The forced Sovietization of American private farms?

A recent article suggests that collective farming is being imposed on American agriculture - not by the state, but by agricultural companies.  I know it's a controversial subject, but this perspective shows the human impact of "big ag".

Chris Petersen, a third-generation hog farmer who says "I bleed rural" and tears up at the fate of family and friends, has found a way to keep his small holding going, and avoid the exodus that so many are making. His grown son and daughter have, too.

But meanwhile, Petersen is at war with the big companies that he says are destroying the culture of smaller places like Clear Lake.

"We are going down the same road as the Russians with the collective farm system," he told me yesterday. "There, the government controlled it. Here, it's the corporations."

While his is a dramatic rendering of the state of American agriculture, Petersen has a point: Across industries, the U.S. has become a country of monopolies.

• Three companies control about 80% of mobile telecoms. Three have 95% of credit cards. Four have 70% of airline flights within the U.S. Google handles 60% of search. The list goes on. (h/t The Economist)
• In agriculture, four companies control 66% of U.S. hogs slaughtered in 2015, 85% of the steer, and half the chickens, according to the Department of Agriculture. (h/t Open Markets Institute)
• Similarly, just four companies control 85% of U.S. corn seed sales, up from 60% in 2000, and 75% of soy bean seed, a jump from about half, the Agriculture Department says. Far larger than anyone — the American companies DowDuPont and Monsanto.

As we have reported, some economists say this concentration of market power is gumming up the economy and is largely to blame for decades of flat wages and weak productivity growth.

. . .

The heyday, in Petersen's memory, was the 1970s, when "rural America was ungodly vibrant." Sixty cents per pound of hog gave farmers a healthy profit, he said.

• The nearby city of Swaledale had just 220 people, yet when you added in everyone in the surrounding, smaller towns, there was sufficient business for a bank, grocery and hardware stores, a gas station, and two bars with restaurants.
• Now, Swaledale is about 150, and the businesses have shuttered: "It's all gone. That's what they've done to rural America."

When Petersen says "they," he means Big Ag, which in his view is plain greedy. It is trying "to run us out," he says, banging the table with his fist.

There's more at the link.

I think the biggest factor in the problem is the so-called financialization of the modern economy - focusing on financial derivatives rather than on physical production.  Agricultural products are no longer sold by the farm to a processing company;  they're sold as futures on an exchange, where brokers may (and probably do) have nothing whatsoever to do with the producers or consumers.  Big agricultural companies have the financial muscle to control futures prices to a large extent through their participation in the futures market.  Private farmers don't.  Therefore, it's "big ag" that primarily benefits from the market, and uses that money to further consolidate its dominance in the rural economy - to the detriment of the private farmer.

Another factor, of course, is the unwillingness of consumers to pay what farmers consider a fair price for their food.  As the article notes:  "In 1960, Americans spent 17% of their disposable income on food; the figure now is just 6.4%, according to U.S. government figures. The tight margins ran out everyone but the big dogs."  Big supermarket chains are largely to blame here.  Cutthroat competition among them meant that they would offer to buy products at set prices, and refuse to pay more for them.  Farmers could either accept what was offered, or plow their crops under and go bankrupt.  During times of shortages, farmers had a little more "clout" in the process;  but ultimately, the buyers set the market price, not the sellers.  This was aided by the ability to import cheaper agricultural products from outside our borders if necessary, undercutting local farmers.  "Big ag" doesn't have that problem to the same extent;  they can control input costs over a much larger production base, where they don't have to share enough with local communities to enable the latter to survive.

Whatever the reason, I know several private farmers who've had a torrid time of it over the past couple of decades.  Some have survived;  others have gone to the wall.  I can't help but wonder how many private farms will be left for our children's children to experience.

Peter