livestock and contracting practices by large agribusinesses affect family farmers and suppliers.
An estimated 80 organizations have endorsed Booker’s bill, including R-CALF USA, the Organization for Competitive Markets (OCM) and Food & Water Watch.
During the past several months, OCM said it has assisted members of Congress with drafting the legislation. OCM expects a companion bill to be filed in the House of Representatives in the coming weeks.
“We need Congress to act now to stop mega-mergers until their full impact can be assessed and market safeguards put in place,” OCM executive director Joe Maxwell stated. “Farmers are being squeezed at both ends by corporations with abusive levels of power, from the sellers of inputs farmers need to the buyers of farmers’ goods. There is simply no profit for the farmer who actually raises and grows the food. Today, farmers are forced to farm for government subsidies and not for the market.”
R-CALF USA said in a release it has long opposed the ongoing consolidation, concentration and foreign ownership of marketing channels in the U.S. cattle industry. In 2008, the group successfully encouraged 17 state attorneys general and the U.S. Department of Justice to block the merger between Brazil-based JBS and the nation's fourth-largest meat packer, National Beef Packing Co. More recently, a controlling interest in National Beef was sold to another Brazilian firm, Marfrig, and neither the Justice Department nor the Committee on Foreign Investment in the U.S. would interfere with the acquisition.
"Our members have long believed that the ongoing trend of mega-mergers and acquisitions by foreign entities is severely reducing competition and jeopardizing our nation's food security and food safety," R-CALF USA chief executive officer Bill Bullard said.