In an attempt to address the problem of market consolidation in the agriculture sector, members from both the House and Senate introduced bills to place an immediate moratorium on acquisitions and mergers in the food and agriculture sector as well as require further study on the impact of the recent surge in consolidation.
Sen. John Tester (D., Mont.), one of the bill’s sponsors, detailed in a media call that consolidation is one of the greatest threats facing farmers today. “As input suppliers consolidate, it reduces competition, artificially drives up prices and as input prices go up, farmers either get bigger or get out, and that is the cycle that kills small towns. It also impacts food security in a negative way,” he said.
The Monsanto-Bayer merger brings 25% of the world’s seed and 23% of insecticides under one company. Four companies control the majority of the pesticide production. Last month, cattle ranchers urged the U.S. Department of Justice to block a proposed merger between Iowa Premium and Brazil-based National Beef Packing Co. The merger would further concentrate the beef sector, where only four companies control 85% of the market. Four companies control an estimated 71% of the pork sector.
Tester said the bill won’t require any action on the mergers that already have occurred, but it’s important to take a look at how capitalism works and advantages of competition in the marketplace. “This is the ideal time to push forward. We can’t claim an agenda of stopping a merger,” Tester said, but it does provide the chance to “take a step back and take a look and see if it’s what we really should be doing.”
The Food & Agribusiness Merger Moratorium & Antitrust Review Act, introduced by Tester, presidential hopeful Sen. Cory Booker (D., N.J.) and Rep. Mark Pocan (D., Wis.) would impose a temporary moratorium on mergers and acquisitions exceeding $160 million in sales between large farm, food and grocery companies. It would also establish a commission to review large agriculture, food and beverage manufacturing and grocery retail mergers, concentration and market power. The commission would make recommendations on how to improve antitrust laws and other federal regulations to ensure a fair and competitive agriculture marketplace.
Booker said while traveling the countryside, he has heard painful stories about farmers struggling to survive and referenced a rancher who had only one buyer for his cattle and so was paid artificially lower prices. He said the bill shouldn’t be seen as threatening to agribusinesses but instead pressing the pause button on a trend that is squeezing farmers.
“Everybody should be sounding alarms,” Booker said. This bill would help study and get a handle on what’s going on to stop this trend. He said DOJ should be doing more to uphold antitrust laws, including examining past mergers. He said the breakup of ATT “did a lot for consumers, employment and competition.”
Agricultural mergers and consolidation have been an increasingly popular topic out on the Democratic presidential campaign trail. Presidential contender Elizabeth Warren (D., Mass.) wants to crack down on consolidation in the agriculture industry and even reverse last year's Bayer-Monsanto merger. Another candidate, Sen. Amy Klobuchar (D., Minn.), a Senate Agriculture Committee member, called for slapping a fee on corporate mergers to help investigate anticompetitive practices.
Nearly 220 groups signed a letter to Congress in support of the bill. The letter outlines the impacts of a merger and acquisition spree that has swept through food and agriculture in the last decade, with mergers between major seed, fertilizer, food processing and grocery retail giants. This wave of consolidation has contributed to falling farm prices, declining farm incomes, stagnant wages for food workers, rising food prices and economic stagnation in rural communities. The letter, signed by groups from 46 states, urged other members of Congress to co-sponsor the legislation to stop the mergers that threaten independent family farmers, consumers and communities.
"We've seen a series of major mergers in the last several years, particularly in the seed industry, that have greatly reduced competition and options for farmers," said Ben Lilliston, director of climate and rural strategies for the Institute for Agriculture & Trade Policy. "What is good for agribusiness profits is not the same as what is good for farmers."
Lilliston added, “There are two faces of the agriculture economy. On the farmer side, we're seeing escalating bankruptcies, increased debt and hard times, but on the agribusiness side, profits are up, and the future is rosy. We need to consider the cost to farmers, our rural communities and our landscape when assessing future mergers that more deeply entrench the ownership of our food system in the hands of fewer and fewer companies."
National Farmers Union president Roger Johnson stated that after a recent wave of agribusiness mega-mergers, the “legislation would provide a much-needed opportunity to evaluate the damage and establish stronger safeguards to prevent this level of consolidation in the future.”
“Smaller-scale and historically disadvantaged farmers who have long depended on livestock to sustain their diverse operations face disproportionate challenges marketing their products at fair prices in an increasingly concentrated agribusiness dominated market,” said Lorette Picciano, executive director of the Rural Coalition. “Mega-mergers are the prime driver of the downward spiral in income, wages and working conditions for this sector of producers as well as farm and food chain workers and small businesses that erodes rural economic vitality and ecological health and pits workers and communities against each other to survive. It is long past time for policy-makers to provide them the time and statutory tools they need to build the futures they want.”