This trend is hard on farmers and rural communities, according to a recent study by senior academic watchdogs of food monopolies — William Heffernan, Mary Hendrickson (a former colleague of mine on the board of the Community Food Security Coalition) and Philip Howard. (See link to their study, below).
Their survey shows momentum toward economic concentration has been quickening (if quietly in terms of public awareness and resistance) in tandem with the quickening off globalization and economic deregulation since the 1990s. The rate of market control enjoyed by the top five companies in most categories doubled from 1997 to 2011 — up from 24 to 50 per cent.
Monopolies (more precisely oligopolies) now cover every angle. They are both vertical (one company that grows, ships and sells bananas, for example) and horizontal (one giant buys a giant in the same segment, as when Kraft bought Heinz, for example).
The point of their studies (the authors define what’s called the “Missouri School” approach to economic power) is that food monopolies get to pick and choose where they will make money, and where they will post profits.
As vertical companies, they might make money from the high price they sell seeds, chemical and fertilizers to farmers, or they might make money by squeezing farmers for low prices so they make a bigger margin when they sell to supermarkets. As horizontal monopolies, they make it next to impossible for farmers to sell to a competitor, since they own the competition too.
The authors refer to this heightened degree of vertical and horizontal integration as a food chain cluster.
Of 51 studies on the impact of monopoly power on farm communities, over 40 show the impact is negative. Farmers make less money, often reduced to “propertied laborers” caught in “debt slavery.” They have less money to spend in town, and the town enjoys fewer local multiplier effects from local Business to Business (B2B) sales. So rural areas face depopulation and loss of key services.
Academics call this downward spiral the “Goldschmidt Hypothesis,” named after the academic who wrote in 1947 that the entrepreneurial-rich, middle class character of rural towns was threatened by monopolies.
It’ now safe to say the Goldschmidt Hypothesis has come true.
During the late 1800s and early 1900s, farmers fought these trends by political campaigns opposing the power of railway and grain milling monopolies — surely a sign that the forces imposing monopoly even way back then were firms dealing with long-distance food systems.
That flavor of rural politics seems to have been trumped by another style.
I wish the authors had a comment on where resistance is at now. In the countryside, there’s widespread rage toward latte liberals and good food advocates. In the cities, the mass of shoppers rush to the retail monopoly offering the lowest prices.
The old law of physics that says every action produces an equal and opposite reaction has been slow to kick in.
Will this year see a 54.7 per cent increase in farmer and consumer backlash, or anything akin to moves countering the 54.7 per cent increase in monopoly power?