President Biden recently issued an executive order promoting competition across the U.S. economy. In an era when Congress is investigating Big Tech companies, the banking industry, and others for possible abuses of market power, the order from the White House is welcome news. If the promise of the order is followed through, rural communities in particular will have much to gain.
Biden is no stranger to these issues—the Obama Administration spent a year investigating competition in agriculture and food, but its efforts for reform were ultimately blocked by the political power of the very industries it was trying to rein in, especially the meat industry.
While consolidation has gotten even worse in the last decade, progressives are increasingly optimistic this time, partially due to the increased attention and vocal opposition from communities most impacted.
Biden’s executive order itself takes a broad view of the benefits of economic competition, pointing to laws passed a century ago in response to extreme consolidation of railroads, meatpacking, and other industries of the time. Courts steadily enforced laws like the 1980 Sherman Antitrust Act and the 1914 Clayton Antitrust Act after their passage, breaking up large companies and blocking new mergers in the interest of maintaining a robust small business environment, which was seen as being good for the U.S. economy as a whole. As an example, the five largest meatpacking companies in the country controlled 55% of the beef market in 1918; strong enforcement of antitrust laws meant that by 1976, the four largest meatpackers controlled just a quarter of the market.
But in the 1980s, the standard for antitrust enforcement was changed to narrowly focus on consumer welfare rather than small businesses. Companies touted the cost efficiencies they would gain through economies of scale and how they would lower consumer prices. Although a highly consolidated economy is resolutely not good for consumers—those cost savings rarely get passed on, choices become more limited, and worker wages fall —antitrust enforcement has declined in the last 30 years and companies have grown to near-monopoly control. Today, four companies control 83% of the beef market.
The new executive order suggests a return to a broader standard, charging the government as a whole and agencies including the U.S. Department of Agriculture, Federal Trade Commission, and others, to “enforce the antitrust laws fairly and vigorously.” The order directs agencies to work together and establishes a White House Competition Council to coordinate efforts.
Areas addressed in the order, including telecommunications, health care, banking, and real estate, all impact rural Americans as well as those in cities and suburbs. But the order also contains provisions on the agricultural economy that would specifically impact rural communities. These include:
- A range of provisions for livestock farmers (particularly poultry growers) who raise animals under contract for meatpackers, such as prohibiting grower ranking systems and other unfair practices, updating rules on unjust or discriminatory practices, and adopting anti-retaliation protections so farmers may safely report abuses.
- Rules to ensure transparent and accurate labeling for U.S.-grown meat.
- Development of a plan to support value-added agriculture and alternative food distribution systems.
- Development of reports on the highly concentrated seed market and on the impact of retail concentration and retailers’ practices.
- Measures to ensure farmers can repair their own equipment without restrictions from proprietary software agreements.
With appropriate long-term follow-through, the changes outlined in the executive order could dramatically improve the economy and quality of life for agricultural and rural regions across the nation. But as state legislators know, there is a long way to go from order to action. To help get there, legislators can publicly support these measures by:
- Discussing the issue with your Congressional delegation and letting them know how competition and strong antitrust enforcement will help your district;
- Working with community groups to generate op-eds and other public support;
- Sponsoring state legislation to build and strengthen local independent food and farm businesses to prevent further consolidation.
If you are a state legislator interested in working on antitrust issues in your state–reach out to us at [email protected]