Antitrust Legislation Is Essential to Racial and Economic Justice in Agriculture

The COVID-19 pandemic has made it clear that how we grow, process and distribute our food needs to change.

From dairy farmers forced to dump their milk given supply chain bottlenecks, to unemployed people forming long lines at food banks, the people who grow our food and eat it find themselves caught within a system as wasteful as it is irrational.

Meanwhile, workers — both in the fields and in processing facilities — labor under the constant threat of contracting the virus.

Inhospitable conditions and dismal pay characterized the reality for most food system workers, many of whom are people of color, before the rest of us even heard of the coronavirus.

Now, the additional hardship that the pandemic has exerted on farm workers and food system workers is seen in their disproportionately high rate of infection when compared to the general population, the overall lack of protections and information that employers give them on the virus, and the mutual aid efforts of nonprofit organizations to help families meet their daily needs.

One overlooked way to help remedy this rigid and exploitative food system is through enforcing our country’s antitrust laws.

Specifically, the Department of Justice (DOJ), as well as the Federal Trade Commission (FTC), can use the tools made available through Progressive-era legislation — the Sherman Antitrust, Clayton Antitrust and FTC Acts — to investigate corporations and punish them for exploiting farmers and workers. The tools grant officials various powers, from breaking up corporations that monopolize markets, to launching wide-sweeping investigations into the harmful effects of mergers and the pricing strategies of private firms.

To start, we need to recognize that antitrust legislation is about markets.

A Brief History of Monopolists and Their Crooked Deals

For some, a concern about markets may seem either lackluster or technical. Protest movements typically don’t march in the streets with signs that say, “Free the markets.” If anything, such demands appear the mantra of conservatives that herald unbridled capitalism as the way to solve our world’s problems.

The reality is another, especially with respect to antitrust legislation.

The legislation itself emerged at the turn of the 20th century as corporations caused alarm for their size and power. The likes of Andrew Carnegie with U.S. Steel, as well as John D. Rockefeller and Standard Oil, had created global economic empires. J.P. Morgan amassed his fortune bankrolling such ventures, as well as others in manufacturing and the railroads.

Corporations drew scorn for their tactics to acquire wealth in ways that killed competition. Rockefeller, especially, was known for engaging in predatory pricing — that is, under-selling competitors to force them out of business. Standard Oil also engaged in what is called “exclusive dealing” through rebates. Here, Rockefeller’s oil mega-conglomerate would receive from railroads a special, discounted rate for shipping with one company over another. Such a practice — a form of discriminatory pricing — enlarges one corporation’s market share due to its size, which in the process robs opportunities from competitors.

Prompted by the excesses of Rockefeller, Carnegie and others, what became illegal — and enshrined in the antitrust laws — were price discrimination and predation, as well as other practices, such as when firms ink exclusive deals with one another, make the same people executives across companies in similar industries, and create mergers that reduce competition.

The point was to fashion rules for markets that allowed competition between different actors to take place, seeing that established firms wouldn’t erect unfair or discriminatory barriers that would crush small-scale producers and entrants.

Antitrust legislation became a fixture of the U.S. economic landscape for much of the 20th century, featured in high-profile cases such as Standard Oil Co. of New Jersey v. United States, which resulted in the dissolving of the Rockefeller corporate monolith into separate, competing firms in 1911, and in the breakup of AT&T into regional companies in 1983.

Yet, in the 1970s, Chicago School economic theory that promoted deregulation and minimal government intervention started to become dominant in certain legal circles. Under the banner of “consumer welfare,” by the 1980s, the DOJ’s periodic interventions to ensure competitive markets became less frequent.

The effects of this decades-long marriage of laissez-faire economics with antitrust jurisprudence are apparent.

Taking on Agribusiness Concentration Is Everyone’s Fight

According to a study by the Open Markets Institute, the four largest poultry processing firms in the U.S. went from controlling 35 percent of the market in 1986 to 51 percent in 2015. For beef, the market share of the top four companies leaped from 25 percent in 1977 to 85 percent in 2015. Likewise, during that same period, the top four corn seed companies’ market share increased from 59 percent to 85 percent.

Supermarket chains are also concentrating. According to the U.S. Department of Agriculture (USDA), the share of sales for the four principal grocery outlets rose from 16 percent in 1992 to around 45 percent in 2016. Such corporate consolidation raises the price of food at the grocery store for consumers, increasing food insecurity.

This tendency also hurts farmers by empowering processors to drive prices down.

We see this in the settlements often reached between farmers and companies for anti-competitive price fixing practices, which of late have got attention in dairy, pork and poultry. As these cases show, corporations believe markets, instead of functioning as sites for competition among diverse actors, exist as conduits for the few to extract profit.

Workers across the food system, too, have been negatively affected by agribusiness consolidation.

First, if farmers receive depressed prices for their produce, then the wages that they pay to employees will also be lowered. Similarly, the ability to provide adequate work conditions, in part, is due to low profit margins.

Mergers also negatively affect wages, especially as fewer and fewer employers and firms exist in an industry. The opportunities for collusion among established firms is increased in thin markets. Such spaces are ripe for employers to agree with one another, however tacitly, on wages and workplace standards.

Furthermore, creating competitive labor markets is a racial justice issue.

This is seen in the fact that the vast majority of farmworkers — over 80 percent — are Latinx. At 49 percent of all employees nationwide, people of color disproportionately count among the ranks of people who labor in food-processing firms.

Sen. Cory Booker’s “Justice for Black Farmers Act,” which seeks to address the history of African American land loss, is a start toward addressing this issue. In part, the long history of Black territorial dispossession involves discrimination at the hands of USDA officials who would deny loans to, and keep information on, farm policies from farmers of color. This legislation, in addition to proposing the creation of a civil rights oversight board within the USDA that would review and investigate complaints of discrimination concerning farm policy, provides the means to redistribute land to new, small-scale Black farmers.

The problem is that even if this legislation helps farmers of color start, the markets that they enter are dominated by corporate players that manipulate conditions to the detriment of limited-resource farmers.

Antitrust legislation provides tools to simultaneously address racial and economic injustices.

First, there is the investigatory power of the FTC. As took place from 1917 to 1919, in its much-heralded investigation of the meatpacking industry that led to regulatory reform and corporate divestiture in railroads and stockyards, this government agency can shed a light on wrongdoing.

That is, if FTC commissioners are prompted to do so.

There is reason to believe that they just might, as last year, one FTC commissioner publicly stated that they want to make antitrust enforcement anti-racist.

In the fields and for new farmers of color, the FTC could do this by finding ways to make markets competitive. In particular, the agency could launch investigations into the effects of market concentration on workers and farmers of color, as well as issue consent decrees that would prohibit particular practices.

Moreover, the DOJ can revise merger guidelines, which could make future dealings difficult. The agency could also look into overturning last year’s Dean Foods-DFA acquisition and the Monsanto-Bayer merger. In the former, decentralizing markets could lead to the creation of more buyers, which would help improve prices for farmers. As for the latter case, taking on centralized seed and chemical companies could help new starting farmers access inputs, some of whom may get into the profession if Senator Booker’s bill becomes law.

With a fresh attorney general and different representatives recently getting behind the idea of antitrust enforcement — as seen in Sen. Amy Klobuchar’s new bill that provides resources to the DOJ and FTC precisely for this effort — the idea of taking on such cases of corporate concentration may not be so far-fetched.

Lastly, the DOJ’s Antitrust Division could call for whistleblowers to come forward to denounce any instances of anti-competitive behavior, such as price fixing and exclusive contracting between firms, as well as initiate a public relations effort to educate people on how to use antitrust laws to hold corporations to account.

Such initiatives, instead of being reactive, would take a proactive stance to promote justice in our food system.

The late Supreme Court Justice and advocate, Louis Brandeis, captured the primary sentiment within antitrust legislation when he said, “We can either have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both.” The coronavirus pandemic has brought to the fore that corporate power — particularly in agriculture — cares not to address racial and economic inequality. This makes now, with the Biden administration in power, a propitious time to make antitrust realize its potential to make markets more competitive, participatory and just.