Merger of Sanderson Farms and Cargill is a bad deal for farmers and consumers

August 19, 2022 10:33 am
Chickens in a Sanderson Farms chicken house. (Stephen Ausmus/Agricultural Research Service, USDA)

(Stephen Ausmus/Agricultural Research Service, USDA)

Why conspire with your competitors when you can just merge?

Over the last two years, giant corporate meat companies have been settling lawsuits to the tune of hundreds of millions of dollars that allege they conspired with each other to fix prices, lower workers’ and farmers’ pay and raise the price of meat for both wholesale and retail customers.

On July 22, Cargill and Continental Grain Co. announced the completion of their acquisition of Sanderson Farms. In 2021, Missouri Rural Crisis Center (MRCC) co-wrote a letter to the U.S. Department of Justice urging them to vigorously scrutinize the mega merger of Sanderson Farms, Cargill, Continental Grain and Wayne Farms.

Sanderson Farms is currently the third largest broiler chicken company in the U.S., and Wayne Farms (owned by Continental Grain Company) is the seventh largest. This merger will increase the market share of the top three processors from 46% to 51% and create a firm with approximately 15% of the U.S. broiler chicken market.

The growing level of consolidation in industries like the broiler chicken industry creates more opportunities for companies to conspire with each other to interfere with the market. Deals like these lead to increased market share for fewer companies, and the opportunity for anticompetitive practices increases.

Also, this merger could (read: will) negatively impact grain farmers by eliminating a major grain buyer from the market. Instead of Sanderson buying grain from the open market as they do now, they will now be combined with Cargill, one of the biggest grain distributors in the world.

For decades, MRCC members, farmers and consumers across Missouri and our country have been sounding the alarm of the negative impacts of mergers like these that put independent livestock producers out of business, allow corporations to charge consumers more, extract wealth from our communities, pollute our land, water and air and weaken our national security.

The recent disruptions in the food system caused by the pandemic, especially the protein supply chain, offer a vivid example of how extreme consolidation has made our food system less resilient.

The recent disruptions in the food system caused by the pandemic, especially the protein supply chain, offer a vivid example of how extreme consolidation has made our food system less resilient.

Our government should have blocked this merger, and we need our elected “representatives” to stop pandering to corporate ag lobbyists and start actually representing us.

Here’s a start: Congress should pass a bill from U.S. Sen. Elizabeth Warren and U.S. Rep. Mondaire Jones, the Prohibiting Anticompetitive Mergers Act, which would block the biggest, most anticompetitive mergers and give the Department of Justice and Federal Trade Commission new tools to reject deals that will harm competition without relying on the corporate-influenced courts.

In July 2021, we thought our decades of work fighting the corporate and foreign takeover of the U.S. livestock industry was finally getting somewhere with President Joe Biden’s “Executive Order on Promoting Competition in the American Economy,” which stated: “Farmers are squeezed between concentrated market power in the agricultural input industries — seed, fertilizer, feed, and equipment suppliers — and concentrated market power in the channels for selling agricultural products. As a result, farmers’ share of the value of their agricultural products has decreased, and poultry farmers, hog farmers, cattle ranchers, and other agricultural workers struggle to retain autonomy and to make sustainable returns.”

Past administrations have promised to address these issues, but have not implemented real rules that reform the system, and we need to see strong action soon or it will be clear that the current administration is on the same course.

To this administration and Congress: Stop the lip service and do something substantial that will truly help family farmers, our local economies and our country. First up? Pass the Prohibiting Anticompetitive Mergers Act and finish the to-do list in the executive order.

This commentary first appeared in the Missouri Independent, which like the Arkansas Advocate is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: [email protected]. Follow Missouri Independent on Facebook and Twitter.

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Tim Gibbons
Tim Gibbons

Tim Gibbons is communications director for the Missouri Rural Crisis Center, a statewide farm and rural organization dedicated to preserving family farms and promoting stewardship of the land and environmental integrity.