Monday, April 30, 2007

Consolidation in the free market

"How did a few corporations gain such dominance over food production and retailing? One response is: people want cheap food, and the market gave it to them. If low cost is the main goal of food production, consolidation makes sense. Big operations gain economies of scale. You can't argue with the results -- the U.S. has the world's cheapest food as a percentage of income.

But that reasoning is naïve. Agricultural markets don't operate freely; they're manipulated as a matter of course. The government subsidizes corn and soybean production, allowing farmers to sell at prices that don't even offset production costs. And taking animals off of pasture and confining them in cages -- the dominant production mode for our meat, dairy, and eggs -- only works if there's a cascade of cheap corn and soybeans to feed them."

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