Food & Power Newsletter: Obama Targets Monopoly, But is He Too Late to Help Farmers and Animals?
After largely ignoring one of the most extreme periods of concentration in U.S. history, President Obama on April 15 acknowledged that America has a monopoly problem. He did so by signing an Executive Order that pushes executive departments and agencies to use their rule-making authority to promote competition wherever possible.
“It’s a public acknowledgement that we have a political economy problem,” says Diana Moss, president of the American Antitrust Institute. “We’ve had 25 years of relatively lax merger enforcement…and there’s mounting bodies of empirical evidence that” the resulting concentration “has been harmful to consumers, to our markets, to our economy.”
The Order targets anticompetitive practices including “unlawful collusion, illegal bid rigging, price fixing, and wage setting” that “erode the foundation of America’s economic vitality.” It gives government officials two months to identify steps they can take to promote competition.
For food and farm activists, the big question is how might the Order help in their efforts to address concentration and related problems in food production, processing, and distribution?
Thus far, President Obama has a poor track record fighting monopolization in food and farming systems. After a series of high-profile meetings in 2010 on consolidation in agriculture, the Departments of Agriculture and Justice largely abandoned efforts to restore open market structures in livestock farming and seeds. Since then, the only big effort against consolidation was the Federal Trade Commission’s 2015 decision to block Sysco’s attempt to buy U.S. Foods.
Some are optimistic about the Executive Order. “This is potentially a huge opportunity,” says Joe Maxwell, political director for The Humane Society Legislative Fund. Maxwell, who also owns a Missouri hog farm, says advocates for open and competitive markets should use the Order as an opportunity to “put pressure” on “the agencies we interface with the most,” especially the USDA.
In farming, most antimonopoly enforcement is handled by the USDA through the Grain Inspection, Packers & Stockyards Administration (GIPSA). In recent years, the USDA has attempted to use its rule-making authority to protect contract farmers like chicken growers from abusive business practices by giant meatpackers, as well as against retaliation for speaking against such practices. But since 2011, Congress has repeatedly included a rider in the agriculture appropriations bill to defund the GIPSA rule-making process.
Activists disagree about whether the Order enables Secretary Vilsack to overrule the GIPSA rider. But still they remain keenly focused on improving protections for chicken growers any way they can. “For the farmers and growers that we represent,” says Kathy Ozer, executive director of the National Family Farm Coalition, “what USDA is able to do and deliver on this issue is critically important.”
Advocates could also use the Order to pressure the USDA to more closely monitor funds collected through checkoff tax programs. These programs are meant to promote the sale of certain American agricultural products. But since the 1990s, the funding generated by many of these programs – $80 million in 2015 just for the beef checkoff tax alone – has to a large degree been captured by organizations that represent corporate, large-scale growers.
A third issue where the Order might have a real effect is Country of Origin Labeling (COOL), implemented in 2009, which tells consumers where their meat was grown and slaughtered. In 2015, under pressure from the World Trade Organization, Congress repealed mandatory labeling for beef and pork. Dudley Butler, the former Administrator of GIPSA, suggests that Secretary Vilsack could view the Order as an opening to consider ways to restore COOL.
Many feel the Order came too late in the administration to have any real effect. In theory, says Patrick Woodall, research director at Food and Water Watch, the USDA could use rule-making to effect dramatic changes in the industry, like “entirely ban all packer ownership of livestock across America.” But even if officials chose to do so, he says, they lack “the time it takes to develop and promulgate the rules.”
Diana Moss agrees that reformers should probably focus their attention on the next president. The Order is a wake-up call that competition “should be an important priority for the next administration, whoever that might be, and that it is very much a bipartisan issue.”
What We're Writing
Leah Douglas wrote for the New America Weekly about the problem of consolidation in the food system and how it came to be.
What We're Reading
JAB Holding Co. will buy Krispy Kreme for $1.35 billion, the latest in a series of acquisitions by the European investment company. Prior JAB purchases include Keurig Green Mountain Inc. for $14 billion and Mondelez Inc.'s coffee company for $5 billion.
As Dow and Dupont head toward a $130 billion merger, and other seed and chemical giants weigh deals, what are the consequences for food security? An article in the Guardian weighs the risks of growing political and economic power in the hands of fewer multinational companies.
In its version of USDA's 2017 budget, the House Agriculture Committee encouraged removing checkoff programs from possible scrutiny under the Freedom of Information Act. Last year, a FOIA request revealed that the American Egg Board, a checkoff program, attempted to take down a small vegan "mayonnaise" company.
Tyson is considering expansion into overseas markets after a profitable year in the U.S. and prior investment in its chicken business in China. The company is currently the largest meat company in the U.S.
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