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Grocery shopping in Rosemead, California on April 21, 2022. (Photo: Frederic J. Brown/AFP via Getty Images)

Why Food Prices Are Rising Even More

Monopolists control nearly every part of the food production process, from selling feed to farmers, to packaging the meat and poultry for supermarkets.

Robert Reich

 by RobertReich.org

Monopolies are slowly killing rural America—and driving up the price you pay for food.

Just four firms control 85% of all beef, 66% of all pork, and 54% of all poultry. This degree of monopolization is hurting farmers—and you.

Corporations are using their monopoly power to fix prices.

Monopolists control nearly every part of the food production process, from selling feed to farmers, to packaging the meat and poultry for supermarkets. Half of all chicken farmers report having just one or two processors to sell to.

Farmers are essentially forced to buy from and sell to monopolies at whatever price the corporation wants – often taking on crushing debt to do so. They are trapped in long-term binding contracts, with no way out but losing their livelihood altogether.

[Either I sign it or I ain't got no chickens. Without any chickens, I can't pay any bills.]

Meatpackers used to compete at cattle auctions for what ranchers produced – which helped ranchers get a reasonable return on their investment. Now, with so few buyers, ranchers have no choice but to sign contracts with meatpackers, and sell their cattle for a lower price than if the market were truly competitive.

In 1980, 62 cents of every dollar consumers spent on beef went to ranchers. Today, only 37 cents do. Most of the profits are going into the pockets of the monopolists. 

And here's the kicker: Even though farmers are getting squeezed, the ag monopolists are also charging you higher prices. During the pandemic, beef prices rose nearly 16%—and the four biggest beef companies' profits rose more than 300 percent.

These corporations are using their monopoly power to fix prices. Just recently, beef giant JBS settled—without admitting guilt, of course—a beef price-fixing case for $52.5 million.

Monopolization is happening across the food sector. In corn, soybeans, dairy, pesticides, and farm machinery. The result is the same: lower pay to farmers, bigger profits for the monopolists, higher prices for you.

A better way to hold these monopolies accountable would be to break them up, and stop future mergers. But it won't be easy. They flex their political muscle through powerful lobbies like the North American Meat Institute, and maintain a revolving door with regulatory agencies like the US Department of Agriculture.

Well, I say, take them on. Rural America is hurting, farmers are getting squeezed, and consumers are being shafted. Notwithstanding the power of food monopolies, taking them on is wildly popular—especially in Rural America.

But don't just listen to me, listen to what farmers are saying about this:

"I'm here to tell the powers at be to enforce the antitrust laws for the world of agriculture."

"The laws are on the books. We have to strengthen those laws and do what Teddy Roosevelt did to break up the monopolies."

"Don't let these boys who come to Washington with pockets of money set there and bribe our congressman year after year after year."

"Who will stand up for me if you don't?"

For the good of us all, America needs to enforce antitrust laws, and break up Big Ag.

Watch:


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Robert Reich

Robert Reich

Robert Reich, is the Chancellor’s Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include:  "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.

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