Concentration Does Not Adversely Affect Food Prices

In a new report, the Government Accountability Office (GAO) concluded that concentration in the processing segment of the beef, pork, or dairy sectors or the retail sector,

In a new report, the Government Accountability Office (GAO) concluded that concentration in the processing segment of the beef, pork, or dairy sectors or the retail sector, overall, has not adversely affected commodity or food prices. The study looked at trends in agricultural concentration, trends in retail food expenditures and prices, trends in prices farmers receive, and the effects of concentration on commodity and food prices. The report also found:

• Concentration generally has increased at all levels of the food marketing chain in all agricultural sectors since the 1980s. At the farm level, less than 2% of farms accounted for 50% of total sales in 2007. At the food processors’ level, in general, a small number of companies accounted for a large and growing portion of sales in 2007. The market share of the largest four hog slaughtering firms increased from 36% in 1982 to 63% in 2007. The share of grocery store sales held by the largest four firms more than doubled, from 16% in 1982 to 36% in 2005.

• Since 1982, farmers have generally received higher monthly prices for their commodities, but these prices have increased less than food prices and inflation in the broader economy. Specifically, prices farmers received, including for beef, pork, dairy, and grains, increased by 34% from January 1982 to April 2009. For the same period, food prices rose by 128% and prices in the general economy rose 102%. The study was requested by Senators Herb Kohl (D-WI) and Chuck Grassley (R-IA).

Competition Issues in Agriculture — USDA and the Department of Justice (DOJ) announced joint public workshops to explore competition issues affecting the agriculture industry in the 21st century and the “appropriate role for antitrust and regulatory enforcement.” The workshops will address the dynamics of competition in agricultural markets, including buyer power and vertical integration. The announcement also stated USDA and DOJ were inviting input on additional topics that might be discussed at the workshops, including the impact of agriculture concentration on food costs, the effect of agricultural regulatory statutes or other applicable laws and programs on competition, issues relating to patent and intellectual property affecting agricultural marketing or production, and market practices, such as price spreads, forward contracts, packer ownership of livestock before slaughter, market transparency and increasing retailer concentration. The workshops will be held in 2010.

Child Born in 2008 Will Cost $221,190 to Raise — USDA released its annual report, “Expenditures on Children by Families,” finding that a middle-income family with a child born in 2008 will spend approximately $221,190 ($291,570 adjusted for inflation) for food, shelter and other necessities to raise that child over the next 17 years. The largest cost is housing at 32%. Food and child care/education each represents 16% of the cost. The report is available at www.cnpp.usda.gov.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.