A country of monopolies

CLEAR LAKE, Iowa — Chris Petersen, a third-generation hog farmer who says “I bleed rural” and tears up at the fate of family and friends, has found a way to keep his small holding going, and avoid the exodus that so many are making. His grown son and daughter have, too.

But meanwhile, Petersen is at war with the big companies that he says are destroying the culture of smaller places like Clear Lake.

• “We are going down the same roadas the Russians with the collective farm system,” he told me yesterday. “There, the government controlled it. Here, it’s the corporations.”

The big picture: While his is a dramatic rendering of the state of American agriculture, Petersen has a point — across industries, the U.S. has become a country of monopolies.

• Three companies controlabout 80% of mobile telecoms. Three have 95% of credit cards. Four have 70% of airline flights within the U.S. Google handles 60% of search. The list goes on. (h/t The Economist)
• In agriculture,four companies control 66% of U.S. hogs slaughtered in 2015, 85% of the steer, and half the chickens, according to the Department of Agriculture.
• Similarly, just four companies control85% of U.S. corn seed sales, up from 60% in 2000, and 75% of soy bean seed, a jump from about half, the Agriculture Department says. Far larger than anyone — the American companies DowDuPont and Monsanto.

As we have reported, some economists say this concentration of market power is gumming up the economy, and is largely to blame for decades of flat wages and weak productivity growth.

• The issue has becomea higher-profile plank of both political parties — and could move to the center of the 2020 debate.

Farmers like Petersen are on the receiving end of all this concentration. Just in the five years from 2007 to 2012, the number of U.S. hog farms declined by 25%, the Agriculture Department says.

The heyday, in Petersen’s memory, was the 1970s, when “rural America was ungodly vibrant.” Sixty cents paid per pound of hog gave farmers a healthy profit, he said.

• The nearby city of Swaledale had just 220 people, yet when you added in everyone in the surrounding, smaller towns, there was sufficient business for a bank, grocery and hardware stores, a gas station, and two bars with restaurants.
• Now, Swaledale is about 150, and the businesses have shuttered:“It’s all gone. That’s what they’ve done to rural America.”

When Petersen says “they,” he means Big Ag, which in his view is plain greedy. It is trying “to run us out,” he says, banging the table with his fist.

• In a statement, Tyson said: “We’ve been working with poultry farmers on a contract basis since the late 1940s and it has been a relationship we believe works well for both the farmer and the company. As noted on our website, contract farming insulates the farmer from the risk of changing market prices for chicken and feed ingredients such as corn and soybean meal, which represents the majority of the cost of raising chicken. So, farmers’ compensation is not dependent on what the feed costs, or prices at the grocery store.”

In 2001, Petersen went bankrupt. After that, he changed his business model and began to raise a premium hog known as a Berkshire, a breed whose meat he compares with Kobe beef. They fetch twice the price of the standard hog.

• The whole sequence isoutside the packers system.
• “It’s capitalism at its best.You get a price, not a fee,” Petersen said.

Πηγή: axios.com