Policy Brief No.6: Agricultural Restructuring and Concentration in the United States: Who wins, who loses?

• a reduced trade surplus in agriculture

• reduced numbers of family farms

• racial discrimination against farmers of color

• increased levels of subsidy to large agricultural concerns
• increased levels of pesticide use,

• decreased crop and biological diversity in the U.S. countryside

• falling levels of rural social welfare

• increased indicators of poverty and malnutrition across the United States

Domestic policy has advanced in lock step with these agreements; the same administrations that have advanced trade liberalization have invariably authored domestic policy changes to comply with these new agreements, at least nominally. The new policies and international market structures have not been neutral in their effects. The U.S. government has created incentive structures that favor large scale monocultural farming operations; in these structures, small family farmers have been marginalized.

Despite strong international rhetoric against agricultural subsidies, and equally vocal domestic rhetoric for a “level playing field”, the U.S.’s direct payments to agriculture are at record levels. The findings of this report suggest that these payments are not being directed to those farming operations most in need of support, but have instead gone to already affluent agricultural concerns and banks.

Farm subsidies have been and continue to be inequitably and inefficiently distributed. The report examines a range of subsidy mechanisms. The top 1 percent of beneficiaries from one program collect an average $83,000 per year and those in the top ten percent average $32,000; the typical program participant, however, receive just $1,200 annually. Recipients include fifteen Fortune 500 Companies.

At the same time, mmall family farmers, facing falling returns from farming together with rising costs, are relying on off-farm income as a survival strategy. Fifty-five percent of U.S. farm operators work off-farm, with 80 percent working full-time jobs. ⁱ
This is a 24 percent increase from 1979. During the same period, the percentage of farm operator spouses working off-farm increased by 65 percent, from 27.7 percent to 45.8 percent. This is
indicative of self-exploitation on the part of farm operator
households, as they must manage both farm responsibilities and
off-farm employment.

While there is no doubt that all small family farmers are facing increasing pressure as a result of consolidation in the sector, the disappearance of American farmers has proven to be quite discriminatory. Minority farmers are at greater risk of being pushed out of the sector than their white counterparts. While 925,000 farmers (14 percent of all farm operators) were
African-American in 1925, there remained fewer than 18,000 African American farmers (less than 1 percent of all farm operators) at the turn of the twenty-first century.ⁱⁱ

With black farmers exiting the sector at a rate almost five times greater than whites, a 1990 House Committee report declared that black farmers were on the verge of extinction. ⁱⁱⁱ

Chart: Index of
farm-to-retail spread for a market basket of goods

(1982-1984=100)

The situation for consumers has improved little. At look at the distribution of revenue in the final prices of food shows that both consumers and farmers have been losing out (see chart above). The farm-to-retail spread, a measure of the difference between the amount farmers receive and the amount consumers pay for a basket of goods, suggests that consumers have failed directly to reap the rewards of lower farm commodity prices. This can be accounted for by the increased level of food processing and marketing, which, in turn, has had serious consequences for U.S. consumers. Over the past three years, there have been upward trends in the level of household food insecurity within the U.S. Simultaneously, as advertising, the development of new products, and increased portion sizes promote increased consumption,

^iv obesity has become a serious problem. Approximately 65 percent of Americans are overweight.^v
While obesity among American children has doubled since 1980, it has tripled among teenagers.^vi

There now exist as many underfed persons as overfed (1.2 billion each, 2.4 billion total), creating a “global epidemic of
malnutrition.”
^vii

We explain the paradox whereby farmers receive a decreasing share of the price of final food products, despite record subsidy levels, by examining the agribusiness sector. Agribusiness firms have increased both their market power and wealth in the United States:

• four companies (Cargill, Cenex Harvest States, Archer Daniels Midland, or ADM, and General Mills) now own 60 percent of the nation’s terminal grain handling facilities

• three companies (Cargill, ADM, and Zen Noh) are responsible for 82 percent of corn exporting

• four companies (Tyson, ConAgra, Cargill, and Farmland Nation) hold 81 percent of the beef-packing industry

• four companies (ADM, ConAgra, Cargill, and General Mills) own 61 percent of flour milling capacity. ^viii

We conclude that the direction of U.S. agricultural policy is being set not by the needs of farming communities, nor by the needs of the majority of US citizens, but by the political influence of a handful of powerful corporate interests. We document these links, and suggest that, with the historic and continuing influence of corporations on the US government, agricultural policy in the public interest remains unlikely.