How to take on the agriculture monopolists

Our food systems are in crisis, around the world, and monopoly power is at the heart of it, as this brilliant new case study from Global Justice Now reveals.

While most people in the world are experiencing a cost of living crisis, and small food producers are struggling, the barons of the food industry are enjoying bumper profits. And, as our report Taken, Not Earned explains, there is a connecting link between poverty for millions and profits for the few: monopoly power.

As a result of decades of mergers and acquisitions, giants increasingly sit astride chokepoints in our food systems, operating like gatekeepers or tollkeepers, able to extract money from the passing traffic.

The neck of the hourglass has been shrinking steadily, the report explains, under a constant drumbeat of mergers and acquisitions. For example, just four companies – the “ABCD”: ADM, Bunge, Cargill and Louis Dreyfus – now control 70 percent of the world market in agricultural commodities. “They trade, transport and process many commodities,” as one report put it. “They own ocean-going ships, ports, railways, refineries, silos, oil mills and factories.” (We define monopoly broadly, to denote excessive and sustained market power, and these firms are all monopolists.)

Owning businesses along the food pipeline from farm to fork is an example of vertical integration. It allows companies to leverage power in one area to dominate others. So if, for instance, a company can dominate or control a transport route, it can force producers to sell to it cheaply, since they have few other ways to get their goods to market, and consumers to pay high prices to this middleman, for similar reasons. The company takes the excess profit in the middle (often in the opaque, low-tax middle, via, say, a subsidiary located in a tax haven.) As a UK food expert said, “[a] lot of people are making a huge amount of money out of food, but food producers [only] get about 8% of the £250bn a year we spend on food.”

Riches to some mean poverty to others – and there is a direct link

Gains to the food barons are losses to the rest of us – as both producers and consumers: so when monopoly is in play, excess profits are the flip side of pain elsewhere.

Recent figures suggest that well over 50% of recent price rises in the UK, US and Australia have been driven by increases in profits. A report from Oxfam in 2023 says:

“not only are companies passing increased input costs on to consumers, but they are also capitalising on the crisis, using it as a smokescreen to charge even higher prices.”

Its research shows a huge increase in the wealth of food and energy billionaires, with 62 ‘food billionaires’ created between 2020 and 2022. All this is bolstered by extensive academic research by Isabella Weber and others, demonstrating recent “sellers’ inflation” or “greedflation.

See the report’s special focus on the Cargill family and its many ‘food and commodity billionaires’

During the Covid pandemic, against the backdrop of millions of deaths, crop failures, and a global hunger crisis that saw nearly a billion people going hungry, Cargill announced its biggest profits in its 156-year history, up 64 percent on the previous year. As a result, the Cargill family, already rich, welcomed four new billionaires to their ranks, making a total of 12.

Meanwhile, inflation has spurred a cost of living crisis, with many unable to afford even the basics for survival. In the UK, for example, some 3.8 million people experienced destitution in 2022, including around one million children, over double the number in 2017.

You might think that these corporations’ market dominance is rooted in a substantial contribution to global food security, but many of their riches have been accumulated from operations that aren’t obviously productive – they are extractive. As the report shows, monopoly power is a central factor here, alongside financial speculation, and lobbying (for instance to tilt trade or intellectual property rules in their favour, against everyone else.)

As our food systems become more concentrated, the quality and diversity of our food sources shrink, as agriculture tends towards monocultures, and as their power gives the companies more leeway to sell us foods not so much based on consumer demand, or health concerns – but on the basis of profits.

Defenders of the system accused would-be reformers of wanting to send us back to the days of horse-drawn ploughs. But that deliberately confuses the improvements in technology with the changes in market structure. We don’t have to throw away our advanced farming machines, to reclaim our food systems.

Break the “system of monopoly” and reclaim our food systems

A “system of monopoly” has grown up since the 1970s to protect and grow monopoly power. It is both an ideological system, and also a collection of elite law firms, consultancies, banks, regulators, academics, think tanks and others, working busily to make sure our regulators stay asleep at the wheel. Just for example, stunning new research from the Hertie School on Wednesday shows how the European Commission has blocked just 14 mergers out of nearly 6,500 notified to it – that is, 0.2 percent.

But, just in the last couple of years, a few market regulators – most notably in the United States – have started to take monopoly power seriously, and to confront this system by tackling corporate power directly, principally wielding antitrust or competition policy. Their focus is mainly on Big Tech for now – see SOMO’s case study – but most of the core tools of can be widened to include agriculture and other sectors. The first stirrings of change are here.

We now need to break the chokepoints and democratise our food systems. We must democratise the “system of monopoly”. To achieve this, most of the general recommendations in our main report Taken, Not Earned, would apply to agriculture. For instance, powerful legislative changes that have been proposed to stop giant Big Tech firms acquiring more firms, could also be used to block agricultural mega-mergers. Or we can break these firms up, and regulate them to prevent economic discrimination.

We can also use more traditional tools, like tax, or minimum wages, or trade rules.

There is no time to lose.