Between and , the average U. Many other industries in the food system, including animal slaughtering and processing , also underwent major consolidation. What drove the push to consolidate? New technology, including chemicals and larger tractors, allowed farmers to work larger areas of land with less labor. Farmers were also motivated by economies of scale—the economic advantage of producing larger numbers of products. A chicken farmer, for example, might turn a greater profit on each bird by housing a larger number of birds up to a point.
Largely as a result of consolidation, most food production in the U. Half of all U. Percentage of sales earned by the four largest companies in their respective industries. In the U. Image credit: Michael Milli and Brent Kim. Johns Hopkins Center for a Livable Future, Decisions about who produces our food, what food is produced, how it is produced, and who gets to eat that food have been steadily moving from … households and governments to … corporation boardrooms.
When a small number of companies have a large market share of an industry, the market for that industry is said to be concentrated. Markets become more concentrated when companies take over, or merge with, their competitors. Over the course of industrialization, markets for food and agricultural products have become increasingly concentrated. Vertical integration is a type of market concentration that occurs when companies gain control of multiple industries involved in the same products.
Smithfield Foods, for example, is involved in the breeding, production, slaughter, processing, and marketing of hogs and pork products. What does market concentration mean for farmers and consumers?
In some cases, market concentration can lower prices for consumers and increase sales. The following list of suggested resources is intended as a starting point for further exploration, and is not in any way comprehensive. Ikerd JE. Sustaining the profitability of agriculture. Farm Size and the Organization of U.
Crop Farming. Rifkin J. New York, New York: Plume; Sustaining the Profitability of Agriculture. Striffler S. New Haven: Yale University Press; Undesirable side effects of selection for high production efficiency in farm animals: a review. Livest Prod Sci. One of the first tractors to successfully utilize the combustion engine, Waterloo Boy helped sow the way for an agricultural revolution in America. The first tractors to hit the market near the turn of the 20th century were hulking masses of steel.
These monstrous machines—weighing between 40, and 60, pounds—were powered by steam engines. Difficult to use and maintain, while also cumbersome and ill-suited for the rough and muddy life on the farm, steam-powered tractors soon gave way to the innovations of the internal combustion engine in the early s. Fuel-powered engines sparked a race among manufacturers to create a user-friendly tractor that could perform in all types of harsh conditions in the field.
Combustion engines powered the chugging heart of the burgeoning automobile industry, so it was only natural that car manufacturers became heavily involved in early tractor creation and sales. In , Ford Motor Co. By , Ford had exited the tractor business. With more than companies manufacturing various tractor makes and models in the s, competition became fierce.
To maintain market share, some companies started offering their machines for less than it cost to make them. Low prices made it possible for thousands of small-scale farmers to afford a tractor, and ownership jumped. Hogs were an important farm product in the 19th century.
They were raised for meat and lard to feed the farmer, but could also be sold at market for cash. The wood-burning stove was used to cook and bake food, but it also served as a furnace and hot water heater for the farm house. Horses provided the main source of field power for farmers in Horse-drawn machinery allowed farmers to expand the number of acres under cultivation. Corn was one of the most common crops on turn-of-the century Iowa farms.
Search Button:. Toggle navigation. Farm Fun Facts. Before exploring the basis for this consensus, it will be useful to examine briefly the complaints of farmers. What were farmers so upset about? Why did they feel so threatened? The complaints of farmers are well documented Buck, ; Hicks, and relatively uncontroversial. First, farmers claimed that farm prices were falling and, as a consequence, so were their incomes.
They generally blamed low prices on over-production. Second, farmers alleged that monopolistic railroads and grain elevators charged unfair prices for their services. Third, there was a perceived shortage of credit and money. Farmers believed that interest rates were too high because of monopolistic lenders, and the money supply was inadequate, producing deflation.
A falling price level increased the real burden of debt, as farmers repaid loans with dollars worth significantly more than those they had borrowed. Farmers demanded ceilings on interest rates, public boards to mediate foreclosure proceedings, and the U.
Treasury to coin silver freely to increase the money supply. Finally, farmers complained about the political influence of the railroads, big business, and money lenders. These interests had undue influence over policy making in the state legislatures and U.
In short, farmers felt their economic and political interests were being shortchanged by a gang of greedy railroads, creditors, and industrialists. Economic historians have subjected the complaints of farmers to rigorous statistical testing. Each claim has been found inconsistent to some extent with the available evidence about the terms of trade.
Farm prices were falling, along with the prices of most other goods during this period. This does not imply, however, that farm incomes were also falling. First, real prices farm prices relative to the general price level are a better measure of the value that farmers were receiving for their output.
When real prices over the post-Civil War period are examined, there is an approximately horizontal trend North, Moreover, even if real farm prices had been falling, farmers were not necessarily worse off Fogel and Rutner, Rising farm productivity could have offset the negative effects of falling real prices on incomes.
Finally, direct evidence about the incomes of farmers is scarce, but estimates suggest that farm incomes were not falling Bowman, Some regions experienced periods of distress—Iowa and Illinois in the s and Kansas and Nebraska in the s, for instance—but there was no general agricultural depression. If anything, data on wages, land rents, and returns to capital suggest that land in the West was opened to settlement too slowly Fogel and Rutner, It is true that interest rates on the frontier were high, averaging two to three percentage points more than those in the Northeast.
Naturally, frontier farmers complained bitterly about paying so much for credit. Lenders, however, may have been well justified in the rates they charged. The susceptibility of the frontier to drought and the financial insecurity of many settlers created above average lending risks for which creditors had to be compensated Bogue, For instance, borrowers often defaulted, leaving land worth only a fraction of the loan as security. This story casts doubt on the exploitation hypothesis.
Furthermore, when the claims of farmers were subjected to rigorous statistical testing, there was little evidence to substantiate the monopoly hypothesis Eichengreen, Instead, consistent with the unique features of the frontier mortgage market, high rates of interest appear to have been compensation for the inherent risks of lending to frontier farmers.
Finally, regarding the burden on borrowers of a falling price level, deflation may have been not as onerous as farmers alleged. The typical mortgage had a short term, less than five years, implying that lenders and borrowers could often anticipate changes in the price level North, These appear to have the most merit.
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