Monopoly in Milk: The End of a Family Dairy Farm

The Hidden History of Monopolies: How Big Business Destroyed the American Dream

How Big Business conquered America. Over the next few months the entire book will be here, new chapters posted every Sunday, for subscribers to read at no cost. If you want to get a physical book to mark up or share with others, just click on the picture above, visit your local bookstore, or check your favorite online seller.

The popular mind is agitated with problems that may disturb social order, and among them all none is more threatening than the inequality of condition, of wealth, and opportunity that has grown within a single generation out of the concentration of capital into vast combinations to control production and trade and to break down competition.

—Senator John Sherman, 1890, speaking of his Sherman Antitrust Act

Monopoly in Milk: The End of a Family Dairy Farm

An older Kentucky dairy farmer named Guy Coombs described dairy farming in the 21st century to an NBC documentary crew. He told them, “It’s been real rough mentally, more than physically. Feed man called me one day and said, ‘How ya doin?’ I said ‘Physically I’m fine, mentally I wanna shoot someone.’ . . . Dairy farming has been important to us. I guess we’ve made it a way of life, or it’s been our life; we’ve worked hard to make a living, and we’ve done pretty good for well over 60 years.”1

Now, Guy Coombs and his son have retired from the dairy milk business. They are among a hundred farmers who lost their contracts—and their livelihoods—in large part because of a shrewd business decision by one of America’s behemoth retail corporations: Walmart.

The senior vice president of sourcing strategy for Walmart U.S., Tony Airoso, explained to a USA Today reporter in 2018, “By operating our own plant and working directly with the dairy supply chain in the Midwest, we’ll further reduce operating costs and pass those savings on to our customers so that they can save money.”2

The reasoning echoes Robert Bork’s fight to allow monopolies to form in order to guarantee low prices and “consumer welfare.”

But milk prices were already so low as to be pressing smaller dairy farmers out of business. Farmers who were able to remain in business relied on exclusive bulk contracts like the one that Walmart’s previous supplier, Dean Foods, had with more than 100 farmers in eight states, including the Coombs family.

Walmart may be able to deliver even lower prices for consumers, but its decision to take on milk processing also has had ripple effects in the economy far beyond the prices that consumers see in stores. Walmart’s milk-processing plant provides milk for more than 600 stores, and Walmart has famously squeezed out smaller alternative grocers in many places across the country. That means that Walmart is the exclusive bulk buyer and retail distributor for milk (and many other products) in many rural areas across America.

Walmart has built a massive milk-processing plant in Indiana and cut out several suppliers like Dean Foods. Those suppliers in turn canceled their contracts with family farms like the Coombses’.

The Coombses were left with no processors to buy their milk and no way to do it themselves. And so, in the third generation of the farm, the Coombses were forced to sell off their cows to slaughter.

Worse yet, the Coombses’ farm wasn’t paid off, so they were forced to immediately try to repurpose it just to eke out enough income to keep the bank from seizing it, and with it their house and livelihoods.

In my home state of Michigan, one reporter noted, “[s]ince 2016, it’s been difficult for most dairy farmers to cover 100% of their cost of production.”3 Low prices and monopolistic purchasing power have already stressed dairy farmers, forcing them to choose between leaving the business or burning through their home’s and generational equity.

The same pressures are happening across all sectors of agriculture.

For instance, just three suppliers—Tyson, Koch Foods, and Perdue Farms—control 90% of the $30 billion broiler chicken market. The result, as the Chicago Tribune reported in 2018, is that retailers saw a “roughly 50 percent increase in the price of broiler chickens” at wholesale.4 This meant the retailers would have to cut their workers’ wages to stay in business.

Market concentration and monopolies aren’t just bad for consumers and small businesses—when it comes to our food supply, having a diverse array of producers minimizes the number of people put at risk if any one supplier has contamination issues.

The pressures of globalized supply chains and the control that behemoth retailers like Walmart and Amazon (which owns Whole Foods) exert over those supply chains mean that generations-old family farms are being gobbled up, forced into exclusive contracts, or simply pressed out of business.

In a 2019 HuffPost interview, Senator Bernie Sanders (I-Vt.) explained to Amanda Terkel the scope of the problem and what kind of action the problem requires from the American government: “[I]ncreasing concentration is true in pork, it’s true in beef, it’s true in chicken,” Sanders said. “It’s true in soybeans. And the answer is, you gotta break them up. . . . I think we’ve not only got to have that moratorium, but we have to go further.”5

A moratorium on mergers in the agriculture sector would pause the problem, but it would fail to address the current overconcentration of agriculture. As in other overly concentrated sectors, the first major solution that should be implemented is to enforce antitrust laws across every sector of agriculture.

Beyond that, we need to remove the hurdles for family farmers to band together in regional co-ops that could compete at scale with larger capital-intensive farms, and which would also provide regions with a relative measure of food security, independent of global supply chains.