Corporations Control Your Dinner
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This story first appeared in the East Texas Review
Most everyone has been told to not play with his or her food, yet somehow agribusiness is playing Monopoly with the nation's food supply.
When pouring your next glass of milk, consider who decided what the cow ate and who controls the distribution of profits. One would think the farmer and consumer take the lead roles in managing the supply of safe and healthy food. The farmer should control his or her business while mainly battling unpredictable weather -- expecting the price they receive for a quality product to be set by a fair and honest marketplace.
However, in today's market, the lack of competition is wielding just as much force as Mother Nature as witnessed by the recent proposed acquisition of the Chicago Board of Trade by the Chicago Mercantile Exchange (CME) to become the CME Group Inc. -- combining the two largest U.S. futures exchanges.
If you think this and similar mergers do not affect your freedom of choice and the quality of food you eat, think again. Food is not simply a commodity to produce at a larger and larger scale, squeezing the family farmer out along with the value of safe and healthy food.
The CME is already the world's largest commodity broker determining futures and cash prices for products such as cheese, butter, live cattle, timber, and fertilizer as they set the benchmark prices for farm country. Within seconds the coarse yelling on the trade floor is translated around the world, affecting farm gate prices and grocery bills of billions of people.
If this merger goes through, the newly formed CME Group will enjoy unprecedented power over global food markets to the detriment of producers and consumers and the glee of large agribusiness and traders -- lining their own pockets with money generated by destroying family farmers and the consumer value that exists in having diversity in the market.
The new CME Group could still end up with the Go to Jail card, as the U.S. Department of Justice must decide whether this merger violates federal anti-trust laws. The CME does not have a clean slate either. Last July six U.S. Senators including Clinton, Specter, and Feingold sent a letter calling on the Government Accountability Office to investigate whether cheese trading on the CME is susceptible to price manipulation. The study was requested to fully evaluate the CME in light of the upcoming farm bill. The Commodity Futures Trading Commission (CFTC) is also currently investigating the nation's largest dairy cooperative, Dairy Farmers of America, for alleged racketeering and insider trading on the CME.
Family farmers already know from previous paychecks that this is not a good forecast. Because the CME is a privately owned corporation, it does not have to follow normal transparency and accountability rules. The CME is subject to nominal oversight by the CFTC over the trading of futures, but there is no external oversight for cash trading.
With market consolidation and little to no oversight, competition and economic fairplay are almost defunct in the U.S. food system. Consumers will pay more for fewer choices; farmers will get paid less -- don't pass go, and don't collect $200 -- that will go to the commodity trader living down on Park Place.
Lack of competition is not new to modern agriculture. The largest producer and processor of hogs in the U.S., Smithfield Foods, Inc., recently announced plans to purchase Premium Standard Farms, the second largest hog producer. On top of owning 20 percent of the nation's hogs, Smithfield would then envelope the ContiGroup, the largest cattle feeding entity in the world, and they control 40 percent interest in Premium Standard Farms. Pork or corporate profit for dinner?
In 2002 the late Senator Wellstone joined with Senators Daschle, Harkin, Feingold and Grassley to reinstate some degree of competition into agriculture and to reign in the excessive control of a few giants in the livestock sector. Unfortunately, the measures to benefit farmers and consumers that were won in the Senate were negotiated away in the conference with the House. Let's hope following the 2006 election that Congress will listen to the public and restore democratic fairness to the markets that are critical to our nation's economy and diet.
The CME Group merger is yet another win for corporate agribusiness players and a loss for consumers and farmers in the game of food system Monopoly.
Debra Eschmeyer is the project director of the National Family Farm Coalition , a non-profit that provides a voice for grassroots groups on farm, food, trade and rural economic issues to ensure fair prices for family farmers, safe and healthy food, and vibrant, environmentally sound rural communities here and around the world.