BigAg is a term used to describe the large companies which, as a result of mergers and acquisitions, barriers to entry, weak or unenforced antitrust laws, and unfair trade practices, have come to control the the agriculture industry from input to output. A robust market should require competition and fair play, reward merit, and place the risks and burdens of failure upon those most directly responsible. Though the agriculture industry was once such a market, nearly every sector is now dominated by BigAg.
Livestock – Family farms still manage “cow and calf” operations, but the beef market is controlled at a choke point by four meatpackers (Tyson Foods, National Beef, Cargill, and JBS USA) which account for 80% to 85% of beef processing. Poultry and pork production is increasingly operated by BigAg “integrators” which own the animal, the feed, and certain other inputs with the family farmer providing only caretaking services. In addition to this vertical integration, the meatpackers control 60% of poultry processing (Tyson Foods, Pilgrim’s Pride, Wayne -Sanderson Farms, and Perdue Farms) and 70% of pork processing (Tyson Foods, JBS USA, Hormel, and WH Group). BigAg has also consolidated and concentrated around fluid milk sales (83%), milk product (40%) and eggs (36% to 40%).
Real Estate- The agricultural land in the United States (particularly in states without a corporate farming ban) is being quickly acquired by BigAg and wealthy investors. Private equity and institutional asset managers have become major players in the global farmland market, currently owning approximately 3% of U.S. farmland. The Mormon “church” owns approximately 2.3 million acres of farmland and private property in the U.S. Farms and ranches are also being acquired by tycoons such as Ted Turner (2 million acres across 15 States), Stan Kroenke (2.7 million acres largely over Texas, New Mexico, Montana, Wyoming, Nevada, and Arizona), Bill Gates (275,000 acres across 18 states), and John C. Malone (2.2 million acres largely over Florida, Wyoming, New Mexico, and Colorado).
Equipment – Tractors, combines, implements and other equipment require a significant investment of capital. Consolidation in the industry has eroded all competition except for John Deere & Co and CNH (a combination of Case, International Harvester, New Holland, and Ford – which were all once independent). These two giants account for 88% of the market for all large tractors, 90% of combines, and 51% of all other agricultural machinery. In addition to the consolidation among these manufacturers, the trend has found its way down to the dealerships. Though dealerships are, ostensibly, independent of the manufacturers, BigAg exercises substantial control over these firms and derives profits from their operations.
Fertilizer – Until the 1980s, the concerted efforts were made to break up the BigAg’s domination of the fertilizer industry. Due to an unwillingness to enforce antitrust laws, each of the different types of fertilizer and the distribution process is controlled by BigAg. Four companies (CF Industries, Nutrien, Kock Industries, and Yara) control 82% of the market for nitrogen. Just two companies (Nutrien and Mosaic) control 91% and 90% to 95% of the phosphate and potash markets, respectively. Big Ag also controls 70% of the distribution and retail of fertilizer.
Seed & Chemical- The seed and herbicide/pesticide sector has become dominated by BigAg in connection with the development (and patent protection) of seed varieties with a resistant to herbicides and pests. A series of mergers and acquisitions in the late 2010s lead to considerable consolidation and centralization. Dow and Dupont merged to form and spun off Corteva, which controls almost 40% of the soybean and corn seed markets) and Bayer acquired Monsanto and to control approximately 30% of the soybean and corn seed markets. Since the occurrence of these transactions, BigAg has leveraged its patented technologies to sell data-driven input recommendations by platforms linked to the companies. This information, however, is not shared with family farmers.
Crop Insurance – Often required by the banks making loans to family farmers, crop insurance protects against losses which may result from weather and natural disasters, plant disease and insect infestations, irrigation system failures, and/or livestock and wildlife destruction. As is the case with every other sector in the agricultural industry, the crop insurance market is now controlled by the largest carriers (such as Chubb INA, QBE North America, Sompo Holdings, and Zurich Insurance) which have shifted crop insurance policy ownership towards large corporations which account for over 90% of premiums.
Finance – With the capital requirements necessary to operate a farm, loans and financing are of paramount importance. Access to this type of credit generally comes from either a Farm Credit System (FCS) institution, a commercial bank, or the Farm Service Agency (FSA). FCS institutions hold over 40% of all outstanding farm debt in the U.S. Commercial banks supply another 40$ and the remainder in from a combination of the FSA and other sources. The institutions of the FCS and commercial banks have not escaped the general trend of consolidation and centralization. Following World War II there were over 2000 FCS lending associations, but only 65 remain. The mass disappearance of the community bank has coincided with the increasing prevalence of the megabank. Though bailed out during the financial crisis, megabanks now account for over 60% of industry assets.
State and Federal Government – Instead of protecting family farms by enforcing antitrust laws, prosecuting unfair and anticompetitive practices, and otherwise limiting and restricting the power of BigAg, the state and federal governments are increasingly providing special protections, incentives, and relief. In addition, the implementation of rules and regulations only act as a barrier to entry or death sentence to family farms. Whereas, BigAg can pass the costs on to the end consumers. The federal government provides certain subsidies to family farms, but the majority of those subsidies go to BigAg and recent Farm Bills have invited BigTech into the industry with certain incentives for the use of AI in agriculture.