“From the fertilizer industry to the feed production industry to the grocery retail industry, all along this food chain, you have deeply concentrated markets with only a few major players,” said Rakeen Mabud, chief economist at the Groundwork Collaborative, “and that lack of competition means that at every point in the system, these companies don’t have to lower their prices.”
Policymakers can curb this by discouraging consolidation and encouraging competition. The Federal Trade Commission (FTC), for example, is attempting to block a $25 billion merger between grocery giants Kroger and Albertsons. A merger would allow Kroger to acquire its main rival, and the FTC argued in a hearing in Oregon earlier this year that the consolidation would be anti-competitive and push costs onto consumers.
Details from the hearing, meanwhile, show that food pricing isn’t all driven by inflation. In a March email to other company executives, Andy Groff, Kroger’s senior director for pricing, seemed to confirm that the grocery chain had raised its prices to higher levels than required by inflationary conditions. “On milk and eggs, retail inflation has been significantly higher than cost inflation,” Groff wrote. In response to questions from FTC lawyers about the email, Groff said that Kroger attempts to “pass through our inflation to consumers.” He also acknowledged that Kroger was able to raise prices in areas where it faced little competition without seeing a drop in sales.
“The food industry is just full of cartels. And that’s what cartels do. They gouge.”
Under Trump, consolidated corporations generally benefited. The Trump administration dissolved the USDA agency tasked with regulating anti-competitive practices in the livestock, poultry, meat, grain, and oilseed industries.
The Biden administration made some attempts to rein in consolidation. In 2022, for example, President Joe Biden signed an executive order aimed at creating more competitive practices, especially in meat and poultry supply chains. Harris’s plans to go after “price gouging” fall in line with these initiatives.
The problem is deeply embedded in the U.S. food system, and it continues to have real impacts. In cities or regions with just a few large food distributors, the consumer costs of consolidation can be stark: USDA data from June shows that, in a few major Midwestern cities with notably scant competition in the dairy distribution supply chain, consumers were paying almost $1 more per gallon of milk, according to The Milkweed, a dairy industry newsletter.
Kansas City, for example, has virtually no competition among its milk producers. One distributor, Hiland Dairy, a joint venture between two large-scale dairy cooperatives, dominates the area Over the past two years, Kansas City has experienced the highest milk prices among 30 major cities, according to The Milkweed. In Chicago, milk prices increased in 2023, even as raw milk costs declined for the two major milk distributors that dominate the local market.
“The food industry is just full of cartels,” said Austin Frerick, author of Barons: Money, Power, and the Corruption of America’s Food Industry. “And that’s what cartels do. They gouge.”
Extreme concentration can be seen everywhere in the food industry. Walmart sells approximately one in three grocery items nationwide—and more than half the groceries in dozens of regional markets. Tyson, JBS, Cargill, and National Beef buy and process 85 percent of beef in the U.S. JBS, the largest meatpacker in the world, has agreed to multiple settlements in recent years related to bribery and price-fixing.
Similarly, in the egg industry, a few large corporate entities hoard the market; Cal-Maine alone controls about 20 percent of egg production in the U.S. This concentration allowed companies to keep egg prices high in 2022 and 2023, after supply chain issues and an avian flu outbreak cut into supply, according to Senator Elizabeth Warren’s (D-Massachusetts) office. Cal-Maine, with no reported avian flu cases in its operations, saw profits increase by 65 percent in late 2022.