I have blogged about the issue of concentration in agricultural markets previously, in November 2017 on concentration levels across various sectors of U.S. agriculture and last March about concentration in the U.S. and global fertilizer markets. However, I am indebted to my friend Austin Frerick, who explored concentration in several key agribusiness sectors, mainly but not exclusively in the United States, in his recently published book Barons. That book shed light for me on an aspect of market concentration that often gets little attention. In recent decades, many big companies have accumulated significant market power in their chosen agricultural sectors by acquiring other companies in the same market segment, but obscure the scale of their total ownership interests in the sector by maintaining the same brand names and/or business names used by the now-absorbed companies, allowing consumers to assume those brands and/or businesses are still in competition with each other.
Austin’s book cites several examples of this phenomenon. He describes the formation of the enormous JAB Holdings Company, a Luxembourg-based company owned by the Reimann family from Germany, which styles itself as an investment firm. This company was established only in 2012. However, as of December 2023, they reported having $54 billion in assets, with most of those investments in the retail food and beverage sector. Their investments include significant holdings in coffee chains such as Peet’s Coffee and Caribou Coffee, pastry shops such as Brueger’s Bagels, Einstein Bagels, and Krispy Kreme, and sandwich restaurants such as Pret a Manger, and Panera Bread. They also sell several branded coffee products in retail stores, such as Green Mountain and La Coulombe Coffee Roasters, and own 27 percent of Keurig, which sells millions of single serve coffee pods (as well as pods for tea and hot chocolate) around the world. I had never heard of this company before reading Austin’s book, but collectively their retail outlets sell more coffee annually than does Starbucks.
In the animal protein sector, a Brazilian-based company, JBS, has acquired several U.S. meatpacking companies over the last few decades. Using $20 billion, some of it obtained through low-interest loans provided by the federal government and state governments of Brazil, the owners of JBS, two brothers named Joesley and Wesley Batista, bought up meatpacking facilities around the world, including in Brazil, Argentina, Australia, Mexico, Italy, and Northern Ireland. They also purchased several U.S. meatpacking firms, including Swift and Company, the beef packing arm of Smithfield Foods, and a controlling interest in Pilgrim’s Pride, a poultry integrator. Today, JBS is one of four firms that control 85 percent of the U.S. beef packing sector. This company also elected to maintain the brand names of the companies they acquired, and sell their products under 43 different labels in the United States alone. In 2023, global revenue of JBS amounted to approximately $72.9 billion.
Although not covered in Austin’s book, the German-based life science company Bayer AG, has followed a similar path to market dominance in the production of seeds that is described above for JAB Holdings and JBS. Bayer is much older than the other two companies discussed in this blog, with a more than 160-year history, although it was one of six major German companies absorbed by mutual agreement into the operating consortium I.G. Farben in 1925, and didn’t re-emerge as an independent company until after World War II. During the war, I.G. Farben made ample use of forced and prisoner labor in its facilities in support of the Nazi war effort.
Starting in December of 2014, the company’ Crop Sciences division began its efforts to acquire new interests, with the Land Management component of DuPont Crop Protection. In May 2016, they contracted to acquire Monsanto, another major life sciences company, although the deal was not completed until 2018. Due to Monsanto’s own acquisitions in previous years, Bayer is one of two companies (the other being Corteva) that controlled the majority of sales to U.S. corn, soybeans, and cotton producers as of 2020. However, Bayer continues to sell seed products under the brand names of companies that no longer exist, such as Asgrow, DeKalb, and Channel (corn, soybeans, and sorghum), Westbred (wheat), and Deltapine (cotton). The company is also a major player in the U.S. and global agricultural chemicals markets, although it assumed a lot of potential liability in its acquisition of Monsanto due to ongoing lawsuits regarding the health effects of its glyphosate (Roundup) herbicide. The whole company’s revenue was $51 billion in 2023, about half of which came out of their Crop Science businesses.
As Austin rightly points out in his book, the U.S. entities with the authority to inhibit the accumulation of market power in the agribusiness sector, as well as the rest of the U.S. economy, have done little to rein in these mergers and/or acquisitions in recent decades. This lack of action characterizes the attitude of both the U.S. Department of Justice (DOJ) and the Federal Trade Commission (FTC), which have neglected their role in restraining the accumulation of such power under presidential administrations of both parties. The current regulators face an upcoming test with the proposed acquisition of a nitrogen fertilizer plant (owned by OCI Global) in Iowa by Koch Industries, which if approved would increase the 4-firm concentration ratio in that industry above already high levels. In public hearings held in Iowa in April of this year, farmers called on the FTC to halt this deal.
