Report: Ag industry consolidation hurts farm incomes
A new report from an independent farmer network suggests continued ag industry consolidation will hurt farm incomes.
Farmers Business Network (FBN) co-founder Charles Baron says their analysis shows as seed and chemical companies increase their market shares, the prices they charge for their products also increase.
“It’s kind of the opposite of what you might expect. You might expect that larger companies, because of economies of scale, would be able to have lower prices for farmers,” Baron says. “What we saw was actually kind of the opposite, which is that as companies gained market share, the prices that they were able to command were higher relative to smaller companies in the market.”
They also found that yield gains from innovation tapered off as seed and chemical suppliers gained market share, Baron says.
“Companies with higher market share do tend to have better performing products, but past a certain point—maybe about ten percent market share—there’s very minimal gains that come from that company getting that much larger.
“So in essence, companies having ten percent market share versus having 30 percent market share may only be worth a few bushels an acre difference, but it can actually be an enormous difference in terms of the prices that farmers then pay.”
Baron says they used yield and input price records provided by FBN farmer-members to compile the report.
Some of the companies involved in ag mergers contend consolidation will lead to enhanced new products and services for farmers.
Link to FBN’s Voice of the Farmer report
AUDIO: Charles Barron and Matt Meisner with FBN
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