By Tim Gibbons
Why conspire with your competitors when you can simply merge?
Over the past two years, giant meat companies have settled lawsuits worth hundreds of millions of dollars alleging they conspired with each other to fix prices, cut wages for workers and farmers and increase the price of meat for both and retail customers.
On July 22, Cargill and Continental Grain Co. announced the completion of their acquisition of Sanderson Farms. In 2021, the Missouri Rural Crisis Center (MRCC) co-wrote a letter to the US Department of Justice urging it to take a close look at the mega merger of Sanderson Farms, Cargill, Continental Grain and Wayne Farms.
Sanderson Farms is currently the third largest broiler chicken company in the United States, and Wayne Farms (owned by Continental Grain Company) is the seventh largest. This merger will increase the market share of the three major processors from 46% to 51% and create a company with approximately 15% of the US broiler chicken market.
The increasing level of consolidation in industries like the broiler chicken industry creates more opportunities for companies to conspire with each other to interfere with the market. Agreements like these lead to an increase in market share for fewer companies and the opportunities for anti-competitive practices increase.
In addition, this merger could (read: will) have a negative impact on grain producers by eliminating a major grain buyer from the market. Instead of Sanderson buying grain on the open market as they currently do, they will now be combined with Cargill, one of the largest grain distributors in the world.
For decades, MRCC members, farmers and consumers across Missouri and across our nation have been sounding the alarm about the negative impacts of mergers like these that bankrupt independent livestock producers, allow corporations to charge consumers more, extract wealth from our communities, pollute our land, water and air, and weaken our national security.
The recent disruptions to the food system caused by the pandemic, particularly the protein supply chain, offer a stark example of how extreme consolidation has made our food system less resilient.
Our government should have blocked this merger, and we need our elected “representatives” to stop pandering to agribusiness lobbyists and start representing us.
Here’s a start: Congress is expected to pass a bill by U.S. Senator Elizabeth Warren and U.S. Representative Mondaire Jones, the Anti-Competitive Mergers Ban Act, which would block the largest and most anti-competitive mergers and give the Justice Department and the Federal Trade Commission new tools to reject agreements that will harm competition without relying on corporate-influenced courts.
In July 2021, we thought our decades of work to fight corporate and foreign takeover of the U.S. livestock industry was finally going somewhere with the “Executive Order on Promoting Competition in the ‘American economy’ of President Joe Biden.
The order stated: “Farmers are caught between market power concentrated in the agricultural input industries – suppliers of seeds, fertilizers, feed and equipment – and market power concentrated in the channels sale of agricultural products. As a result, farmers’ share in the value of their agricultural products has declined, and poultry farmers, pig farmers, cattle herders and other agricultural workers are struggling to maintain their self-reliance and generate sustainable income.
Previous administrations promised to fix these problems, but failed to implement real rules that reform the system, and we need to see strong action soon or it will be clear that the current administration is on the same path.
To this administration and this Congress: Stop paying lip service and do something substantial that will truly help family farmers, our local economies, and our country. The first up? Pass the law prohibiting anti-competitive mergers and complete the to-do list in the executive order.
About this column
The Author: Tim Gibbons is director of communications for the Missouri Rural Crisis Center, a statewide agricultural and rural organization dedicated to preserving family farms and promoting land stewardship and environmental integrity.
This column was originally published by Missouri Independent, part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock with any questions: [email protected]. Follow Missouri Independent on Facebook and Twitter.