Occupy's Next Move: Agribusiness?
If there's one big take-away I think we can all agree on from the Occupy movement, it's this: We value balance and diversity. That being the case, I believe the agribusiness sector could be fertile ground for protestors searching for their next cause.
But first, why balance and diversity are so important
I'll get to agribusiness in a minute, but first we should lay some groundwork.
It was a lack of diversity in the types of bets our biggest institutions made on derivatives that led them to the brink of bankruptcy three years ago. And it was the lack of balance within the banking industry that led us to bail out the largest banks.
Source: Federal Reserve, March 31, 2001, figures in trillions. Includes all banks with over $100 million in deposits.
That type of disparity alone looks alarming. Bank of America, Citigroup, JPMorgan, and Wells Fargo accounted for about 28% of all deposits held by U.S. banks. But take a look here to see how fast and furious bank consolidation has been. By this summer, the picture looked much, much worse.
Source: Federal Reserve, June 30, 2011, figures in trillions.
It's clear that where there once was some semblance of balance, there is now an alarming concentration of power.
This type of situation becomes lethal whenever a threat moves in on the dominant powers. Without a balanced system, problems in one bank can lead the entire system to disaster. And this isn't just the case in banking -- it's true everywhere in society.
Put half of your portfolio in one stock, and the failure of that company will prove disastrous to your retirement prospects. Build your sports franchise around one player, and the loss of that player could ruin a season (hello, Colts!). You get the idea.
Now, to the business of agribusiness
The same type of distortion in balance and diversity that we see in the banking industry is also true for big agribusiness. Consider the following statistics provided by the National Family Farm Coalition:
- 58% of all corn seeds are provided by just two companies: DuPont (NYS: DD) and Monsanto (NYS: MON) .
- Just three companies control 90% of the global corn market: Archer Daniels Midland (NYS: ADM) , Cargill and Bunge.
- Four companies control 85% of the global high-fructose corn syrup: ADM, Cargill, Staley Manufacturing, and CPC International.
Why this is a problem
If we are all up in arms over an industry (banking) where the four biggest players control 50% of the cash, surely we should be wary of the fact that 90% of our most consumed food (corn, whether for human or animal consumption) is in the hands of just three companies!
Just last year, U.S. Attorney General Eric Holder "told the crowd of farmers, labor and consumer groups and corporate representatives that the Justice Department sees erosion of competitive markets as a significant threat to the U.S. economy, thus a national security matter."
Aside from the economic concerns such a monopoly raises, agribusiness is also harmful to our health. When a team of professionals from MIT and Columbia were recently asked to come up with a simple way to improve the health of Americans, they said, "a diversified, regional food economy -- could be the key to improving the American diet."
Right now, our diet -- which consists largely of corn and soy by-products -- is anything but diverse. Of course, we all have a level of choice over our diets, but as long as we allow large agribusiness to control such large swaths of both our food supply and the land used to make that food, that choice will be under assault, and largely a luxury of the wealthy.
Finally, the result of such an imbalance both within the food industry and our diets has played a huge role in our sky-high medical costs being passed on to the 99%. According to the Center for Disease Control, three-quarters of health-care spending now goes to treat "preventable chronic diseases."
Many of these diseases can be traced back to our overconsumption of corn- and soy-based products that dominate our dietary choices. As Todd Dawson, a plant biologist at Berkeley, pointed out, "it's not that corn per se is bad, but it's the sweetener made from corn that gets into many of the foods that Americans are probably consuming too much of, and we now see that showing up as obesity and heart disease and potential for type 2 diabetes."
For protestors trying to figure out how to help the 99%, their deteriorating health, and their rising medical costs, focusing on the companies that profit from these trends provides some food for thought.
At the time this article was published Fool contributor Brian Stoffel is aware that he didn't even get into farm subsidies, which would've doubled the length of the article but is still worth discussion. He does not own shares of any of the companies mentioned. You can follow him on Twitter at @TMFStoffel.The Motley Fool owns shares of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. The Fool owns shares of and has created a covered strangle position on Wells Fargo. Motley Fool newsletter services have recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.