Made from Concentrate

Four companies decide what meat you eat, two choose what milk you buy, and soon only one will determine what beer you drink. Are we all fine with that?

In the age of farm-to-table restaurants and the mainstreaming of organic foods, transparency has become an increasingly valuable commodity in food production. Nearly every day, more companies are committing to sourcing cage-free eggs, labeling genetically modified ingredients, and reducing antibiotic use in livestock production. One might take these changes as signs of a healthy, resilient food system. But in fact, these consumer-oriented nods to sustainability can reveal only so much about the opaque power structure that lurks behind the scenes of food production, distribution, and retail.

Concentration and Power in the Food System

Concentration and Power in the Food System: Who Controls What We Eat?
by Philip H. Howard
Bloomsbury Academic, 216 pp.

With Concentration and Power in the Food System, Philip Howard, of Michigan State University, poses a simple question: Who controls what we eat? This question has animated Howard’s decade’s worth of research on the food system. Howard’s work investigates the corporate power web that forms the food industry’s structure, and helps us understand how and why we eat what we do.

This slim book takes the reader through the history and importance of economic consolidation using a political economy lens. Howard seeks to demonstrate the negative effects of “fewer and fewer people [having] the power to make important decisions, such as what is produced, how it is produced, and who has access to these products.” In Howard’s analysis, a consolidated food landscape has negative effects on producers, consumers, and workers. Farmers have fewer and less-competitive markets in which to sell their hogs or corn. Shoppers consider thousands of goods at the grocery store, but many of them are produced by the same few food processors. And mega-retailers like Walmart set standards of low wages that are copied by competitors. The outcomes of these realities “tend to disproportionately affect the disadvantaged—such as women, young children, recent immigrants, members of minority ethnic groups, and those of lower socioeconomic status.”

By looking at the interactions between regulation and corporations, Howard is able to more fully understand the political context in which consolidation has flourished.

Other commentators on the food system, such as Marion Nestle, Michael Pollan, and Mark Bittman, have encouraged changes in consumer habits (such as “voting with your fork”) or to public health policies (such as taxing sodas) to address supply chain issues. But Howard focuses on the specific effects that deregulation and growth of corporate power have had on the food system. With this book, he demonstrates that some of the greatest woes of our food industry—the decreasing number of farms, subsidies that primarily benefit large-scale producers, lowering of farm income, poor access to healthy food in some regions—can be traced to lower enforcement of antitrust policy and the unchecked influence of corporations.

Howard briefly discusses how, in prior decades, the U.S. more strongly monitored corporate power. Populist and progressive political movements effected antitrust regulation during the late nineteenth and early twentieth centuries.

Such legislation included the Sherman Antitrust Act of 1890, the Clayton Antitrust Act of 1914, the Packers and Stockyards Act of 1921, and the Robinson-Patman Act of 1936. Those laws provided tools for regulators to break up existing trusts, thereby keeping markets open and competitive, and to limit concentration in other industries. Antitrust regulations were seen as crucial to protecting farmers and producers from exploitation by large corporate buyers, and to protecting suppliers and distributors from the monopoly power of monolithic retailers such as the A&P, the Walmart of its day.

The greatest woes of our food industry can be traced to lax enforcement of antitrust policy and unchecked corporate influence.

But by the 1970s, antitrust regulation had become unpopular with wealthy corporate executives, many of whom were politically connected and donated to the campaigns of anti-regulation candidates. The Reagan administration directed federal agencies to decrease enforcement of antitrust regulations and to raise the burden of proof on the potential harms caused by concentration. Concentration became a problem only when the consumer was directly and obviously harmed—stakes that Howard calls a “dramatic change from the intent of [antitrust] legislation” from earlier decades.

As a result, mergers and acquisitions that would have been unthinkable in prior decades became commonplace. This trend of deregulation and low antitrust enforcement was as true in the food sector as in many others. Companies became larger and their control over supply chains more comprehensive. Today, we see the pork, beef, and chicken industries each dominated by four companies, the milk industry controlled by two, and the beer industry barreling toward just one monolithic parent. Those companies at the top of the industry wield outsize political power and influence, can dictate unfair terms to producers, and create a less resilient supply chain.

Howard takes a wide-lens approach to looking at the effects of food system consolidation. He considers a chicken industry that is built on abusive and secretive contracts with farmers who have little say in how their birds are raised. He highlights how the top four grain companies—ADM, Bunge, Cargill, and Louis Dreyfus—are estimated to control up to 90 percent of the global grain trade. He discusses how the market share of just one milk company, Dean Foods, reaches 70 percent in most cities. And he examines the growing role and importance of venture capital in consolidating the power of individual corporations.

Howard also extracts a few lesser-told stories from the annals of food industry concentration. One is in the relative niche of organic food distribution. The largest player in this sector is United Natural Foods, or UNFI, a Providence, Rhode Island–based company that is a primary supplier for Whole Foods and Safeway. In 2002, UNFI and its then competitor Tree of Life (which was bought by KeHE, another distributor, in 2010) controlled about 80 percent of organic food distribution.

UNFI’s original competitors, many of whom were cooperatively owned, couldn’t keep up with its aggressive expansion, which was partially funded by Wall Street investors. Between 1982 and 2002, the number of cooperative distributors dropped from twenty-eight to three. Today, many natural and organic food retailers are sourced exclusively by UNFI. While not the most powerful entity in the food industry, UNFI has an “overwhelming dominance” in its supply chain. This power allows it to “make or break” organic food manufacturers, and creates higher barriers to entry to newcomers in the industry.

Another lesser-known issue that Howard discusses is concentration in livestock genetics. The livestock genetics industry is fairly small, at about $4 billion a year in global annual sales, one-tenth the size of the pesticide industry. But it is also highly consolidated, which has resulted in a dramatic reduction in animal diversity. Most commercial chickens are one of just four breeds, and just two or three firms control 94 percent of sales. For turkeys, just one breed comprises 100 percent of the global supply. Most pork in the U.S. is Duroc, Hampshire, or Yorkshire, and more than 85 percent of milking cows are Holsteins.

Livestock animals are increasingly bred for profitable characteristics, such as a chicken’s breast size or a cow’s milk production, rather than for traits such as resistance to disease. And demand for consistent products has encouraged producers to standardize their flocks. The resulting homogeneity makes livestock animal populations more vulnerable to disease outbreaks such as avian flu. And growing consolidation in genetics firms makes it hard for smaller companies to enter into the industry.

In his concluding chapter, Howard does nod to some positive trends combatting monopolization in the food industry. For instance, craft beer has grown to comprise 14 percent of beer sales by revenue, and the two giants in the industry-Anheuser-Busch InBev and SABMiller—have taken on relatively little market share in recent years. This lack of growth has prompted ABI to seek an acquisition of SABMiller. The deal got a green light from Justice Department regulators and awaits shareholder approval.

Though Howard is a professor and Concentration and Power in the Food System contains many academic citations, the book avoids slipping into jargon. It’s accessible to any reader interested in learning how political economy can help us understand who really does control what we eat. And as the food industry continues to consolidate, Howard’s work will become increasingly vital to imagining an economy with open, competitive markets for farmers and eaters alike.

Leah Douglas

Leah Douglas is a food and agriculture policy reporter at the Open Markets Program at New America.