This is a great article that helps to illustrate issues that truly affect family farmers. The USDA fails to enforce the anti-trust acts on the books that are supposed to protect the most vital part of our economy from control in the hands of a few. Now people might argue that it is against capitalism to protect the economy from concentration, but the truth is that it is impossible to have a healthy economy with excessive consolidation.
When access to market, seeds to plant, fertilizer to use, and prices received are all controlled, there IS no free market. Such is the case in the vast majority of agriculture. This scenario leads to the proliferation of biotech as they are the ones with the most money in their pockets and, as evidenced by the Monsanto Protection Act insertion into the Ag appropriations extension and Blunt admitting he “did it for Monsanto”, it should be clear that this topic is extremely important for our health and well being.
The “Missouri Monsanto Protection Act” will lead to even more concentration in this State. Representative Jason Smith, the sponsor of HJR 11 and 7, is insisting that the bill will save farmers from undo regulation at the hands of HSUS. However, the group that evidently pushed him to sponsor this tripe has some pretty obvious issues with their listed members. That group is Missouri Farmers Care. Not all of their members are in the column of the nasty and nefarious, but enough of them are that it certainly implicates the group as being a shill for the biotech industry while running under a deceptive title pretending they “care” about small family farms. Just have a look at their membership page.
Currently, Monsatan (Monsanto) owns the lion’s share of the global seed market. In the US, it is even more concentrated than in other nations. The question for the Missouri legislators (and Montana, Delaware, Indiana and Oklahoma, by the way) is who do they represent? Are they wholly owned subsidiaries of Monsanto, or do they represent the people? Their vote on this purported “Right to Farm” act will tell.
Without further adieu, here’s a look at the reality of concentration in the agricultural arena from the Daily Yonder:
With the rising concentration of companies that provide “inputs” for farmers — seeds, farm machinery, fertilizer — the prices for these goods have been rising faster than the cost of what farmers produce. Monsanto has a near monopoly on some kinds of seeds
Editor’s Note: One of the primary concerns of The Daily Yonder over the past six years has been the increasing concentration of businesses in the business of agriculture. Simply, fewer firms are providing us everything from fertilizer to groceries.
Big business is getting bigger when it comes to growing our food.
Below is a summary of a recent report that looks at what this increasing concentration means for ag research and development. It was written by researchers at the Economic Research Service, an invaluable part of the U.S. Department of Agriculture.
To see the full report, go here.
Since the 1990s, global market concentration (the share of global industry sales earned by the largest firms) has increased in the crop seed/biotechnology, agricultural chemical, animal health, animal breeding, and farm machinery industries – all of which invest heavily in agricultural research.
By 2009, the largest four firms in each of these industries accounted for at least 50 percent of global market sales. Market concentration was particularly high in animal genetics and breeding, where the four-firm concentration ratio reached 56 percent in 2006/07 (the latest year for which data are available).
Growth in global market concentration over 1994-2009 was most rapid in the crop seed industry, where the market share of the four largest firms more than doubled from 21 to 54 percent. The top eight firms in all five input sectors had between a 61 and 75 percent share of global market sales by 2009.
Firms increase their market share either by expanding their sales faster than the industry average or by acquiring or merging with other firms in the industry. Firms can expand their sales faster than others in the industry by offering better products or services (often an outgrowth of larger R&D investments), improving their marketing ability, or offering lower prices (often through economies of scale). The leading input firms in 2010 had faster sales growth than the industry average, but a significant amount of that growth came from acquisitions of other firms.
Reasons for Concentration
Reasons for mergers and acquisitions vary by industry and firm circumstances but include market forces and the emergence of new technologies. Government policies can also affect the ability of firms to compete in markets and their incentives to merge with or acquire other firms.
In the crop seed and animal breeding sectors, the emergence of biotechnology was a major driver of consolidation. Companies sought to acquire relevant technological capacities and serve larger markets to share the large fixed costs associated with meeting regulatory approval for new biotechnology innovations.
In the animal breeding sector, vertical integration in the poultry and livestock industries enabled some large firms to acquire capacity in animal breeding as part of their integrated structure.
In the farm machinery industry, many of the major mergers and acquisitions can be traced to large financial losses sustained by some leading firms during periods when the farm sector was in prolonged recession, which substantially reduced demand for farm machinery as farmers delayed major capital purchases. Firms experiencing large financial losses are often vulnerable to acquisition.
The agricultural chemical sector has been heavily affected by changes in government regulations governing the health, safety, and environmental impacts of new and existing pesticide formulations: larger firms appear better able to address these stricter regulatory requirements.
Consolidation in the animal health sector appears to be largely a byproduct of mergers and acquisitions in the pharmaceutical industry, as most of the leading animal health companies are subsidiaries of large pharmaceutical companies.(full article here)