On Wednesday, Cory Booker, the Democratic Senator from New Jersey, introduced a bill that would impose a temporary moratorium on mergers and acquisitions between large farm, food, and grocery companies, and establish a commission to strengthen antitrust enforcement in the agribusiness industry.
The bill, modeled after legislation introduced by the late “prairie populist” Democratic Senator Paul Wellstone of Minnesota in 1999, would be effective for 18 months, or until more comprehensive legislation is passed to confront the effects of market consolidation in the food and farm sectors. It also directs the government to work on changing existing antitrust laws to tip the scales back in the direction of small- and medium-scale agriculture producers, who have been losing their market share for generations.
In a lengthy preamble, the bill offers 23 findings about the effects of concentration, along with some staggering statistics. In the past three decades, for instance, the four largest pork packers, beef packers, soybean crushers, and wet corn processors have captured ever larger shares of the supply chain, now controlling 71 to 86 percent of their respective markets. Four companies control 90 percent of the global grain trade.
In sum, a handful of firms “dominate the processing of every major commodity,” and because many of them are vertically integrated, they control prices at every stage of the food chain, from farm inputs to distribution. Buyer consolidation “has restricted choices for farmers trying to sell their products,” and as a result, the “farmer’s share of every retail dollar has plummeted from 41 percent in 1950, to approximately 15 percent today.”
“We don’t know if there will be further mergers among the already highly concentrated meatpackers. We now have four meatpackers that could control 85 percent of the feed-cattle market in all of the United States,” says Bill Bullard, CEO of the Ranchers-Cattlemen Action Legal Fund United Stockgrowers of America (R-CALF USA), one of 80 organizations to endorse the bill. “We’ve seen so many mergers and acquisitions here lately that we believe we need to put a stop to it.”
As a recent example, Bullard offers the Brazilian food company Marfrig, which became the world’s second-largest beef processor when it bought a controlling interest in the Missouri-based National Beef Packing Company for $969 million. “We want robust competition in each one of those marketing points,” he says, referring to each particular segment of the food chain, from auction yards, to feedlots and meatpackers.
Bullard adds that he is also troubled by foreign ownership of major aspects of American food production, which includes the purchase of Greeley, Colorado-based Pilgrim’s Pride by the Brazilian meat giant JBS, and China’s purchase of Smithfield Foods, this country’s largest pork producer. “This is a relatively new phenomenon,” he says, “layered over the concern we’ve had for a long time about the consolidation of the marketplace.”
In the absence of true competition, says Fred Stokes, a cattle rancher and founding member of the Organization for Competitive Markets (OCM), a nonprofit focused on antitrust and trade policy in agriculture, “the prices that the farmer pays for the tractor and the fertilizer, or gets for the crops and cattle, is determined in the boardroom, not the dynamic marketplace.” Driven down, in other words. Interestingly, the bill excludes agricultural cooperatives, like the monopolistic Dairy Farmers of America, and manufacturers of farm machinery, such as John Deere, from its definition of input suppliers affected by the moratorium.
But what does a senator from New Jersey, which ranks 46th in the nation in livestock and poultry sales and 47th in cattle inventory, care about all that? It’s not as though ranchers represent one of Booker’s biggest constituencies. But it is true that he has long advocated for better food access: during his tenure as mayor of Newark, he notoriously lived on a food budget of $30 for a week—the amount allotted to New Jersey food stamps recipients. And Booker has also co-sponsored food waste acts in successive Congresses, and legislation to ban fast-food employers from “no-poach rules.”
Booker also has a keen interest not just in eaters, but in producers and growers—particularly when it comes to cattle production, the largest sector of American agriculture. In 2016, he introduced legislation to “increase transparency and accountability” in checkoffs, which are government-mandated marketing programs financed by fees paid by producers. (We’ve written extensively about the bitter debate checkoffs prompted in the organic industry.)
That Booker would introduce such a bill when New Jersey boasts a relatively modest farm sector is a sure sign that an ag-whisperer had his ear. Joe Maxwell, Missouri’s former lieutenant governor, a fourth-generation pig farmer, and the executive director of OCM, says he began talking to Booker about beef checkoff corruption in 2015.
“He knew a lot about agriculture, especially as it relates to New Jersey,” Maxwell recalls, noting that the state does produce a fair amount of vegetables, ranking 17th in the country. “We had been finding fewer and fewer members of the House or Senate from major agriculture states that weren’t already in bed with industrial agriculture—you know, the globalization, and increased concentration—or didn’t want to push against them.”
Maxwell recalls that Booker’s stances on corporate power, and his line of questioning in hearings, made him seem like a natural advocate for ranchers. (He couldn’t name particular hearings or legislation when asked for specifics. Booker’s office did not respond to requests for comment by press time.)
“He was one of those folks who believed there was too much power on one side of the deal,” Maxwell says. “If I can make that case on behalf of America’s family farms and ranchers, he was already there. He was just, he hadn’t been exposed to it in that light.”
As far as ranching issues go, Maxwell says checkoff corruption “was a great issue to bring to him, because it’s also a good-government issue.” And, “the farmers are being mandated to pay this assessment, and it’s being used in a counter purpose for which it is collected.” Maxwell says Booker was a quick study (“he’s like a sponge”) and that he had followed up by sending the senator readings from Mary Hendrickson, the University of Missouri rural sociologist, and more recently, arranging visits with farmers and ranchers in Illinois and Kansas.
Maxwell has brought other issues to Booker’s attention, too. Earlier this year, the senator took aim at the chicken industry by introducing an amendment to the Small Business Lending Oversight Reform Act that challenged what some say is a rigged relationship between integrators—entities like Tyson Foods that contract with farmers to raise chickens or hogs to slaughter size and weight—and contract growers, known as affiliates. At issue was the $1.7 billion in small-business loans granted to growers who farm for integrators, which Booker and others said meant they couldn’t be considered small businesses.
Other than the $60-billion Bayer-Monsanto merger, which has already been approved by the Department of Justice (DOJ), the bill’s supporters—or at least the ones I talked to—don’t see any other imminent mergers on the horizon that this proposed legislation could avert. The release of the bill now, in this Senate, Maxwell says, is strategic to capture the attention of elected officials leading up to their re-elections.
“It gives us a chance to walk the halls,” he says. “They pay a lot of attention during election years.”
Allies who support the moratorium could include Republican Senator Chuck Grassley of Iowa, who has called agriculture consolidation a “tsunami,” and Republican Senator Mike Lee of Utah, who has questioned claims from seed giants that mergers increase production efficiency.