The Modern Monopoly
He's not as harmless as he looks.
In the world today, there are food giants, and then...there's everyone else.
Tyson, Cargill, Swift & Co, and National Beef Packing apparently kill 84% of cows. This statistic is worrying because a) jee whiz, that's a lot of cows, and b) it speaks volumes about the effect of agribusinesses on the overall food industry. The examples of monopolies in the food industry seem to go on and on; 81% of all corn exports in the US are done by Cargill, Continental Grain, ADM, and Zen Noh. That's as good as dominating the industry. Almost 80% of all soybean crushing is done by 4 companies: Cargill, Bunge, ADM, and AGP. There are also a few giants in the food industry that have their fingers in many pots. Kraft, Unilever, and ConAgra are examples of this. Monsanto has been all over the news lately for controlling corn and soy - in fact, Monsanto controls 97% of the genetically modified corn and 91% of GM soy. Examples of other dominant companies in the food industry include Dean (known for their milk production), Kellogg (cornflakes, anyone?), Danone, General Mills, and Tyson.
According to Phil Howard in The Natural Farmer, there are three different ways that we can see these monopolies slowly gaining control. First of all, horizontal integration - we have to observe the ratios above more closely over time to see the extent of the monopoly. The moment that a few companies control a little less than half of the market, we can no longer say that competition is being encouraged. Secondly, vertical integration links companies in various links of the supply chain. In the example given in the article, ConAgra both distributes seeds and processes chickens for cold dinners. This kind of infiltration does not allow other companies to enter the market. Thirdly, we can see these monopolies through global expansion. Again, in the example given in Howard's article, WalMart has expanded far beyond the boundaries of the continental United States.
We can also see monopolies as links between other monopolies. Oligopolies? It's a possibility Through the usual mergers and acquisitions, companies can come together to split the profits of every part of the supply chain.
Tyson, Cargill, Swift & Co, and National Beef Packing apparently kill 84% of cows. This statistic is worrying because a) jee whiz, that's a lot of cows, and b) it speaks volumes about the effect of agribusinesses on the overall food industry. The examples of monopolies in the food industry seem to go on and on; 81% of all corn exports in the US are done by Cargill, Continental Grain, ADM, and Zen Noh. That's as good as dominating the industry. Almost 80% of all soybean crushing is done by 4 companies: Cargill, Bunge, ADM, and AGP. There are also a few giants in the food industry that have their fingers in many pots. Kraft, Unilever, and ConAgra are examples of this. Monsanto has been all over the news lately for controlling corn and soy - in fact, Monsanto controls 97% of the genetically modified corn and 91% of GM soy. Examples of other dominant companies in the food industry include Dean (known for their milk production), Kellogg (cornflakes, anyone?), Danone, General Mills, and Tyson.
According to Phil Howard in The Natural Farmer, there are three different ways that we can see these monopolies slowly gaining control. First of all, horizontal integration - we have to observe the ratios above more closely over time to see the extent of the monopoly. The moment that a few companies control a little less than half of the market, we can no longer say that competition is being encouraged. Secondly, vertical integration links companies in various links of the supply chain. In the example given in the article, ConAgra both distributes seeds and processes chickens for cold dinners. This kind of infiltration does not allow other companies to enter the market. Thirdly, we can see these monopolies through global expansion. Again, in the example given in Howard's article, WalMart has expanded far beyond the boundaries of the continental United States.
We can also see monopolies as links between other monopolies. Oligopolies? It's a possibility Through the usual mergers and acquisitions, companies can come together to split the profits of every part of the supply chain.
So What?Well, right off the bat, according to Friedman economics, the price of any product under a monopoly will rise. This is because the monopoly does not have to make it's price equal to marginal revenue and marginal cost, and it does not have to be fair. It is not controlled by Adam Smith's invisible hand. This doesn't mean that the price can be increased arbitrarily, but it does mean that the price of corn will be higher, and it's all Monsanto's fault.
Also, you are not always assured of the quality of the food because there are no clear competitors in the field. Since the company no longer needs to please it's consumers, it will always opt for the least-cost method. It is important to keep in mind that when genetically engineered food was being introduced into the industry, people had very little choice in the matter - they could only eat what came from their supermarkets, after all. Another worrisome aspect is the dependency factor. Although it is unlikely (very, very unlikely) that these companies would collapse all at once, if that did happen, we would be bereft of a great deal of food supply. The modern monopoly in food effectively threatens our health and the quality of our food; it creates an unhealthy economic system with little competition and increases prices. |