#6 Corporate Consolidation Causing Record Inflation in Food Prices

by Project Censored
Published: Last Updated on

Corporate consolidation is a main driver of record inflation in food prices, despite claims by media pundits and partisan commentators to the contrary. As the economy attempts to shake off the lingering impacts of COVID-19 and Americans struggle to stretch their dollars, many have blamed supply chain disruptions and the Biden administration’s stimulus package for soaring prices. However, in an October 2021 article for Common Dreams, Kenny Stancil documents that food producers, distributors, and grocery store chains are engaging in pandemic profiteering and taking advantage of “decades of consolidation, which has given a handful of corporations an ever-greater degree of market control and with it, the power to set prices.”

Stancil’s article reported on new research by the Groundwork Collaborative that suggested price gouging was rampant in America’s oligopoly-controlled food industry. In a paradigmatic case, the beef industry is simultaneously among the most consolidated and the most impacted by inflation. The study found that with only four conglomerates controlling 80 percent of the market, the cost of beef had risen a startling 12 percent since 2020. The egg industry also saw a dramatic increase in prices that sparked investigations and lawsuits across the country.

Record profits for food producers and grocers during the pandemic have raised questions about why these companies continue to shortchange their customers and employees. Kroger, the largest supermarket chain in the country, cited rising inflation as the reason for hiking prices in their stores even as they cut worker pay by 8 percent. Yet, as Stancil explained, Kroger’s CEO publicly gloated that “a little bit of inflation is always good for business,” a motto that many corporations seemed to adopt while making attempts to conceal high profit margins since the start of the pandemic.

A joint investigation by Food and Water Watch and the Guardian provides new details on the “market dominance” of the largest US food producers. In a July 2021 article for the Guardian, Nina Lakhani, Aliya Uteuova, and Alvin Chang reported that a handful of “food giants”—including Kraft Heinz, General Mills, Conagra, Unilever, and Del Monte—control an average of 64 percent of sales of sixty-one popular grocery items. Amanda Starbuck, a policy analyst at Food and Water Watch, told the Guardian, “It’s a system designed to funnel money into the hands of corporate shareholders and executives while exploiting farmers and workers and deceiving consumers about choice, abundance and efficiency.”

As an example of market consolidation and the illusion of consumer choice, the Guardian noted that three companies own 93 percent of carbonated soft drink brands; 55 percent of the market share in canned corn is controlled by four firms; and PepsiCo owns five of the most popular dip brands, including Tostitos, Lay’s, and Fritos, controlling 88 percent of the market. Despite supermarket aisles full of shelves stacked with different breakfast cereals, just three companies—General Mills, Kellogg, and Post—produce 73 percent of the cereals on offer. As for grocery stores themselves, Starbuck told the Guardian that supermarket mergers have eliminated smaller grocers and regional chains, and the nation has “roughly one-third fewer grocery stores today than we did 25 years ago.”

A report for the American Prospect by Rakeen Mabud, chief economist at the Groundwork Collaborative, and David Dayen revealed that one of the most common inflation scapegoats, supply chain problems, is itself a consequence of consolidation. They argued that corporate-controlled supply chains were designed for “maximum profit rather than reliably getting things to people,” ensuring that “the problems that arose in the pandemic folded in on themselves.” Just three global alliances of ocean shippers are responsible for 80 percent of all cargo, allowing them to charge a premium even as delivery times soared during the pandemic. These shippers raked in “nearly $80 billion in the first three quarters of 2021, twice as much as in the entire ten-year period from 2010 to 2020,” by increasing their rates as much as tenfold.

The establishment press has covered the current wave of inflation exhaustively, but only rarely will discuss the market power of giant firms as a possible cause, and then usually only to reject it.

After the Biden administration identified consolidation in the meat industry as a cause of price increases in September 2021, the corporate media were overwhelmingly dismissive, treating administration attempts to link inflation to consolidation as a rhetorical move meant to distract from conservative critiques of Biden’s stimulus program. One New York Times article, from January 2022, attempted to debunk consolidation as a factor in inflation, reasoning that “consolidation has been high for years, but inflation has been low for decades.” Another Times piece briefly touched on consolidation’s role but went on to blame “broken supply chains and high demand for goods from consumers still flush with government-provided cash,” and foregrounded perspectives from business lobbying groups such as the Meat Institute and the US Chamber of Commerce. None of these articles presented the sort of detailed exploration provided by the American Prospect or the Guardian on the ways market structures and corporate power might contribute to rising food prices.

To its credit, in May 2022 the Times did publish an incisive commentary by the Groundwork Collaborative’s executive director, Lindsay Owens, arguing that giant corporations are “using the cover of inflation to raise prices and increase profits” and pointing out that in industries such as meatpacking and shipping, “pricing power comes from concentrated market power.” In the same month, Forbes published a lengthy editorial by sustainable food advocate Errol Schweizer criticizing oligopolistic food companies for using the pandemic to reap windfall profits. But these isolated opinion pieces were far outnumbered by the hundreds, even thousands, of reports and analyses by commercial media outlets that blamed everything but oligopolistic price gouging for the rising cost of groceries.

Brett Wilkins, “New Report on ‘Grocery Cartels’ Details Exploitive Retailer Monopolies,” Common Dreams, November 15, 2021.

David Dayen and Rakeen Mabud, “How We Broke the Supply Chain,” American Prospect, January 31, 2022.

Kenny Stancil, “Corporate Greed the ‘Real Culprit Behind Rising Prices,’ Researchers Say,” Common Dreams, October 14, 2022.

Nina Lakhani, Aliya Uteuova, and Alvin Chang, “Revealed: The True Extent of America’s Food Monopolies, and Who Pays the Price,” The Guardian, July 14, 2021.

Student Researchers: Mack Parlatore (North Central College) and Ethan Reiderer (Saint Michael’s College)

Faculty Evaluators: Steve Macek (North Central College) and Rob Williams (Saint Michael’s College)