Agribusinesses Consolidate Power

Product Number: 

At all stages of the food system—from seeds
and other inputs to food processing and retail
food sales—market power is concentrating in
an ever smaller number of corporate firms. This
trend is transforming how the world produces
food, squeezing millions of farmers between a
small group of input suppliers and an equally
concentrated group of commodity purchasers,
and in turn influencing the food choices available
to consumers.

Concentration begins at the input stage in
agriculture. Three companies control about half
of the global agrochemical market: Bayer, Syngenta,
and BASF.1 Use of genetically modified
(GM) seeds has risen dramatically since these
were first commercialized in the mid-1990s—
now 45 percent of the corn and 85 percent of
the soybeans grown in the United States are
GM.2 By branching out into plant biotechnology,
huge chemical and pharmaceutical companies
such as Monsanto have gained control
over critical agricultural inputs that reach into
food systems around the world. In 2004, land
planted with Monsanto seeds accounted for 88
percent of the total area in GM crops worldwide.
3 Once a global commons,
genetic resources are now subject to
Intellectual Property Rights protections.
Developing countries are forced to deal
with large transnational companies to get access
to improved seed varieties and plant breeding

Other input markets are similarly concentrated.
In the United States, Mosaic—a company
created out of a merger between Cargill
and IMC Global—controls 50–60 percent of
the synthetic fertilizer market, while four firms
control over 80 percent of the market for farm
equipment.5 Four companies control 60 percent
of terminal grain facilities, and Cargill, Archer
Daniels Midland, and Zen Noh control 81 percent
of U.S. corn exports and 65 percent of soybean
exports.6 Cargill has the largest global
terminal capacity, handling significant grain
exports in Canada, the United States, Brazil,
and Argentina.7 It owns and operates a worldwide
transportation network of ships, trucks,
barges, railcars, and grain elevators for storage.
Cargill is also among the top three beef producers
in the United States and plays an important
role in poultry production.8

Genetic stock, a crucial input into animal
production, is another area where concentration
has rapidly taken hold.9 Control over the
development and dissemination of livestock
genetics is shifting from farmers and ranchers
to specialized genetics companies. They hold
exclusive contracts with the largest livestock
producers and play a key role in determining
which livestock breeds will dominate the market.
10 Today, virtually all white eggs sold on the
U.S. market come from a single breed of layer,
the white leghorn.11 A depleted genetic pool
will weaken the global food system’s ability
to respond to disease, to changes in climate
or available inputs, and to shifts in consumer

A growing share of farmers and ranchers in
the United States, Europe, and some developing
countries work under contract for companies
that also control food processing and
distribution. These firms may mandate the use
of a certain technology to maximize yield or
animal weight gain. If producers stray from
the prescribed methods, they may find their
contracts terminated.13 Virtually all U.S. poultry
is produced under contract, as are close
to 60 percent of hogs, cotton, rice, fruit, and
dairy.14 Contracts tend to shift risk from the
company to the producer, and producers are
often forced by necessity into contracts that
pay little or are excluded altogether from markets
if they do not contract.15

Whether producing independently or under
contract, farmers have few choices when it
comes to selling their product to a packer or
processor. In Brazil, 68.5 percent of the soybean
oil refineries are controlled by just three
companies.16 In the United States, 81 percent
of beef packing plants are run by four firms.17
(See Table 1.) Concentration in livestock and
dairy markets is likely to continue in developing
countries as well, as rising incomes and shifting
dietary preferences boost meat consumption.18

Globally, transnational supermarkets dominate
the retail sector for food. In 2003, the top
30 retailers held 19 percent of the market in
Asia and Oceania, 29 percent of the market in
Latin America, and 69 percent of the market in
Europe.19 Globalized supply chains give supermarkets
the ability to get products from wherever
they are cheapest, and the large firms exert
pressure on suppliers to accept lower prices.
Suppliers in turn demand that farmers accept
lower prices. Squeezed between low returns
and high-priced farm inputs, farmers around
the world have experienced declines in net farm
income. In the United States, farmers’ share of
the retail food dollar fell from a high of 40 percent
in 1973 to below 20 percent in 2000.20 In
Canada, the National Farmers Union reported
that farmers’ net income, adjusted for inflation,
was lower over the last decade than at any time
since the 1930s.21

Some analysts argue that large supermarkets
like Wal-Mart’s Supercenters have helped consumers
by using market power to drive down
prices.22 But a growing body of economic
research suggests that, over time, concentration
tends to lead to higher prices.23 Because of the
power they exert over the market, giant retailers
have no incentive to pass on savings to consumers,
even as they squeeze producers and
suppliers by offering lower and lower prices for
their products.24

In a striking example of the power of large
processors and retailers, U.S. hog prices fell
to Depression-era lows in real terms in 1998,
sending many family hog producers into bankruptcy.
25 Meanwhile, the average price of pork
in the grocery store dipped by less than 2
percent.26 This wide farm-retail price spread
helped the giant meatpacking company IBP
bring in record profits and facilitated market
dominance by industrialized hog operations.27

Around the world, individuals, communities,
and civil society organizations are working
to counteract the negative impacts of concentration
in the food system. In the United States,
they are trying to strengthen existing laws, such
as the Packers and Stockyards Act, that have
been weakened by lax enforcement, underfunding,
or legal loopholes.28

Campaigns against abusers of market power
are taking shape. In Europe, a major campaign
has been launched against the largest supermarket,
Tesco. It demands fair treatment of U.K.
farmers and those abroad; protection of workers’
rights; an independent watchdog agency
to protect consumers, farmers, and workers
against exploitation; a moratorium on mergers
with other supermarkets; and stronger planning
policies to protect local shops.29 Organizations
are using class action lawsuits and penalties
against retail giant Wal-Mart for discrimination
against women, forced overtime without pay,
abuse of Family Leave laws, and other labor
problems.30 International networks such as the
Agribusiness Accountability Initiative are helping
campaigners to connect across national

For farmers, the most effective strategy is
strength in numbers: forming cooperatives so
that they can supply enough reliable quantity
and quality of crops or livestock products to
negotiate with supermarkets. At the same time,
public education campaigns worldwide are raising
awareness about direct marketing options
for farmers and consumers, including farm
stands, farmers’ markets, and Internet sales.
But farmers need government support to keep
agribusinesses in check and to meet the quality
standards that these large companies impose.

1. ETC Group, Oligopoly, Inc. 2005: Concentration in
Corporate Power, Communiqué Issue #91 (Ottawa,
ON: December 2005).
2. Pew Initiative on Food and Biotechnology,
“Factsheet: Genetically Modified Crops in the
United States,” Washington, DC, August 2004.
3. Sophia Murphy, Concentrated Market Power and Agricultural
Trade, EcoFair Trade Dialog Discussion
Paper No. 1 (Berlin: Heinrich Böll Foundation,
August 2006), p. 10.
4. C. S. Srinivasan, “Concentration in Ownership of
Plant Variety Rights: Some Implications for Developing
Countries,” Food Policy, October–December
2003, pp. 519–46.
5. Keith Collins, Statement before the Senate Committee
on Appropriations (Washington, DC: U.S. Government
Printing Office (GPO), 2001); Democratic
Staff Committee on Agriculture, Nutrition and
Forestry, Economic Concentration and Structural
Change in the Food and Agriculture Sector: Trends,
Consequences and Policy Options (Washington, DC:
GPO, 2004).
6. Mary Hendrickson and William Heffernan, Concentration
of Agricultural Markets (Columbia, MO:
Department of Rural Sociology, University of
Missouri, 2005).
7. Murphy, op. cit. note 3, p. 9.
8. Ibid.
9.William Heffernan, “Social Consequences of Factory
Hog Production Systems,” in Understanding the
Impacts of Large-scale Swine Production: Proceedings
from an Interdisciplinary Scientific Workshop (Des
Moines, IA: 2005); M. S. Honeyman, “Sustainability
Issues of U.S. Swine Production,” Journal of Animal
Science, June 1996, pp. 1410–17.
10. Robert Kemp, Innovation in the Livestock Industry:
Implications for Animal Genetic Improvement Programs
(Ottawa, ON: Canadian Biotechnology Advisory
Committee, 2001); Harvey Blackburn et al., United
States of America Country Report for FAO’s State of the
World’s Animal Genetic Resources (Washington, DC:
146 Vital Signs 2007–2008
U.S. Department of Agriculture (USDA), 2003);
Canadian Farm Animal Genetic Resources Foundation,
The Need for an Animal Genetic Resource Policy
for Canada (Brighton, ON: 2003).
11. Janet Raloff, “Dying Breeds,” Science News, 4 October
1997; Harlan Ritchie, Where is the Beef Seedstock
Industry Headed? (East Lansing, MI: Michigan State
University, 2002).
12. Honeyman, op. cit. note 9; David Pimentel et al.,
“Economic and Environmental Benefits of Biodiversity,”
BioScience, December 1997, pp. 747–57; D. R.
Notter, “The Importance of Genetic Diversity in
Livestock Populations of the Future,” Journal of Animal
Science, January 1999, pp. 61–69.
13. Agricultural Marketing Service, Contracting in Agriculture:
Making the Right Decision (Washington, DC:
USDA, 2006); Neil Harl, “Contract Agriculture: Will
it Tip the Balance?” Leopold Letter (Ames, IA: Iowa
State University, 1998); Collins, op. cit. note 5;
Clare Hinrichs and R. Welsh, “The Effects of the
Industrialization of US Livestock Agriculture on
Promoting Sustainable Production Practices,” Agriculture
and Human Values, June 2003, pp. 125–41.
14. USDA, Structure and Finances of U.S. Farms: 2005
Family Farm Report (Washington, DC: 2005).
15. Oli Brown, Supermarket Buying Power, Global Commodity
Chains and Smallholder Farmers in the Developing
World, Human Development Report Office
Occasional Paper (New York: U.N. Development
Programme, 2005).
16. J. Wilkinson and G. Flexor, Brazilian Agrofood,
Transnationalization and Market Concentration (Rio de
Janiero: Rural Federal University, 2005).
17. Hendrickson and Heffernan, op. cit. note 6.
18. Christopher Delgado et al., “Livestock to 2020: The
Next Food Revolution,” Outlook on Agriculture,
March 2001, pp. 27–29.
19. Myriam Vander Stichele, Sanne van der Wal, and
Joris Oldenziel, Who Reaps the Fruit (Amsterdam:
SOMO, 2005), p. 49.
20. USDA Economic Research Service, Food Price
Spread Briefing Room, at
FoodPriceSpreads, viewed 20 February 2007.
21. National Farmers Union, The Farm Crisis, Bigger
Farms, and the Myths of “Competition” and “Efficiency”
(Saskatoon, SK: 2003), p. 12.
22. See, for example, Emek Basker, Selling a Cheaper
Mousetrap: Wal-Mart’s Effect on Retail Prices (Columbia,
MO: University of Missouri, 2005).
23. Lawrence Weiss, ed., Concentration and Price (Cambridge,
MA: The MIT Press, 1989), pp. 266–83;
Bruce Marion et al., “Strategic Groups, Competition
and Retail Food Prices,” in Ronald Cotterill, ed.,
Competitive Strategy Analysis in the Food System
(Boulder, CO: Westview Press, 1993), p. 197;
Ronald Cotterill, “Measuring Market Power in the
Demsetz Quality Critique in the Retail Food Industry,”
Agribusiness, vol. 101, no. 15 (1999); Peter
Carstensen, “Concentration and the Destruction of
Competition in Agricultural Markets: The Case for
Change in Public Policy,” Wisconsin Law Review,
spring 2000, p. 531.
24. Carstensen, op. cit. note 23.
25. Democratic Staff Committee, op. cit. note 5.
26. Ibid.
27. Ibid.
28. General Accounting Office, Packers and Stockyards
Programs: Actions Needed to Improve Investigations of
Competitive Practices (Washington, DC: 2000).
29. Tescopoly, at, viewed 9 March
30.Wal-Mart Watch, at
_relations, viewed 9 March 2007; Wal-Mart Class
Action, at
.html, viewed 9 March 2007.