by Yves Smith
posted April 20, 2013 by Naked Capitalism
Yves here. This is a short but useful reminder of how the failure to enforce anti-trust laws leads to oligopolies. MBAs are taught how to make markets inefficient to increase corporate profits, and one of the most lasting ways is to achieve a dominant position, ideally in a concentrated industry. “Roll ups” which is a consolidation play, is a favorite among private equity firms (but they often stumble in integrating the companies).
The author describes how dominant players preserve their profits through aggressive lobbying in the food space, and why that is particularly troubling.
By Wenonah Hauter, the Executive Director of Food & Water Watch. She has worked extensively on food, water, energy and environmental issues at the national, state and local level. Her book Foodopoly: The Battle Over the Future of Food and Farming in America examines the corporate consolidation and control over our food system and what it means for farmers and consumers. Cross posted from Triple Crisis
There is one thing that my new book is about: corporate control of every aspect of our food system, from how it is labeled to the pesticides we are exposed to. The main thesis of Foodopoly is simple — We, the people, must reclaim our democracy. We must reestablish strong anti-trust laws as part of the progressive agenda if we have any hope of fixing our broken, corporate-controlled food system. And to do that, we need to organize and force our elected officials to create laws that result in a food system that works for consumers and farmers—not big agricultural, food processing, retail and chemical conglomerates.
How has consolidation enabled Monsanto, Tyson, Nestle, Kraft, Cargill, McDonalds and other food/ag/chemical companies to write our food policy, and why is about to get worse? The disastrous decision in the landmark Citizens United case now allows corporations to spend unlimited sums of money to buy the political system. This decision comes at the expense of citizens and democracy itself.
Foodopoly delves into the history of food and farm policy to explain how we got to the massive consolidation of the food supply. For example, only four gigantic companies process 80 percent of the beef we eat, and only four retailers sell 50 percent of the groceries (with one out of every three dollars spent on groceries in the U.S. going to Walmart). The top 10 fast food companies control 47 percent of all fast food sales. Together, these industries have commandeered local economies, and now it is clear that the era of family farmers and mom and pop stores has ended. What’s not as clear is the effect this has on our political system.
Make no mistake: when those companies enjoy near monopolies and vast market power — both domestically and globally thanks to crooked free trade agreements — their profits enable them to contribute large sums of money to groups that lobby Washington very effectively. At Food & Water Watch, our organizational budget to fight the corporate control of the food system annually is about $12 million. According to the Center for Responsive Politics, the food industry spent $40 million lobbying the federal government in 2011. And the biotech industry spent over half a billion dollars in campaign contributions and lobbying expenditures since 1999. Additionally, special interests spent $173.5 million lobbying on the 2008 Farm Bill.
Citizens United accelerates the corporate power grab of our democracy. Other issues affecting our essential resources are trade and the financialization of nature. This summer, President Obama will attempt to fast-track two trade deals — the Trans Pacific Partnership and the Transatlantic Free Trade Agreement —which are permanent power grabs by corporations and their financers. For Americans this means increased gas exports and increased imported foods, an undermining of our domestic laws and increasing corporate ownership of our natural resources. They will forever enshrine the very economic system that has lead to an ever greater imbalance in income and wealth, and increasingly frequent economic crises. And it will all be enforced by new international tribunals akin to the WTO.
The changes needed to reform our food system and strengthen our democracy can only happen when the people demand better from their leadership. We can’t shop our way out of this problem: we need to address the political reasons our food system is so broken.
Read more at http://www.nakedcapitalism.com/2013/04/the-elephants-in-the-room-citizens-united-trade-and-corporate-ownership-of-our-natural-resources.html#5vLUzF7owy8sXVbC.99