Rep. Demings Hearing on Food Supply Chain

Orlando, FL: Today Rep. Val Demings and the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law (ACAL) held a hearing on economic concentration and America's food supply. Rep. Demings' statement and questions can be seen here: VIDEO

Said Rep. Demings, "I grew up the daughter of a maid and janitor and it was critical for my family to have access to affordable food. We grew vegetables in the garden, raised chickens, traded with neighbors, and relied on our local grocery stores. Today corporate profits are spiking while Floridians pay more at the store and family farmers go under.

"The evidence is clear: big corporations have squeezed independent stores and food producers out of the marketplace, leaving us with a fragile food system. When one thing goes wrong, it causes catastrophic effects. Meanwhile, corporate profiteers have taken advantage of the excuse to raise prices-not because they need to, or because they have a better product, but simply because they can. It's wrong. They are making record profits while working families struggle.

"It's simple: corporate monopolies have caused prices to jump and shelves to stay empty. It's good for businesses to make a profit. But they should have to compete in a fair marketplace, where they invest those profits back into their workers, supply chains, and businesses. More market competition means stronger supply chains, better prices for families, and more support for farmers and ranchers."

Background

In recent decades, there has been rampant consolidationthroughout the entire food system, resulting in rising levels of concentration in key agriculture markets. In 2011, a U.S. Department of Agriculture reportcalled attention to these trends, noting that concentration in most markets increased between 1994 and 2009, "with the highest levels observed in the animal breeding and crop seed sectors and the largest increase observed in the crop seed sector.

Four firms or fewercontrolled at least 50% of the market for 79% of the groceries.

The National Pork Producers Council statedthat "their smaller numbers mean loss of just a few producers can have a profound impact on the pork supply."

According to the National Economic Council, "Consolidation gives these middlemen the power to squeeze both consumers and farmers and ranchers. There's a long history of these giant meat processors making more and more, while families pay more at the grocery store and farmers and ranchers earn less for their products. Absent this corporate consolidation, prices would be lower for consumers and fairer for farmers and ranchers. The meat-processors are generating record profits during the pandemic, at the expense of consumers, farmers, and ranchers…During the pandemic, wholesale prices for beef rose much faster than input prices for cattle. That means that the prices the processors pay to ranchers aren't increasing, but the prices collected by processors from retailers are going up."

In February 2021, Pilgrim's Pride-one of the nation's largest broiler chicken producers-pleaded guilty to charges that it criminally conspired to fix prices and rig bids for broiler chicken products.

The National Grocers Associationconfirmed that, with supply limited, "independent grocery stores [have] not receive[d] their fair share," seeing "whole pallets of the products missing from independents' shelves in the big box retailers across the street."35 The Association further noted that "the pandemic was not the first time power buyers undertook anticompetitive activities; it was just the mechanism by which these activities, which we know have been going on for decades, but could not easily prove, were laid bare for all to see."

In addition to leading to higher prices and worse quality for food, bottlenecks in the food supply chain have increased the vulnerability of the food supply chain to disruptions.

Dr. Diana L. Moss and Laura Alexander of the American Antitrust Institutewrite, "Supply chains are routinely subjected to shocks such as extreme weather, disease, and conflict. But those that feature robust competition at various levels are far more likely to ensure the reliable and stable distribution of essential food products…we cannot ignore the role played by the wave of consolidation that has fundamentally reshaped the food system in the U.S. over the last two decades…when the few large firms that control these critical segments fail, the supply chain can break."

Dr. Meg Jacobs, Princeton, writes, "Almost two-thirds of publicly traded companies had substantially larger profit margins this year compared with the same period in 2019, before the pandemic. In 2021, close to 100 of them saw their profit margins go up at least 50 percent relative to 2019."

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