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ERS Finds Increasing Concentration in Ag and Food Sectors

The USDA’s Economic Research Service looked into market concentration and its impact on competition. It’s a subject that’s attracted growing public scrutiny.

The ERS study says market concentration, which is measured by the share of industry sales held by the largest firms, has increased sharply over the last four decades in many seed, livestock, and food retail markets. From 2018-2020, two seed companies accounted for 72 percent of planted corn acres and 66 percent of planted soybean acres in the U.S. In 2019, the four largest meatpackers accounted for 85 percent of steer and heifer slaughter and 67 percent of hog slaughter. In most metropolitan areas, five to six store chains account for most supermarket sales.

Economic theory and empirical analysis demonstrate that high concentration can facilitate the exercise of market power, with firms driving sales prices above or livestock prices below the prices that would prevail in competitive markets.

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