Opinion

Standing with Farmers in the Fight Against Concentrated Power

Today, America’s independent farmers face many challenges: natural disasters and the rising threat of climate change, the pain of President Donald Trump’s China tariffs — which, sadly, force farmers to sacrifice for a trade agenda that almost exclusively benefits the largest corporations — and a shortage of farm labor.

Against this backdrop, though, America’s agriculture producers are feeling increasing economic pressure from another angle: corporate consolidation and monopoly power. A new report by the Center for American Progress (CAP) highlights how the agriculture sector has witnessed a decades-long structural trend that has seen the rise of dominant players. This exploding level of concentration has tilted the economic playing field dramatically in favor of powerful, distant corporations and against the earning power of farmers. Such a supply chain structure squeezes hard-working farmers, while a lack of competition enables powerful corporations to increase input prices and depress or manipulate the prices farmers receive.

For example, between 1985 and 2015 the dominance of the top four companies in the corn seed market increased from 50.5 percent to 85 percent. During the same period, corn seed costs grew by more than 100 percent, while yield per acre increased only 29.7 percent.

Similarly, buyer concentration has increased dramatically. In many markets, farmers have only one or two bidders for their products or have little choice but to enter into exploitative production contracts with largely unaccountable corporations. Even a modest departure from perfect competition can result in a 30 percent hit to the earning power of farmers.

It comes as no surprise to those who have been working on these issues that farmers are feeling the pinch. As of 2017, more than 40 percent of midsize farms — defined as family farms with gross cash receipts between $350,000 and $1 million — had an operating profit margin of less than 10 percent, placing them at high risk of financial problems, according to the U.S. Department of Agriculture (USDA).

Washington’s willingness to take this issue seriously has waxed and waned, mostly in the face of massive industry lobbying. But with farmers reeling from financial strains, it’s more important than ever that we protect the middle class from the abuses of concentrated capital. By taking a page from the playbooks of other critical fights, we can help get power back in the hands of farmers.

In the run-up to the financial crisis, financial regulators were weak and divided, leaving Wall Street financial firms free to rip off customers and drive the entire economy into a recession. Similarly, GIPSA, the watchdog entrusted with the enforcement of competition statutes enacted to protect farmers, has since been shut down, and the residual enforcement authorities at USDA have been reduced to a shadow of their former power, with the elimination of rules put in place at the end of the Obama Administration.

In 2010, post-financial crisis reforms took the diffuse and under-used consumer protection tools away from captured banking regulators and stood up a dedicated, independent Consumer Protection Financial Bureau (CFPB) to protect consumers from predatory practices on Wall Street. Similarly, an Independent Farmer Protection Bureau (IFPB) with strong authorities and a clear mission would be a powerful force in defending the economic independence of farmers from the anti-competitive practices of concentrated agribusiness power. Additionally, just as the financial sector has long lived with caps on concentration, caps in agriculture would put in place simple, enduring limits on monopoly power.

Farmer cooperatives have long empowered farmers to negotiate for a fair share in the fruits of their labor, just as labor unions empower workers to bargain for higher wages. These farmer collective action tools must be strengthened. Just as tripartite wage boards have helped raise wages for fast-food workers in New York and domestic workers in Seattle, so too can boards made up of farmers, farm workers and businesses help level the playing field and facilitate the negotiation of fair prices for farmers. Fair pricing structures would, for example, guarantee farmers a percentage of the price of the wholesale or retail good that they helped produce.

Of course, these tools will work best if they are complemented by the revival of the antitrust laws that are foundational to competitive markets.

Across the economy, workers, farmers, small businesses and consumers are threatened by extraordinary levels of monopoly power. Americans are living in a new Gilded Age, defined by increasing income inequality and the rise of powerful monopolies comparable to the railroad, oil, and banking monopolies of the late 19th century. Back then, a powerful alliance of farmers and workers fought back and won. Today, farmers are again a key partner in taking America back from the concentrated economic powers that squeeze working families out of the middle-class. Making the economy work for everyone requires reining in concentrated power, and it’s time to stand with farmers to make the economy work for everyone.

Zoe Willingham is a research assistant for Economic Policy at the Center for American Progress. Andy Green is the managing director for Economic Policy at the Center.

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