Agribusiness consolidation is destroying rural communities in America

Austin Frerick recently wrote this piece for The American Conservative, which gives a detailed explanation of how corporate consolidation in agriculture-related industries has had a very negative impact on rural America. Although The American Conservative contains the word “conservative” in its name, Frerick is a former Democratic congressional candidate who ended his 2018 campaign for a U.S. House seat in Iowa prior to the Democratic primary, and his piece is largely in line with progressive political thought in regards to rural issues.

Frerick’s piece began with mentioning how an unnamed Iowa Farm Bureau official told Frerick “that most rural communities will soon disappear”, then Frerick’s piece quickly went into a very good explanation of how rigged in favor of large corporations and against family farmers the rural economy in America is:

This concentrated power comes at the expense of farmers and workers. Because the supply, processing, distribution, and retail networks are controlled by only a handful of firms, farmers face higher costs for their inputs and lower prices for their goods. In the 1980s, 37 cents out of every dollar went back to the farmer. Today, farmers take home less than 15 cents on every dollar. This new economic reality forces farmers to survive on volume, creating a system where only the largest farms can make a living.

The nation’s meatpacking industry is now more concentrated than when Upton Sinclair wrote The Jungle more than a century ago. Four companies, two of which are foreign-owned, now slaughter 52 percent of all meat consumed in the United States, more than twice the market share that the four largest companies held in 2002.

As journalist Christopher Leonard documents in The Meat Racket: The Secret Takeover of America’s Food Business, the current system closely resembles sharecropping. Large corporations like Tyson Foods will only slaughter a farmer’s chickens if he has an exclusive contract with the company. In many rural communities, a farmer raising animals for slaughter has the “choice” of selling to only one slaughterhouse. And because Tyson is often the only buyer in town, it calls the shots, dictating everything from the facilities a farmer builds on her farm, to the feed she uses, to the price the farmer receives for full-grown chickens. The farmer has very little power in this transaction, and this asymmetry is a key factor in why 71 percent of American chicken farmers live below the poverty line.

For slaughterhouse workers, industry concentration has contributed to wage stagnation over the course of the past few decades. Workers at a Hormel slaughterhouse in Austin, Minnesota, made $10.69 per hour in 1985, equal to $25.04 in 2018 when adjusted for inflation. But 33 years later, the average slaughterhouse worker makes less than $3 more. Meanwhile, Wan Long, the chairman and CEO of WH Group—the holding company of Smithfield Foods—made $291 million in 2017, the equivalent annual wages of 10,457 slaughterhouse workers.

Source

While rural America can be saved, it would require a significant change in how agribusiness operates in America in order to revitalize rural communities in America. The current status quo is simply unacceptable: farmers and workers in agriculture-related industries are making less money, and this creates a ripple effect in the economies of rural communities, since those very farmers and workers are not able to contribute as much to the economy because they don’t have as much money to spend on goods and services; additionally, many younger people who grew up in rural America are moving to larger cities for economic opportunity due to the lack of economic opportunity where they grew up. Increased competition in agribusiness, which can be achieved by implementing and enforcing stricter antitrust laws, is one change that is absolutely necessary in order to help revitalize rural America.