Basic Economics 101 teaches that economies of monopolies and oligopolies cause higher prices. The concentrated ownership of wealth-producing assets is bad for our political processes, too. This article shows additional negative consequences.
From the LA Times, it evidences additionally that “power corrupts, absolute power corrupts absolutely. ” The monopoly (really an oligopoly) within the tomato industry, and the power which it granted this one set of agri-businessmen, created the environment for criminal corruption.
Step into a grocery store these days and on almost every aisle there’s an item tied to a federal investigation: dairy distributors, egg producers, citrus firms and seed developers are all the targets of federal lawsuits or investigations. Starting next month, the Justice Department and the U.S. Department of Agriculture will hold meetings to gather complaints and hear concerns over lack of competition in the dairy, grain, livestock and poultry sectors.
First, notice that the corruption is rampant throughout the entire agricultural marketplace. Accordingly, federal prosecutors are finally entering the fray. Second, notice this scheme had existed for decades.
Third, note that the concentrated economy leads to higher grocery bills, perhaps as much as 30%.
Behind the push are growing concerns that, as the industry becomes increasingly consolidated, the public’s grocery bills are getting bigger, in part from corrupt or monopolistic practices among food processors, distributors or farmers.
In the tomato market, economic consolidation is especially intense.
Nearly 95% of all tomatoes grown in the U.S. are processed by four companies in California.
Can Alabama farmers not grow and process tomatoes? Alabama certainly can compete with California in this market; however, since the 1970’s, government policies have skewed the development of the agriculture market to this unhealthy condition.
We need widespread ownership of farms, processors, and distributors. Let me rephrase, we need locally-owned farms, distributorships, and processors. Competition must be re-introduced within the markets, especially the agricultural sector. From the farm to the processors to the distributors, Alabama can lead the way with our historic tradition of great agriculture. With the proper policy, Alabama can create an environment which could reignite an entrepreneurial spirit for aspiring Alabamians across this state.
Obviously, this story evidences the current system is not only inefficient but also corrosive of morals.