WASHINGTON, DC, US — Agriculture, together with the labor, health care and technology sectors, will be subject to heightened enforcement challenging industry consolidation and anti-competitive behavior, according to a July 9 announcement from the White House.
The announcement was issued ahead of US President Joe Biden’s signing of an executive order “to promote competition,” in a bid to lower prices for families, increase wages for workers and promote innovation and increased economic growth.
In more than 75% of US industries, “a smaller number of large companies control more of the business” than was the case 20 years ago, the White House said.
“This is true across health care, financial services, agriculture and more,” the White House said.
The Biden administration said the increased concentration has resulted in higher prices for consumers with gross margins tripling during the 20-year period.
Similarly, the announcement blamed competition on driving down wages for workers.
“In total, higher prices and lower wages caused by lack of competition are now estimated to cost the median American household $5,000 per year,” the White House said.
Speaking at the White House before signing the Executive Order, President Biden said, “The heart of American capitalism is a simple idea — open and fair competition.”
“Competition keeps the economy moving and keeps it growing,” he continued. “Fair competition is the reason capitalism has been the greatest force for prosperity and growth.”
The Executive Order will launch a government-wide effort to promote competition.
“The order includes 72 initiatives by more than a dozen federal agencies to promptly tackle some of the most pressing competition programs across our economy,” the Biden administration said.
Suppliers of farm equipment and agricultural inputs for growers were called out in the announcement.
“Over the past few decades, key agricultural markets have become more concentrated and less competitive,” the administration said. ‘The markets for seeds, equipment, feed, and fertilizer are now dominated by just a few large companies, meaning family farmers and ranchers now have to pay more for these inputs. For example, just four companies control most of the world’s seeds, and corn seed prices have gone up as much as 30% annually.”
Rising seed costs have meant growers are keeping a smaller percentage of sales than in the past.
“For example, four large meat-packing companies dominate over 80% of the beef market, and, over the last five years, farmers’ share of the price of beef has dropped by more than a quarter — from 51.5% to 37.3% — while the price of beef has risen,” the Biden administration said.
The proportion of dollars spent on food reaching farmers and ranchers has been falling for decades.
“In short, family farmers and ranchers are getting less, consumers are paying more, and the big conglomerates in the middle are taking the difference,” the administration said. “Meanwhile, the law designed to combat these abuses — the Packers and Stockyards Act — was systematically weakened by the Trump administration Department of Agriculture.”
Foreign companies also are squeezing US farmer and ranchers, the Biden administration said. As an example, the administration said most meat sold domestically as “Product of USA” often is raised overseas and then sliced in the United States.
“Corporate consolidation even affects farmers’ ability to repair their own equipment or to use independent repair shops,” the administration said. “Powerful equipment manufacturers — such as tractor manufacturers — use proprietary repair tools, software, and diagnostics to prevent third parties from performing repairs. For example, when certain tractors detect a failure, they cease to operate until a dealer unlocks them. That forces farmers to pay dealer rates for repairs that they could have made themselves, or that an independent repair shop could have done more cheaply.”
The order directs the US Department of Agriculture to develop a plan to “increase opportunities for farmers to access markets and receive a fair return, including supporting alternative food distribution systems like farmers markets and developing standards and labels so that consumers can choose to buy products that treat farmers fairly.”
The USDA also has been directed to issue new rules establishing when meat can carry “Product of USA” labels and to make it easier for farmers to “bring and win claims” under the Packers and Stockyards Act, related to how farmers are paid to protect them from retaliation when famers “speak out about bad practices.”
Neither the grain storage and handling nor the milling/processing sectors were specifically identified for action in the White House announcement.
“I’m a proud capitalist,” Biden said in his remarks. “I spent most of my career representing the corporate state of Delaware. I know America can’t succeed unless American business succeeds. But let me be clear, capitalism without competition isn’t capitalism. It’s exploitation.”