NCPA - National Center for Policy Analysis

Farm Consolidation: Boon Or Bane?

October 19, 1999

The romantic vision of American agriculture dominated by millions of small, family-owned farms is giving way to the reality of mergers and consolidations leading to a small number of large agribusinesses. Traditional farmers and some politicians are railing against the trend. But even if it could be reversed, should it be?

  • In 1900, there were 5.7 million farms in the U.S., with an average size of 147 acres.
  • As of last year, there were 2.2 million farms averaging 435 acres each.
  • Some agricultural economists predict that in the next few decades just 30,000 farms will produce all of the nation's food -- less than the number of farms operating in Oklahoma today.

According to the U.S. Department of Agriculture:

  • Five firms account for 80 percent of the beef packing market, while six companies comprise 75 percent of all pork packing.
  • Four firms control 70 percent of corn exports, and four grain buyers account for 40 percent of all the grain storage elevators.

The Departments of Justice and Agriculture are heeding calls from both Democratic and Republican congressmen to keep an eye on agribusiness mergers -- and both have acted in recent months to discourage farm consolidations. Farmers argue that the mergers are squeezing them financially because the bigger the businesses they must deal with, the less clout they have in pricing.

Yet the trend toward concentration -- which has been going on for decades -- has not hurt consumers. In the 1950s, American consumers spent one-quarter of their disposable income on food. Today, that stands at just 10 percent -- the lowest level ever.

Stephen Moore, of the Cato Institute, states flatly that it is difficult "to make any argument that consumers are being harmed by consolidation in farming."

Source: Joseph Guinto, "Death Knell for the Family Farm?" Investor's Business Daily, October 19, 1999.


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