Smaller farmers getting pinched by growing market concentration of large firms

If local farmers are finding it harder to make a living, the cause may not be just a recession cycle.

The industry is changing, and in ways that appear not to be good for farmers, and may ultimately be bad for consumers.

The four largest grocery chains now control more than 36 percent of all food sales in the U.S., according to a GAO report. In 1982, the same chains controlled only 16 percent of the market. They are Wal-Mart, Kroger, Albertsons and Safeway.

At the same time, the share of the food dollar that goes to food producers has declined, and the gap between what consumers pay and what farmers receive has never been bigger.

The consolidation of retail chains has not yet led to higher prices for consumers, but that could change once the advantages of greater efficiency have been wrung out of the market place.

The Government Accountability Office said the gains in efficiency experienced by large firms may begin to diminish, “while market power could continue to increase,” the agency wrote. “In the retail sector, one expert expressed concerns about the effect on food prices in the future if food retailing becomes dominated by a handful of larger chains.”

Two experts counter that the increasing concentration in the food industry has already lowered prices paid to farmers, ranchers and dairy owners.

C. Robert Taylor, an ag economist at Auburn University, and Fred Stokes, executive director of the Organization for Competitive Markets, have asked the Department of Justice to examine this area of the economy for violations of antitrust laws, and it has agreed to open an inquiry.