Corporate consolidation and power in the food system: An interview with Dr. Mary Hendrickson

Mary Hendrickson is Assistant Professor of Rural Sociology at the University of Missouri. Her research focuses on local food systems and consolidation in the industrial food system. She will speak at the UVM Food Systems Summit on June 27. In anticipation, we spoke with her about why these issues are important for farmers and eaters alike.

University of Vermont: Your research has investigated the role of corporate consolidation in the agri-food industry. Why is this issue important?

Mary Hendrickson: My work has always focused on the structure of relationships in the food system, and how local food systems can be a response to the power issues that emerge in the more globalized and consolidated industrial food system. It can feel very disempowering to only look at the issues of industry concentration. So it’s important to look at what the solutions might be.

I recently went back and read Harold Breimyer’s work from the 1960s titled “Individual Freedom and the Economic Organization of Agriculture.” He studied four commodities, including poultry. I was blown away to discover that almost all chicken farmers were already participating in the contract system that prevails today.  Yet the real complaints from contract poultry growers really didn’t seem to arise until the 1980s and 90s. The difference is that the concentration ratio of the top four firms in the poultry industry held constant at 18% between 1964 and 1976; now it’s over 50%. And the stories from poultry growers who testified at the Department of Justice workshops on concentration a couple of years ago show they feel they are at the mercy of the big poultry firms – firms that supply the chicks, feed, and veterinary care and schedule pick-ups of the grown birds.  Those who complain might receive lesser quality birds or feed, which means they end up at the bottom of the ranking system that determines their pay.

On the other hand, this dynamic doesn’t look the same in the beef industry. The top four firms slaughter over 80% of steers and heifers, but we still have a large number of ranchers dispersed over a wide area. They don’t face the same consolidated markets for inputs or for their calves– at least until the calves reach the feedlot level where there are powerful ties with the beef packers. However, the ranchers seem to be terrified of being “chickenized” as they call it. The point is, each commodity can be different but there are general trends of concentration in most major agricultural commodities.

For that reason, I’m very interested in notion of dependency in these markets relationships and how power manifests itself through that dependency. Having more choices in the market, both in terms of inputs and outputs, gives you independence. What happens when you become dependent? What happens to your power position vis-à-vis others in the arena?

UVM: How does food industry consolidation affect the average eater?

MH: First, through a lack of transparency on information about who produced your food, how it was produced, and who’s getting the profits. There’s an illusion of choice in the food system—for example, there may be a ton of brands, but you’re actually buying from the same company. ConAgra Foods, for example, produces Healthy Choice, Hunts, Orville Redenbacher, Banquet, etc. So the branding can mask the amount of market concentration there is.  Really a lot of our processed foods come from just a handful of firms – Nestle, Kraft (now Mondelez), ConAgra, General Mills.

JoAnn Jaffe and Michael Gertler argue that as the consolidated, industrialized food system developed, there has been an associated “de-skilling” of the consumer in the supermarket. As a result, we don’t know much about the food we’re eating, and we also don’t know as much about choosing, cooking, or storing food as people did a hundred years ago. It’s weird – as a society we know more about nutrition than ever – and each of us knows less individually.  Food manufacturers and supermarkets have that knowledge instead.

As companies get bigger, they need standardized processes to make themselves more efficient. This standardization allows for companies to move more products with less cost, but it also allows concentrated markets to develop. As you standardize, you want a standard genetic pool so the products – say tomatoes – will look the same every time.  You don’t want big fat tomatoes and little ones because your customer wants to know that there are exactly 25 tomatoes in a case. So another impact is on genetic diversity. Not all standardized processes are bad, but where’s the flexibility and adaptability? Ecology and community both rely on context.  Larger organizations with far flung supply chains can’t be as sensitive to context. Smaller organizations are more adept at this.

UVM: How does food industry consolidation affect farmers?

MH: Basically, farmers feel like they are getting squeezed on either side. On the inputs side, farmers feel they don’t have a choice of the inputs they can buy. Commodity farmers have just a few choices of seeds, so they don’t get to make as many decisions about genetics, about what type of crops to plant – or for livestock, how to treat those animals in terms of production practices and vet care. On the market side, a grower might be reduced to being dependent on one particular outlet for their product.

For example, I spoke with a farmer in Missouri in the mid-2000s after Monsanto had acquired Seminis, then the world’s largest vegetable seed firm. This farmer had been using a Seminis eggplant variety liked by the local distributor and food service market. After Monsanto acquired Seminis, it discontinued that particular variety in order to streamline its processes. So that farmer doesn’t have the choice of growing that eggplant variety anymore.

As the industry consolidates, the smaller operators (farmers, grocery stores, distributors, seed companies) are left out of the game and we lose of a lot of infrastructure.  For instance, take those farmers who try to search out non-GMO soybeans. So many farmers flocked to Roundup Ready, and the seeds had to be purchased from dealers, that many of the small, independent seed cleaners who used to clean seeds for their neighbors who saved seed from year to year aren’t there anymore. Now when farmers want to buy an alternative soybean seed, they have a hard time finding them.

UVM: What projects are you working on currently?

MH: I’m currently working on a project with another sociologist and an agricultural economist exploring the question of power in the food system from the viewpoint of dependency in market relationships. Sometimes we use the word “power” rather glibly. So we’re interested in really showing how power manifests itself in relationships in the food system as a result of market concentration.

I’m also working on another project with the University of Nebraska looking at whether local food systems can be drivers of rural economic development. Nationally – and in the Midwest particularly the market for locally produced foods is much greater in urban areas than in the rural areas where they actually have food production capacity. Part of that is the population density factor. If only 20% of the population will go out of their way to buy local foods, you can find more of them in one place in big cities. So people who are producing in rural areas bring their food to urban areas because they can make more money than they can in their home town. However, it seems the informal economy is much more apparent in rural areas than it is in a city. Many people in rural communities consume locally produced foods, but they get it from their neighbor or aunt or a coworker. So networks are really important, and we might be overlooking local food activity if we just focus on formalized markets.  That might be very important as we think about options for rural development.

Posted in: Economic, Environmental, Health, Social.