How to Close the Democrats’ Rural Gap

Forget Trump’s tariffs. Big Ag is driving a new farm crisis.

The midterm elections made two things very clear about Democratic voters in the Donald Trump era. First, they vastly outnumber Republican voters: Democrats gained control of the House of Representatives and won the popular vote by more than eight percentage points, the biggest midterm “blue wave” since Watergate. But, second, those Democratic supporters are geographically clustered in a way that wastes millions of their votes. While the party improved its margins among rural voters compared to 2016, its candidates still lost by a whopping fourteen to eighteen percentage points outside of metro areas, lagging well behind Barack Obama’s 2012 performance. As a result, Democrats lost two net Senate seats. The Senate map in 2020 is only slightly less foreboding, as statewide races in heavily rural states like Iowa, Missouri, and the Dakotas seem to slip ever further out of reach.

There was a time in the very recent past when many on the left were confident that an era of Democratic dominance was just around the corner, the inevitable result of a “rising electorate” of younger, better educated, and more diverse voters. The midterms were a wake-up call. The rising electorate may be swinging left, but there has been an equal reaction among older and less educated whites—and they represent a lot more of the political map. Without doing much better among voters outside of metro areas, Democrats have little hope of regaining the Senate for years, maybe decades, to come, and may even continue to lose the Electoral College despite winning the popular vote. 

Mindful of this reality, many Democratic strategists are rightly warning that the party desperately needs a strategy to win back rural voters. Unfortunately, the most prominent plans tend to combine small-bore ideas that are insufficient to the scale of the problem (like more money for rural broadband) with attacks on Trump’s agricultural tariffs, which Trump-supporting farmers actually tend to give the president a pass on.

While the notion that all Trump voters are motivated by “economic anxiety” has been thoroughly debunked, there’s no denying that America’s agricultural communities have been starkly declining for years-struggling to turn profits through farming, suffering epidemic levels of opioid addiction and suicide. Democrats thus have both an opportunity and a moral obligation to try to win these voters back by offering policies that will improve their livelihoods in a way that stoking white cultural grievance never will. 

Just ask J. D. Scholten. The thirty-eight-year-old former minor league baseball player garnered national attention in November for almost unseating Iowa Representative Steve King, an eight-term Republican incumbent in one of the reddest districts in America—and perhaps the most unabashed racist in Congress. The last Democrat to run against King lost by 22.6 percent; in 2016, the district went for Trump by twenty-seven points. Yet Scholten lost by only 3.4 percentage points—a swing from 2016 that, if it could be replicated nationally, would all but wipe out the current incarnation of the Republican Party. How did he do it? 

“I have a lot of folks calling me thinking of running for president and they want to know what their rural message should be,” Scholten says. His answer: “Talk about market consolidation.” 

Without doing much better among voters outside of metro areas, Democrats have little hope of regaining the Senate for years, maybe decades, to come, and may even continue to lose the Electoral College despite winning the popular vote.

At his thirty-nine town hall meetings, across every county in Iowa’s Fourth District, Scholten spoke about improving the economy by addressing the growing power of agribusiness monopolies, which, by raising prices on what farmers buy and pushing down prices of what farmers sell, are devastating farm incomes. “Agriculture is the backbone of this district,” Scholten says. “At every [town hall] I talked about how farmers are being squeezed on the input and on the output side. . . . That resonated more than tariffs ever did, and I think that’s one thing that national reporters never understood.

“I think farmers view tariffs as temporary, whereas market consolidation is a long-term issue,” he adds, noting that the call for fair competition has bipartisan appeal. “Anti-trust . . . has not been a partisan issue. Traditional Republicans, they want competitive markets, and that goes against what’s happening in the ag business.” 

Scholten’s message on agribusiness monopolies may have resonated with farmers, but it has not yet broken through with big-city liberals, too many of whom write off the possibility that progressive economic populism could appeal to rural voters more than right-wing cultural warfare. Until Democratic leaders and candidates find their voice on the key issue affecting rural communities’ economic fortunes, even the biggest blue wave won’t be enough to take back the map. 

If you have heard about the plight of America’s farmers, it was likely in the context of Trump’s media vortex. You may have seen stories about dairy farms closing because Trump made a fuss about Canadian dairy markets while renegotiating NAFTA. Or you know that China aimed retaliatory tariffs at farmers to target Trump’s base. But while Trump’s trade policies have certainly made matters worse for many farmers, they are hardly the prime cause for the full-blown crisis gripping America’s farm economy. Farming communities have been dwindling for decades. The three years leading up to the 2016 election saw the sharpest decline in farm incomes since the Great Depression. In 2015, more than half of all farm households lost more money than they made farming. 

By now, many observers are predicting that we are on the verge of a farm crisis more dangerous than the one that ripped rural America apart in the 1980s. The downturn is particularly devastating for grain and dairy farmers, who rely on large annual operating loans to keep going each season. After four to five years of losing money on every acre of grain or gallon of milk, these farms have exhausted their credit lines. Farmers’ debt-to-income ratios are the highest they’ve been in three decades. Wisconsin alone has lost 1,100 dairy farms over the past two years. One large dairy co-op in the Northeast sent its members a list of suicide and mental-health hotlines along with their dairy checks. 

As farm income declines, so do whole regions. First, local equipment dealers and seed and feed suppliers close. Then, with the decline in economic activity and eventual loss of population, so do local banks, schools, and hospitals. Most people in rural America are not farmers, but in traditionally ag-dependent regions, even non-farmers’ livelihoods depend, directly or indirectly, on farm income, which is often the only substantial source of incoming wealth. 

What is behind the accelerating decline? One popular idea in elite quarters is that the plight of rural America was foreordained by technological change. As agriculture becomes more productive, the thinking goes, we need fewer farmers, and so rural communities naturally depopulate. Meanwhile, a digitized, global economy naturally gives the highest reward to highly skilled “knowledge workers” who feed off each other’s creativity by clustering in elite cities. That’s the theme of a recent report by the Brookings Institution, revealingly entitled “Strategies for Left-Behind Places.” It concludes that the growing gap between elite cities and rural America is the inevitable result of digital technology, which has “increasingly rewarded the most talent-laden clusters of skills and firms.”

That’s a narrative that appeals to many experts, who not coincidentally live in those “talent-laden clusters.” It suggests that the plight of Left-Behind Places is nobody’s fault—it’s the result of an impersonal evolutionary process that just happens to favor coastal elites while crushing the maladapted. 

Well, here’s a different take—one that has far more resonance in heartland America and is backed up by overwhelming evidence. The biggest cause of growing regional inequality isn’t technology; it’s changes in public policy, embraced by both parties, that have enabled predatory monopolies to strip wealth away from farmers and rural communities and transfer it to America’s snazziest zip codes.

Here’s how it works. Farmers are caught between monopolized sellers and buyers. They must pay ever higher prices to the giants who dominate the market for the supplies they need, like seed and fertilizer. At the same time, they must accept ever lower prices from the giant agribusinesses that buy the stuff they sell, like crops and livestock. 

Start with how corporate concentration affects the prices farmers pay. In 1994, the top four seed companies controlled only 21 percent of the global seed market. By 2013, just the top three controlled 55 percent, with Monsanto alone controlling more than a quarter. With that increase in concentration has come a shocking increase in the cost of seed, because these giants face little pressure to compete on price. USDA data shows that the per-acre cost of soybean and corn seed spiked dramatically between 1995 and 2014, by 351 percent and 321 percent, respectively. 

Today’s seeds are often genetically modified to produce higher yields, but that doesn’t translate into more net income for the farmers. Not only is the cost of genetically modified seed high, but patent monopolies often make it illegal for farmers to use a portion of their crops to produce their own seeds, as most did in the past. Moreover, even as farmers are paying monopoly prices for a diminishing selection of seed strains produced by handful of giant corporations, they also are paying monopoly prices for fertilizers and pesticides, often to the same corporations. Since 2017, the Big Six seed and agrichemical companies have shrunk to four, after Dow merged with DuPont and Bayer purchased Monsanto. The top four producers of nitrogen fertilizer controlled 34 percent of the market in 1977, but by 2015 had increased their share to more than two-thirds. 

As crop prices fall and farmers look for areas to cut back on the cost of inputs, many feel up against a wall. “[Seed companies] figure out, how much will a farmer actually pay for seed corn before he’ll go switch to some other company,” says Nebraska farmer Vern Jantzen. “If I don’t like what Mycogen is charging for seed corn I can go to Pioneer and I can go to Dekalb, but there’s only three guys. If they all kind of talk to each other a little bit, there isn’t a whole lot of difference in prices.” That is, of course, when there are even multiple sellers to choose from. 

The same story holds for chemicals used in agriculture, whose prices roughly tripled from 1990 to today, with the steepest increases after 2007. The fertilizer market is dominated by several international phosphorous and potash cartels, and a 2013 monograph by the American Antitrust Institute made the case that price swings in these markets were due to oligopolistic behavior. 

Farming communities have been dwindling for decades. While Trump’s trade policies have certainly made matters worse, they are hardly the prime cause.

All together, the average farmer spends three times more on inputs per acre today than in the 1990s. Recently, the president of the Nebraska Farmers Union, John Hansen, looked up the corn prices from 1973, when he started farming. At that time, he sold corn for $3.30 a bushel; in 2017 the average price per bushel was $3.33. “So, how does it work to live and farm in 2017 and pay for those 2017 costs with 1973 prices?” Hansen asked in a message to NFU members. “The honest answer is that it does not work.”

It does work, though, for the seed and chemical companies. Before their acquisition by Bayer and recent legal trouble, Monsanto touted record seed sales and profits in 2017. “They’ve had a boom while farmers have gone broke,” says Joe Maxwell, who is a farmer, former lieutenant governor of Missouri, and executive director of the Organization for Competitive Markets. 

Even as monopolization means that farmers pay more for the supplies they need, it also means that they receive less for the food they produce. 

Nationally, the top four beef packers slaughtered 25 percent of cows in 1977; today that’s up to 84 percent. As recently as 1990, four companies processed 61 percent of all soybeans; today those same four process 85 percent. These statistics actually understate the problem, because at the local level, dominant agribusinesses often have total monopolies. “Today you’ll find that in most all this country, really, there’s just one buyer,” says Maxwell. “It’s as if they all sat in a room somewhere and carved the country up.”

Courtesy of J. D. Scholten for Congress

Taking a stand against Big Ag: J. D. Scholten, left, made taming the agricultural monopolies a central theme of his campaign to win over voters like Iowa farmer Charles Rasmussen.

This degree of corporate concentration has turned farmers into price takers. If there’s a single statistic that captures the plight of rural America, it is this: In the 1980s, when American consumers spent a dollar on food, 37 cents out of that dollar went back to the farmer. Today, farmers receive less than 15 cents on every dollar. The difference is increasingly flowing to powerful and concentrated agribusinesses, middlemen, and retailers. In 2016, the big meat-packer Smithfield openly bragged about how its record profits were due to a fourteen-year low in the prices paid to hog farmers and simultaneously higher consumer prices for packaged pork products. 

The same story repeats across agricultural sectors, from grains and produce to eggs and poultry. The Contract Poultry Growers Association of the Virginias says its chicken farmer members haven’t seen an increase in base pay for the past twenty years. Nor do consumers benefit. Chicken and turkey retail prices grew steadily over the last decade, by 19 percent and 47 percent from 2007 to 2013, respectively, before finally slowing and then slightly declining over the past three years.

As Big Ag cuts farmers’ margins, often the only way farmers can see to stay in business is to try making it up on volume. This is what accounts for the emergence of “confined animal feeding operations,” or CAFOs, in which thousands of animals are crammed together in inhumane conditions. CAFOs reflect the ruinous competition farmers face with one another. They also pose a massive threat to human health, as some farmers routinely use nontherapeutic antibiotics on animals crowded into confined spaces, producing antibiotic-resistant bacteria. And they cause vile pollution from large manure lagoons, further detracting from the quality of life across expanding sections of rural America. 

When Barack Obama was competing for the Democratic presidential nomination in 2008, he seemed to understand the role that corporate concentration was playing in immiserating much of rural America. Campaigning in Iowa, North Carolina, and Colorado, he promised to take on abuses by monopolistic agribusinesses, particularly meat-packers. 

Early in his presidency, he followed up on these promises by having top Agriculture Department (USDA) and Justice Department officials hold hearings across the country to investigate malpractice in the poultry, cattle, dairy, and seed industries, as well as the growing gap between the prices consumers paid and farmers received. At the conclusion of these hearings the USDA proposed rule changes that would have given farmers far greater power to stand up to abuses by ag monopolies. 

But the blowback was immediate. Big Meat threw its lobbying weight behind an effort to block the reforms. Soon, sixty-eight Republicans and forty-seven Democrats delivered a letter to the USDA saying that the new rules were unjustified and required more industry input and economic analysis. Obama could have implemented the rules unilaterally, but for whatever reason his secretary of agriculture, Tom Vilsack, hesitated. Then, in 2010, Republicans took the House and began passing appropriations riders that stripped the USDA of the necessary funds to implement the rules even if they had gone into effect. In December 2016, Vilsack finally signed off on a significantly watered-down rule change. But shortly after President Trump took office, new Secretary of Agriculture Sonny Perdue shot down even these modest reforms and dissolved the USDA’s antitrust agency entirely, burying its duties within the agribusiness-friendly Agricultural Marketing Service agency.

So it turns out that the Democrats briefly did have a rural policy that took monopoly seriously, but gave it low priority and retreated in the face of corporate opposition. Today, this record leaves many farmers bitter, especially those who risked retaliation by testifying at the USDA hearings about the abuses they suffered at the hands of monopolists. That bitterness is only amplified when they hear voices in the Democratic Party arguing for solutions that fail to acknowledge the party’s own role in fostering agribusiness monopolies. Writing in the New York Times shortly after the election, columnist Michael Tomasky recommended that the party embrace a “four pillar” plan written by Tom Vilsack, which calls for, among other things, spending more money on opioid addiction treatment, encouraging more local farmers’ markets, and directing more payments to farmers who set aside land for conservation. But Vilsack’s plan pointedly fails to mention a central cause of American farmers’ misery, let alone any strategies for taking on the agribusiness monopolies he failed to roll back during his time in office. Perhaps not coincidentally, Vilsack is currently the president and CEO of the U.S. Dairy Export Council, an agribusiness lobbying group.

Other plans circulating in Democratic quarters embrace a kind of social Darwinism to explain the growth of regional inequality and then propose solutions that are almost insulting in their inadequacy and implicit victim blaming. Brookings Institution’s “Strategies for Left-Behind Places,” for example, states flatly that it would be “inefficient to ‘save’ every left-behind small city or rural community in the U.S.” It then argues that the best that can be done is to offer displaced farmers and rural workers more broadband networks, some targeted federal economic development programs, and training in programming skills. The report concludes by calling for changes to zoning laws that would produce more affordable housing in high-cost cities like New York and San Francisco, thereby allowing more heartlanders to move to those thriving metropolises—a solution that would, of course, only exacerbate the problem of coastal population clustering. Though the report does mention rising monopoly as a cause of regional inequality, it stops short of recommending anti-monopoly measures as part of the solution. 

Big Ag would obviously oppose any Democratic effort to win in rural America with an anti-monopoly playbook. But policy levers, large and small, are available at every level of government to politicians who want to show their solidarity with ordinary voters in rural communities. The big policy levers include things like busting up ag monopolies and reforming giant food co-ops. An encouraging start is a pair of complementary bills, introduced by Senator Cory Booker and Representative Mark Pocan, both Democrats, that would put an eighteen-month moratorium on large agribusiness mergers while a new commission studies ways to improve competition policy enforcement. (For more details, see “The Three Ways Democrats Can Fix the Farm Economy” by Adam Diamond.)

Smaller-scale but still substantive measures include legislation that would prevent meat-packers from vertically integrating into owning livestock or forcing farmers into exploitative contracts. Booker and Republican Senator Mike Lee introduced an amendment to the farm bill that would have addressed agricultural monopoly in still another way, by reforming so-called “checkoff” programs. These are federally sponsored programs that collect money from farmers to market their product but that often wind up financing agribusiness lobbying groups (The amendment failed, but did draw thirty-eight votes from across both parties.) At the local level, mandating that schools use more locally grown food in their cafeterias is one available weapon for combating agribusiness monopoly. 

In the 1980s, when American consumers spent a dollar on food, 37 cents went back to the farmer. Today, it’s less than 15 cents. The difference is increasingly flowing to concentrated agribusinesses, middlemen, and retailers.

Advocating for such policies could appeal to a far broader set of Americans than just farmers. One reason is that monopolization in agriculture has by now become so extreme that even as it drives down prices for farmers, it can also drive up prices for consumers. This reality has been reinforced by recent investigations into price fixing at tuna companies, mega-brewers, dairy co-ops, chicken processors, and pork packers. Monopolization also affects urban and suburban consumers by forcing farmers into a system of industrial-scale monoculture that lacks resiliency in the face of climate change, poses substantial human health and environmental threats, and produces a level of cruelty to animals that more and more Americans can no longer abide. Though rural and urban Americans may differ on many cultural wedge issues, their common victimization by monopolists provides an issue that bridges the divide. 

Taking on agribusiness monopolies also provides a way to do something important for farm and food chain workers exploited under the current system. Many of the people who pick our food and cut our meats, whether they are undocumented immigrants, refugees, people of color, or working-class whites, are further marginalized when a single agricultural giant controls all the jobs available to them across whole regions. 

Rural communities are also deeply oppressed by other forms of monopoly. These include the closing of local hospitals bought out by giant corporate chains; the takeover of locally owned financial institutions by taxpayer-subsidized “too big to fail” banks; the loss of connectivity to the global economy that results when airlines cut off service to “flyover country”; and the threats posed by deregulated freight railroad monopolies that are abandoning service to farms and industries along branch lines while charging monopoly prices on the mainline traffic they keep. 

J. D. Scholten also points to how large chain stores like Dollar General “sink money out of the community” by shutting down locally owned retailers. Restoring antitrust enforcement across the board, including against companies like Walmart and Amazon, would go a long way toward allowing local economies to once again compete on an even playing field. “Part of that rural identity is being independent,” argues Scholten. “Now [rural communities] are reliant on a corporation rather than being self-employed, and I think that’s part of the issue.” 

In the face of such challenges and opportunities, leaders interested in addressing the nation’s growing economic and political divides should stop listening to people who think we can fix the problems of rural America with more broadband, coding classes, and zoning changes. Instead they should pay attention to people like Scholten who know what they are talking about and are willing to say it out loud.  

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Claire Kelloway

Claire Kelloway is a reporter and researcher with the Open Markets Institute and the primary writer for Food & Power, a website covering corporate concentration in the food system. Her writing on food and agriculture has appeared in ProPublica, Civil Eats, Pacific Standard, and more.