Agricultural market concentration is abundant and increasing, according to a study released by the National Farmers Union.
The findings are from a NFU-commissioned study that looked at the concentration of agricultural markets. University of Missouri economists Mary Hendrickson and William Heffernan conducted the study. The data showed that every agriculture sector has had increased concentration, except ethanol production. One could speculate that is due partially to the fact that it's so new.
Among the findings, the study shows that the top four beef packers control 83.5 percent of the market, four pork packers have 66 percent of that market, and the top four poultry companies process 58.5 percent of the broilers in the United States. Tyson Foods is listed in the top four of each of those categories.
Retailers also are becoming increasingly concentrated. The top five companies control 48 percent of U.S. retail food entities. That compares with 24 percent 10 years ago.
"This study supports what we have long known," says Tom Buis, NFU president. "In the absence of public policy intervention, consolidated and non-competitive markets flourish, while independent family farmers disappear. Congress must take action to restore competition in the marketplace. The 2007 Farm Bill is the perfect opportunity to make that happen."
As far as ethanol production is concerned, it's the sector that has seen a decrease in concentration. Four companies now control 31.5 percent of the market. In 1987, the top four companies owned 73 percent-- of course, the landscape has grown dramatically since then. Farmer-owned ethanol plans today account for 39 percent of total capacity.
"Renewable fuels is one of the most exciting areas of agriculture and is a clear example of the impact and potential for public policies that encourage competition and reward local ownership," says Buis. "It is important to continue this trend for ethanol but also expand rural ownership to our other agriculture-related sectors."
The study was presented as part of the extensive testimony before the House Agriculture Subcommittee on Livestock, Dairy and Poultry, held this week. Various commodity and agriculture groups presented perspectives at the hearing to look at market concentration.