Monopsony Most Fowl

I am glad I had some time off for Labor Day, but the horrendously sad fire at Brazil’s national museum (which destroyed the irreplaceable treasures of that enormous nation) and the continued dumpster fire of incompetence and corruption in Washington sort of make me feel like I shouldn’t write about a happy subject.  Therefore, I am going to link to a very profound article in The Atlantic by Annie Lowrey…about the business and economics of small chicken farms!

When I say small…I mean “small business”: these are the nightmarish factory farms you read about with tens (or hundreds of?) thousands of chickens stuffed into tiny spaces.  Although the factory farms are locally owned by individual farmers with small staffs they receive the chicks from enormous international poultry companies and sell them back ready for market.  These chicken contractors receive subsidies meant for small farmers, but they are really appendages of huge monopolistic food cartels which are generally the only buyer the chicken rancher can count on.   The small farmer assumes the financial (and legal) risk for running a dangerously skinflint and ethically dubious operation.  He is constrained at every turn by binding contracts, extensive rules, and the threat that the giant business will not buy from him or will otherwise dump him.  Then he sells at slim, slim margins to a single customer (single payer systems can seriously curtail prices, as any WalMart supplier could tell you).

You can read the article to get all of the details, but the picture which emerges is of a world where huge corporate cartels collude to fix prices for their buyers and then likewise collude to make sure their suppliers take all of the risks.     The article also presents a counter-statement from the monolithic food cartels.  Needless to say, the big corporations do not present themselves as terrifying monopolies which are fixing prices and asphyxiating all competitors as they torture and pollute. Yet the mealymouthed platitudes of their corporate mouthpieces do not much convince the reader that the poultry titans (Purdue, Tysons, et al.)  are anything other than rent-seeking cartels operating beyond the law.  The article also suggests that this situation is quickly becoming the norm beyond chickens…in every other walk of economic life.

The take-away from this troubling story of America’s chattel chicken farmers is the same take-away from a deep dive into almost any large industry: this nation’s big businesses are completely out of control.  We need the ghost of Teddy Roosevelt to come back and lop off some heads and cut some of these fat strutting capons into quarters.

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