Antimonopoly Is About Democratizing the Food System (and the Rest of the Economy)

PUBLISHED

Claire (@clairekelloway) is a senior researcher and reporter at Open Markets Institute, where she leads Food & Power

Sandeep Vaheesan is legal director at the Open Markets Institute.

PUBLISHED

Claire (@clairekelloway) is a senior researcher and reporter at Open Markets Institute, where she leads Food & Power

Sandeep Vaheesan is legal director at the Open Markets Institute.

This post was written in response a recent post titled “Don’t Trust the Antitrust Narrative on Farms”

In their post last month, Nathan Rosenberg and Bryce Stucki challenged narratives commonly used to advocate for antitrust enforcement in agriculture that broadly paint farmers as an aggrieved and struggling class. While we agree that sweeping generalizations of farmer insecurity can be misleading and divert attention away from those most exploited in the food economy, we also believe Rosenberg and Stucki’s accounting is an incomplete and unfair portrait of antimonopoly policy and politics. We respond to put forth a different narrative: that the historical and present-day purpose of antimonopoly law and policy is to distribute power downward and build, in agriculture and elsewhere, an economy that is fair and democratic. This includes mitigating corporate domination over farmers and the food system, but also promoting the very worker-owned farms that Rosenberg and Stucki endorse.

Although it is true that, as a whole, farm families have higher annual incomes and more wealth than the average American, median figures obscure the economic heterogeneity in farming households. In 2015, of the 817,000 U.S. farms with an owner that actually farmed for a living, roughly half made less than $350,000 in cash sales and lost money or barely broke even. These farmers still had an average household income just above the 2015 U.S. average, but more than 70% of that income came from off the farm. Even if some misidentified hobby farmers fell into this group, that still leaves a sizable fraction of farm families struggling to make a living from agriculture.

Additionally, there are certain sectors of agriculture in which corporate consolidation pushed many farmers off the land in recent memory. The rise of vertically integrated meatpackers buying animals through specialized contracts wiped out roughly 70% of all hog farms between 1987 and 2017, consolidating production onto much larger, industrial farms. Beef packing consolidation also precipitated a shift to fewer, larger cattle feedlots located near large plants. And a combination of lower milk consumption, oversupply, and consolidated buyers and cooperatives has collapsed milk prices and pushed 95% of dairy farms out of business since 1970. Nonetheless, we agree that it is still specious to call most farmers today poor.

But the goal of antimonopoly policy in agriculture is not simply to enrich farmers and otherwise leave existing arrangements intact. Antimonopoly law seeks to restrict corporate control of supply chains and redistribute decision making power over food production away from concentrated financial interests to a broad array of producers, including workers. This redistribution is not a tangential distraction from “the exploitation at the heart of the system,” as Rosenberg and Stucki suggest. It is directly linked to the power-building potential of workers.

For example, the “chickenization” of the economy, which Rosenberg and Stucki mention in passing, is a major and concerning trend in agriculture and elsewhere. Due to reinterpretations of antitrust law, large corporations can use contracts to maintain tight control over nominally independent businesses, including Amazon delivery drivers, franchisees, and gig workers, without bearing any responsibility for their labor protection or financial risks. These arrangements correlate with more labor violations and lower, even sub-minimum wages. In agriculture, growing contracts can mandate the use of environmentally destructive and dangerous confined animal feeding operations. They also give regional managers of large processors the power to pick winners and losers, which they’ve used to retaliate against complainants and discriminate against Black farmers. 

Dominant retailers and processors also exert monopsony buyer power over their suppliers to extract lower prices and more favorable business terms. This harms workers and competitors alike. One study found that the longer a supplier depends on just one or two large buyers, the more the wages of the supplier’s workers tend to fall over time. This big buyer squeeze contributed to an estimated 10 percent of wage stagnation since the 1970s. Justin Flores, vice president of the Farm Labor Organizing Committee, argues this phenomenon also harms farmworkers. “Every year [growers] get a one-year contract with one or multiple corporate purchasers and they have zero say in what the price for their commodities is going to be, and typically the corporations squeeze those growers as much as they can,” says Flores. “Our union has always looked up the supply chain as we organized … [Corporations] are exploiting growers and then growers are exploiting workers.”

Antimonopoly law can reduce endemic buyer dominance and shift power in supply chains away from corporations and in favor of farmers, ranchers, and workers by breaking up existing monopolies and instituting strong anti-merger rules to prevent future consolidation. Just as significantly, antimonopoly governs the methods and strategies of corporations.

Laws like the Sherman Act, Clayton Act, Packers and Stockyards Act, and FTC Act restrict how companies can grow and control trading partners, whether consumers, workers, or suppliers (including farmers). For instance, can firms capture market share by deliberately losing money year after year and take over new markets by forcing customers to purchase bundles of separate products? Can poultry processors pit farmers against each other in a zero-sum gain tournament payment system? Can large food retailers form exclusive relationships with Big Food manufacturers in exchange for hefty rebates and discounts?

Rules of fair competition and fair practice are as important as restrictions on corporate structure and breakups of existing monopolies and oligopolies. Indeed, breakups of dominant firms are not of much value if other corporations are free to use the same unfair methods to acquire monopolistic positions. Moreover, market concentration is not the only source of power in a political economy in which property entitlements and access to finance are unequally allocated. Even with more prospective purchasers for their crops and livestock and significant financial and property entitlements of their own, farmers and ranchers who have substantial mortgages and little in liquid assets are still at a bargaining disadvantage relative to corporate middlemen.

While antimonopoly law is necessary to create a fair and equitable food system, it is not sufficient. We don’t know any antimonopoly advocates who believe that merely reducing the power of Walmart and Tyson Foods will naturally lead to living wages and safe conditions for workers. While farmers and farmworkers are both squeezed by the power of dominant corporations that purchase, process, and sell food, their interests are not wholly harmonious. For instance, farmers and ranchers have conspired to suppress their workers’ wages. (The Open Markets Institute, where we both work, filed an amicus brief in support of the workers’ wage-fixing suit.) 

This is why we have both argued that building the power of farmworkers is an essential complement to antimonopoly policy. At present, farmworkers do not have the right to organize under federal labor law and are not entitled to minimum wages and overtime under the Fair Labor Standards Act. These legislative carveouts are due to New Deal era compromises between congressional progressives and the Roosevelt administration, on the one hand, and Southern Democrats beholden to powerful agricultural interests, on the other hand. These exclusions are indefensible, and Congress should repeal them. But more is necessary: The present food system is built on a system of captive labor in which much of the backbreaking work in fields, orchards, and ranches is done by undocumented immigrants or guest workers, principally from Latin America. These workers either lack secure residency or are bound to their employers on a term-limited basis, making them more vulnerable to employer intimidation and abuse. Abolishing guest-worker programs, granting basic labor and employment protections to all workers, regardless of their sector or immigration status, and providing secure residency and a path to citizenship for undocumented workers are essential for ending the exploitation on which American food is built.

Granting full labor and employment rights to all farmworkers would extend to them rights that many farmers and ranchers already possess. Farmers and ranchers have the right to, in effect, unionize by forming cooperatives to sell their crops and livestock. A sizable fraction of them also receive direct or indirect income supports. These market rules have contributed to farmers and ranchers, as a class, earning more than the median income. Markets for farmworkers’ services should be structured in a similar manner to ensure that these workers earn living wages and receive fair terms of employment.

We believe expanding workers’ rights and enacting antimonopoly laws must go together. Justice for workers is impossible when a handful of powerful corporations dominate our food economy and dictate terms to everyone else in the system. Establishing more rights for labor without also restructuring this system is unlikely to do more than make marginal improvements in the lives of the workers who pick fruits and vegetables, tend livestock, and butcher animals.

Economic democracy, not just ending existing corporate domination, should be the goal of any antimonopoly agenda for food and farmworkers. Law and policy should encourage and support farms cooperatively run by workers, including through public financing of such enterprises and fair competition rules to level the playing field . The workers —many of whom, at present, earn sub-minimum wages — would democratically govern farms and be the beneficial owners of these enterprises. This was the vision of the multiracial Knights of Labor in the 19th century, a labor republican organization inspired by antimonopoly ideas. Organizing a strike among Black cotton plantation workers in post-Reconstruction Louisiana, the Knights aimed not only to improve the appalling wages and working conditions of the workers but also to transfer control of the land from former slaveowners into the hands of the workers. Such a broad and deep reallocation of power is the philosophy inspiring antimonopoly, then and now.

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