Wednesday, December 17, 2003

Agribusiness oligopolies and costs The Agribusiness Accountability Initiative is a nonprofit that is dedicated to corporate domination over the food industry and its effect on farmers and consumers. Here's its take on what we call the cost- or supply-side advantages of large oligopolies. Far too few consumers realize that they actually pay for their "cheap food" three times: at the check-out counter, again through their tax bill, and finally by assuming the long-term social and environmental costs of unsustainable production methods. Thanks to market distortions, public subsidies and tax avoidance, corporate oligopoly power in the food system actually results in a massive transfer of resources from farmers, workers and consumers into the coffers of an ever-smaller number of transnational companies. If you believe that in free markets, the strongest survive a fair fight and deserve to dominate, you aren't taking account of the way the rules are rigged in favor of big entities. The food oligopoly, like others, has the power to make the market less free byhelping draft government policies that reduce their costs by subsidies, tax reduction, and removal of trade and regulation barriers. In return, they supply plentiful food at a relatively low price to the consumer. That low cost is inflated by the increasing market presence of "value-added" food products, that is, highly-processed ready-to-eat food that costs far more than basic foodstuffs. But, as the site maintains, the nominal price is only part of the real price. The AAI site interestingly argues that agricultural overproduction, subsidized by tax dollars, keeps the cost of raw food low for the food companies and allows them to form oligopsonies that dictate costs to suppliers. With freer world trade, they can play off one nation's farmers against another. 11:37:45 PM

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