Ensuring greater competition in agriculture, particularly for smaller family farms which still comprise the majority of farm operations in California, is an issue that’s climbed to the near-top among members of the ag industry, and on the government farm and ag policy agenda over the last three years.
The impetus for this has been the ongoing consolidation of farms and agribusiness in the U.S. For example, in California The Wonderful Company has consolidated a high percentage of almond growing, processing and marketing, and California-based Driscall’s (AKA The “Berry Kings”) has done the same with strawberries, blueberries, raspberries and blackberries.
In the all important plant seed industry, today only four companies control nearly 100 percent of all global sales because of decades of mergers and acquisitions. Consolidation.
The meat, poultry and dairy industries also have seen significant consolidation and far less competition over the last two decades. This consolidation goes from the farm and ranch to the processing house, to the actual branded products sold in retail stores and to foodservice operators.
Consolidation also has hit the bread industry – three companies control nearly 100 percent of branded bread sales in the U.S. This has clearly reduced competition in the retail bread category and put massive wheat buying power into the hands of these three companies. They often set the price paid to growers because of their wheat contracts. The number one bread company in the U.S., Grupo Bimbo, is actually headquartered in Mexico.
Nationally, consolidation in food and agriculture has become a source of concern to the Biden Administration, Democrat and Republican members of Congress, the Federal Trade Commission (FTC), the USDA, academics and family farmers and their advocates.
Consolidation and competition, or whether or not there’s a lack of the latter, also has stretched over into the food and grocery industries. For example, in the November 2023 issue of My Job Depends On Ag Magazine I wrote about the anti-competitive issues surrounding the FTC’s review of the proposed merger between grocery retail giants Kroger CO. and Albertsons. (See: The Kroger-Albertsons Mega-Merger and California Produce.) If approved as is, which I suggested in the piece it won’t be, it would be the largest merger of grocery retailers in U.S. history. Opponents – and there are many – argue the merger will greatly diminish the competition in grocery retailing, harming consumers and workers alike.
Fair and competitive markets have long been the cornerstone of the American economy. Competition ensures that American farmers, ranchers, and those who grow our nation’s food have the freedom to choose among different suppliers, employers, and retailers to buy and sell their product and the products they need. It spurs many businesses to innovate, improves opportunities for producers and workers, and increases resilience in the food supply.
Over a century ago, Congress authorized the U.S. Department of Agriculture (USDA) and other agencies to police against illegal market structures and conduct that harm farmers, ranchers, and agricultural producers. The Packers and Stockyards Act (P&S) of 1921 authorizes the USDA to “assure fair competition and fair trade practices, to safeguard farmers and ranchers, to protect consumers and to protect members of the livestock, meat, and poultry industries against unfair and unjust competition.
In 2021 President Biden issued an executive order promoting greater competition in agriculture as well as in other industries. It was a major move and was largely supported by family farmers and their advocates.
The executive order has led to new priorities to increase competition at major government agencies like the USDA and FTC (Federal Trade Commission). The FTC is scrutinizing major food and ag companies and farming mergers and acquisitions, like the Kroger-Albertsons deal I mentioned earlier, and others, as well as taking action against companies like Amazon on anti-competitive grounds.
A second major move to further increase competition in agriculture and level the playing field for farmers happened in November when the USDA issued new rules under the 1921 Packers and Stockyards Act. The new rules build on President Biden’s 2021 executive order.
These are the new USDA rules designed to increase competition and level the playing field for farmers and others in agriculture, according to the USDA:
Competition and Innovation in Seeds
USDA continues to deliver on its commitments to promote fair competition and innovation in seeds. This week, the Agricultural Marketing Service (AMS), the agency leading the Farmer Seed Liaison initiative, issued multiple letters to seed companies reiterating their obligation to comply with the Federal Seed Act’s varietal labeling requirements for agricultural and vegetable seed shipped in interstate commerce and highlighting the importance of establishing best
practices under the March 6 Notice to Trade. As part of this effort, AMS is holding seed companies accountable to the best interests of their farmer stakeholders by requesting they examine how they are complying with the Federal Seed Act and USDA’s Notice to Trade in providing variety transparency to farmers at the point of sale, disclosing the variety to growers usually at the time of purchase and no later than the commencement of shipment. USDA recognizes the variety of seed farmers are purchasing under different brand names is important to them and enables a more competitive, innovative seed landscape.
Updated Domestic Origin Requirements for USDA Purchases of Meat Products
AMS is clarifying that meat products must be from animals that are born, raised, and slaughtered in the U.S. to meet the domestic origin requirements for purposes of USDA purchasing. AMS procures food products of domestic origin for use in nutrition assistance programs and regularly evaluates the effectiveness of its food purchase programs.
Upon review, the guidelines for procuring beef, pork, lamb, and bison products were not as clear as other commodities. Last year, AMS purchased $800 million worth of meat products. This clarification to the domestic origin requirement will ensure U.S. producers enjoy reaping the full benefit of USDA purchase programs and recipients of nutrition assistance programs benefit from domestically-produced meat products.
Establishing a Chief Competition Officer at USDA
USDA has created a new, senior- level career position at the Agricultural Marketing Service to support its multiple efforts to address the many, complex competition challenges in the agricultural sector. Located in the AMS’s Administrator’s Office, the new AMS Chief Competition Officer will formalize and enhance implementation of key competition policy priorities at AMS and support efforts across the Department, including Packers & Stockyards Act enforcement, seed transparency and competition, and partnerships with State Attorneys General.
The Senior Executive Service position will work closely with the current Biden-Harris USDA’s leadership on competition policy and will also serve as a career liaison to other federal agencies working to tackle competition issues using a whole-of-government approach.
This is only the beginning of rewriting the public policy playbook for agriculture, according to USDA. Next year, which is an election year, will see more.
Tom Vilsack, a family farmer (in Iowa) himself, is an advocate for smaller, family farms and independent agribusinesses. He’s been out to California numerous times this year, talking to farmers and independent agriculture-related businesses.
My analysis is that the new rules and the overall major effort to increase competition in agriculture and create a more level playing field for farmers is good for California’s independent family farmers, who are essential in keeping the Golden State number one in agriculture because they are so innovative, creative and resilient.
USDA Secretary Vilsack says there’s more to come and the California Department of Food and Agriculture supports the USDA’s efforts.
Fair competition is the backbone of the American economy and it’s important to make sure the smaller can compete with the larger, particularly in California where family farmers and independent agribusinesses have had serious challenges over the last few years. Family farmers have been the innovators in California. We need them today more than ever.
My Job Depends on Ag Magazine columnist and contributing editor Victor Martino is an agrifood industry consultant, entrepreneur and writer. One of his passions and current projects is working with farmers who want to develop their own branded food products. You can contact him at: victormartino415@gmail.com.
