Turns out letting ‘efficient’ monopolies control our food supply was a terrible idea
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Written by Claire Kelloway / Washington Monthly April 29, 2020
For many Americans, grocery shopping has become an intensely stressful experience. To maintain social distancing, people must queue before entering stores. Once inside, they must scramble to find increasingly scarce products, including household staples from milk and eggs to pork and beef. Others can no longer afford to go to grocery stores. Instead, they wait for hours to get goods from food banks that are also running short on supplies.
But in a seeming paradox, farmers are destroying their products—including many of the same goods that stores lack. Dairy Farmers of America, the country’s biggest dairy co-op, has called many of its members and instructed them to dump their milk. The cooperative has estimated that farmers are now dumping up to 3.7 million gallons of milk per day. Sanderson Farms, a chicken processor, smashes 750,000 eggs each week. Farmers have been plowing their produce into the ground.
How is it that Americans can face shortages, and in some cases go hungry, while farmers face a glut so large they’re deliberately wasting food? A number of recent stories have noted that America’s food supply chain has proven unable to adjust to the new COVID reality. In particular, food processors and distributors that serve shut-down commercial customers, like restaurants, aren’t able to retool in order to send food to retail outlets like grocery stores, where demand is high. But that just begs the question: why is the supply chain set up in this now obviously risky way?
Decades of consolidation have made food systems more vulnerable, say experts. Beginning in the 1980s, the federal government allowed more agribusinesses to merge and grow largely without restraint in the name of efficiency—before, antitrust and other policies helped keep these industries decentralized and competitive. Consequently, a small number of giant, often vertically integrated, firms, produce and distribute the bulk of food in the U.S. Their hulking and specialized supply chains are not so efficient in the face of disruption.
Dairy Farmers of America, for example, now controls 30 percent of all raw milk in the United States. (I wrote about consolidation in the dairy industry for the Monthly here). In the meat industry, roughly 50 factories process 98 percent of the nation’s beef. The same holds for pork: Following industry consolidation in the late 1980s and 1990s, the portion of U.S. hogs slaughtered in massive, million-head capacity plants rose from 38 percent to 88 percent in just two decades.
Losing even one of these large plants can rattle entire livestock markets (as ranchers saw when a fire took out a Kansas beef plant this summer).
Larger plants also concentrate more workers in close quarters, causing some of the largest clusters of COVID-19 outbreaks among workers in the country. At least 15 massive meat-processing plants shut down this month, reducing production capacity by 20 percent for both pork and beef. Experts now predict meat consumer shortages within a month and farmers are euthanizing livestock to deal with a sudden backlog of animals.
“If you pull out one little thing in that specialized, centralized, consolidated chain, then everything crashes,” said Mary Hendrickson, a rural sociology professor at University of Missouri. “Now we have an animal welfare catastrophe, an environmental catastrophe, a farmer catastrophe, and a worker catastrophe altogether, and we can trace a lot of this back to the pursuit of efficiency.”
Hendrickson argued that a more diverse network of both small and regional meat processing plants may have been able to mitigate risks and absorb production from closed facilities. “What if we had regional pack facilities like we used to have? Would we have 20 percent of the pork processing capacity closed because of worker sickness?” she asked. “It would just be less likely.”
But it isn’t just bottlenecks. Consolidation also drives inflexibility. Farmers increasingly raise foods on contract for one dominant buyer that can dictate what they grow and how (Heinz, for instance, has their tomato farmers use Heinz crafted seeds). Large swaths of foods may be raised for one specific plant that serves just one purpose, such as bottling milk for grocery stories or processing cheese for restaurants. While highly specialized products and plants create consistency, these rigid supply chains cannot easily redirect their products to different uses if things go awry.
Take the case of eggs. Farmers such as Kerry Mergen in Minnesota raise laying hens on contract. Mergen’s 61,000-bird operation was specifically designed to supply eggs for pre-cracked fluid-egg mixes, used almost exclusively in food service. Most of what they produced went to one Cargill plant that temporarily shut down this week due to lost restaurant and food-service customers. Even though grocery stores report egg shortages, grading eggs for retail requires special equipment and likely new contracts with a different large buyer. Instead, the corporation that Mergen raised hens for, Daybreak Foods, decided to euthanize his flock and sell the birds to a rendering plant to become pet food.
Shifting entire business models built around serving restaurants or adjusting to sudden systemic labor shortages is no easy task for any system. Some foods are trapped in particular channels because the FDA requires different labeling for consumer-facing goods. And even if all surplus foods could make it to grocery stores, it’s not clear that home cooks’ demand for fresh fruits and vegetables could match that of restaurants. When it comes to storing or donating extra vegetables, government and food bank cold storage is already maxed out, in part because the USDA bought up frozen meats that would have been sold to China, as part of the agency’s trade war relief effort earlier this year.
All this taken into account, experts like Hendrickson still contend that less centralized food systems with a stronger mix of public, nonprofit, and private players could more readily adapt to the COVID-19 crisis. For example, the smallest and most local food providers, such as local farms providing community supported agriculture (CSA) shares, have reacted quickly to the crisis and benefited from a spike in demand for direct food sales. These businesses are not tied to complicated purchasing contracts and often work with multiple buyers and distribution channels, including direct access to consumers.
“If you look at what the small farmers are doing, they’re changing on a dime to online ordering systems and delivery,” said Hendrickson. “Those organizations that have the most flexibility and latitude to change are going to be really important in the future.”
Finally, public food infrastructure could play a critical role in supporting mid-sized producers, responding to shocks, and serving communities cut out of consolidated supply chains. Michelle Miller, the associate director of the University of Wisconsin’s Center for Integrated Agricultural Systems, pointed to the critical role that the U.S. Department of Agriculture played in managing disruptions to food systems following the Dust Bowl drought and Great Depression. She also touted the benefit of public food wholesale markets, or food terminals, that provided accessible markets for producers of all sizes to sell their products, even if their normal buyers are no longer accepting their product.
Unfortunately, when the U.S. embraced pro-corporate policies that allowed massive corporate consolidation, it also cut back on programs that help buy up and distribute food to those in need. “There is some basic infrastructure that used to be in place that is no longer, as the food system became privatized and vertically integrated,” said Miller.
Now, as COVID empties grocery shelves and renders many Americans food insecure, the Trump administration is trying to temporarily revive a similar kind of public investment in the agricultural system. After ignoring months of warnings that they should act, warnings that may have helped prevent some of the waste and shortages had they been heeded, the Department of Agriculture now plans to buy up $19 billion in goods to help the sector and provide food to those in need. But the government can’t fix decades of neglect overnight. Before it can have an impact, this money will have to move through a system that’s poorly equipped to handle a crisis.
To prepare for the next disruption, we need a long-term solution. And that means we need not just a better public system for distributing food, but vigorous antitrust enforcement. Otherwise, no amount of money will allow farms to adjust to sudden shocks.