PCDForum Column #63, Release Date October 8, 1993
by A.V. Krebs
The production, preparation, availability, distribution, and quality of food
the sustainer of life have shaped human cultures in fundamental ways throughout
history. We have good reason to be concerned when our food production,
distribution, and preparation system commonly known as the agribusiness system
becomes dominated by powerful and increasingly monopolistic corporate interests
that see food only as a source of profits and power. More than 95 percent of the
food consumed in the United States is today manufactured processed, packaged and
advertised by such a corporate system.
The destruction of the small farmer, the inhuman condition of many farm
workers, the hunger and starvation that result from the maldistribution of food,
and the nutritional disorders related to the use of heavily advertised but
nutritionally inadequate processed foods are all consequences of this system
that raise a range of heretofore unaddressed social, economic, political,
environmental and moral questions. The growing reach of these transnationalized
corporations as they extend their control over an ever growing portion of the
world’s food production and distribution within a globalizing world economy make
these questions ever more urgent.
In the United States most people are today well-fed and take ready access to
food for granted. This may account for the fact that few Americans are aware of
the concentration of monopoly power in the U.S. food system and its
consequences. A few statistics reveal the extent of that concentration.
Cargill, the largest private (family owned) corporation in America, is also
the world’s largest grain trader. Cargill and Continental Grain together control
50% of all grain exported from the United States. Cargill has also become the
second largest meat packer in the country. Cargill, Iowa Beef Processors, and
ConAgra together slaughter close to 80 percent of all the meat slaughtered in
the United States. Four companies General Foods, General Mills, Kellogg’s and
Quaker Oats dominate almost 90 percent of an ever growing cold cereal market.
When four companies control 40 percent or more of the market, economists usually
consider the market to be oligopolistic.
This enormous market power has made agribusiness corporations the most
profitable industrial sector in the United States over the past five years, as
measured by returns to stockholder equity. One way in which they have used this
power has been to push down the prices received by the independent farmer, who
now functions merely as a producer of raw materials for a corporate dominated
food manufacturing system. Unable to make a fair return, farmers are forced to
rely on borrowed money and government handouts. Resulting bankruptcies have led
to a massive consolidation of U.S. farmland. Less than 2 percent of all farms
now account for nearly 40 percent of the value of U.S. farm output. Of course
the largest holders are agribusiness corporations including most of those named
earlier. Most remaining family farms earn only 15 percent of their income from
farm sales. They survive on their earnings from off farm work. Agribusiness
corporations have also been effective in holding down the wages of farm workers,
who earn far less than their urban counterparts and often endure dehumanizing
working and living conditions.
It is commonly maintained that American consumers benefit handsomely from
this system because they pay only 11.7 percent of their income for food, nearly
the lowest in the world. This statistic reflects high average incomes more than
low food prices and masks the fact that poor Americans must spend as much as 35
percent of their incomes on food and many go hungry even in the land of plenty.
The figures used in this calculation also fail to take into account the taxes
these same consumers pay to cover expensive farm programs that subsidize the
profits of the agribusiness corporations. They also omit the health costs
associated with consuming nutritionally inadequate processed foods, and being
exposed to the toxic chemicals, hormones, and additives used in food production
and processing that remain in the food we eat and pollute the water we drink.
Agribusiness corporations are now working to reshape the international
trading system through the North American Free Trade Agreement (NAFTA), the
General Agreement on Trade and Tarriffs (GATT), and other trade agreements to
further the extension and concentration of their economic power. European and
Japanese farmers have mounted a strong opposition to their proposals under GATT,
because they realize what will happen to them if corporate agribusiness gets its
way. It is time for farm groups from all around the world to join with consumer,
environmental, and labor coalitions to counter this monopolization of the global
food system and return control of our food to the people who depend on it for
sustenance and livelihoods.
A.V. Krebs is research director, Prairie Fire Rural Action, 550 11th St.,
Des Moines, IA 50309, U.S.A., fax (515) 244-6732. This column was produced and
distributed by the PCDForum based on his book The Corporate Reapers: The Book of
Agribusiness (Washington, DC: Essential Books, 1991), which is available from
Prairie Fire.