You’ve heard about Big Tech. What about Big Food? Walmart, Driscoll’s and Fair Oaks Farms are just some of the companies that dominate our food industry, says Austin Frerick, agricultural and antitrust policy fellow at Yale. He’s the author of the new book “Barons: Money, Power, and the Corruption of America’s Food Industry,” in which he argues the food system is the most consolidated sector in the United States today.
“There’s also this illusion of choice. Like, you can look at the peanut butter area in the grocery store, and you see all these different brands, but it’s really one company that does like 50-60% of it,” Frerick said.
On the show today, Frerick explains how the American food system became so concentrated, how that’s inflated prices and eroded quality, and what we should do about it. Plus, Walmart’s role as king of grocery kings.
Then, we’ll get into how American consumers are buckling, resisting and adapting to higher prices. And, why Boeing can’t keep up with SpaceX.
Later, a listener shares their take on why positive economic indicators aren’t ringing true for many folks lately. And, an expert on youth mental health (and former guest on “Make Me Smart”) was wrong about how teens curate their social media feeds.
Here’s everything else we talked about today:
“Lax Antitrust Enforcement Imperils The Nation’s Supply Chains” from Forbes
“What Is “Big Ag,” and Why Should You Be Worried About Them?” from Union of Concerned Scientists
“The problem with growing corporate concentration and power in the global food system” from Nature Food
“Major retailers are offering summer deals to entice inflation-weary shoppers” from AP News
“US Consumer Confidence Rises for First Time in Four Months” from Bloomberg
“Inflation now means high prices, not just rising costs” from Axios
“What do Americans think about inflation?” from The Brookings Institution
“Boeing Prepared to Fly Crewed Space Taxi With Helium Leak” from Bloomberg
We love to hear from you. Send your questions and comments to makemesmart@marketplace.org or leave us a voicemail at 508-U-B-SMART.
Make Me Smart May 28, 2024 Transcript
Note: Marketplace podcasts are meant to be heard, with emphasis, tone and audio elements a transcript can’t capture. Transcripts are generated using a combination of automated software and human transcribers, and may contain errors. Please check the corresponding audio before quoting it.
Kai Ryssdal
Hey everybody, I’m Kai Ryssdal. Welcome back to Make Me Smart, where none of us is as smart as all of us.
Kimberly Adams
And I’m Kimberly Adams. It’s Tuesday, May the 28th. Yesterday was Memorial Day and many of you likely spent the long weekend having food, lots of it. Maybe even a classic American barbecue, possibly burgers, hotdogs, veggies if you were so inclined. So today we are talking about food, specifically, Big Food.
Kai Ryssdal
We want to know more about how corporate consolidation in the American food system has impacted consumers and whether something you shouldn’t be done about it. Here to make us smart about all this is Austin Frerick. He’s a Yale agricultural and antitrust policy fellow, also the author of the book “Barons: Money, Power and the Corruption of America’s Food Industry.” Austin, welcome to the show. It’s good to have you on.
Austin Frerick
Yeah, thanks again for having me on. It’s such an honor.
Kai Ryssdal
So, what does it look like in practical terms consolidation in American food?
Austin Frerick
Um, for most people, it usually means higher prices in the grocery store. I mean, we shouldn’t be shocked by this. Concentrated markets gouge, that’s what they do.
Kai Ryssdal
Say more.
Austin Frerick
To me, the best example is the meat industry. I mean, it’s almost like every month, there’s a new allegation of price fixing in some protein market. The meat markets now are more concentrated than they’ve ever been. It’s more concentrated than when Upton Sinclair wrote “The Jungle.” And that’s why I mean, we see rapid abuse everywhere with labor during COVID. And then with the use of child labor in these slaughterhouses.
Kimberly Adams
You say it’s a matter of factly. And yet, in theory, we have laws against this kind of stuff. What’s going on here?
Austin Frerick
Oh, it’s a combination of a few things. I mean, there’s just some laws not being enforced. You have that going on. But then you also have the corruption of the regulatory system. So, it’s those two things that really allowed, really created the rampant consolidation we have in the food system, like I really do believe I think the food system is the most concentrated space in America right now. Because there’s also this illusion of choice. Like, you can look at the peanut butter area in the grocery store, and you see all these different brands, but it’s really one company that does like 50-60% of it. And their market share is probably higher because they usually do the store brands. And we only know they do store brands is usually when there’s a recall.
Kai Ryssdal
When did this consolidation start?
Austin Frerick
Um, I mean, it’s a combination of a few things. But I think it really took hold in the 1980s when we had this, like, anti-monopoly antitrust framework really collapsed, which allows this massive consolidation to take place in these markets. And I also had this one grocery industry person say it best to me were “big boys like to run with big boys,” like the creation of one robber baron makes other robber barons because people want to have market power to negotiate with these other people.
Kimberly Adams
So, how has this concentration of power in the food system kind of affected how we eat because I know you said, we see it in terms of the prices at the grocery store, but how it actually impacted what we eat and maybe even our health?
Austin Frerick
I think an underappreciated thing of this moment is how much taste has declined. Like Driscoll’s is my berry baron. They sell one to three berries, but they don’t grow a single berry. And I’m using their story to tell this bigger story of, a lot of produce has actually moved offshore in America. And when these supply chains get long, I mean, they’re not. These berries are engineered for durability, not for taste. And even writing this book, I would do little tastings of like milk, so that people drink industrial milk, and then I’d have them drink old fashioned pasture milk. And there’s such a difference. I mean, inputs really matter. And so, like when cows eat grass on different grasses on the land, they’re going to make a better tasting milk than cows inside a massive metal shuttle day eating corn.
Kai Ryssdal
Yeah, this isn’t actually just all about the stuff we pick up at the grocery store, right? You write about farmland and seeds. Tell us about that.
Austin Frerick
Yeah, so I mean, I’m from Iowa. And to me, Iowa’s canary in the coal mine here. You have the world’s best soil; I wish to be the Italy of North America, yet the waterways are basically an open sewer. Like, 60, 70% of waterways here are just too polluted for you to go in. And then also, Iowa has the second highest cancer rate in the country. And it’s pretty clear that those two are connected. And I mean, the farmland, you just look at it and like, the countryside doesn’t feel like the countryside anymore to me. It just feels incredibly industrial. Like you don’t see animals anymore. You smell them, but you don’t see them. And that happened all in my lifetime. And like, that’s kind of honestly what drove me to write this book is what happened Iowa? Like, how? It all kind of fell apart here. And also at the same time, I should say, I want to have an honest conversation over the food system. But I also want to talk about what it could be because I find that the could be to be hopeful and actually what inspires people because everyone, things seem pretty dark in the world right now, but people want that positive vision.
Kimberly Adams
Okay, so let’s do it. What could it be and what would it actually take to change it to make it better?
Austin Frerick
My big thing is I just want to put animals back on the land. It is wild and radical that we shove thousands. You know, most animals live their most of their lives in indoors all day. And here’s the thing, we’re at this kind of fork in the road with the stuff. Cars are moving into hybrids and EVs. And unbeknownst to most people, the largest use of corn on America is ethanol. So, that market is going to collapse, and it’s going to collapse fast. And the question is, what are we going to do with that land? That’s my hope here is we use this coming moment to you know, get away from this industrial model. Because let’s not forget, a lot of green production will probably be robotics in the future. And that’s not a bad thing, but there’s only so many dairy cows one person can look after. That’s also better for the land. It’s better tasting. It’s better for the environment. It just kind of helps take the temperature down on things. And so, I find that actually really bipartisan thing that a lot of people can understand, like, just really get inspired by.
Kai Ryssdal
What is this thing called “chickenization”?
Austin Frerick
Oh. I kind of drove to someone the other day. You can kind of blame chicken for all the ills in the food system right now. And I kid you not it’s because a century ago when we wrote these regulations in response to Upton Sinclair’s book, “The Jungle,” we didn’t write chicken to the regulations. Because there weren’t commercial chicken slaughterhouses. You literally just had chicken in your backyard. You’d kill it, you know, bring inside butcher it, eat it. So, what happened was down south corporations took that really exploitive sharecropping model that was used at the detriment of Black farmers and used and applied it to chicken production. So, to this day in America, if you’re a chicken farmer, you’re given the bird, you’re given the feed, you take on a ton of debt to build these metal sheds to the company specifications, you babysit the bird, you give it back to the company, they wait in a room you cannot see. And I mean, this is an old stat but like 70% of chicken farmers in America are in poverty. And kind of undercurrent in my book is USDA kind of failed to stop this. So, chicken starts getting a lot of market share, and started making chicken behave like the other meats, you see a race to the bottom. That’s where they were chickenization comes from. So, like the hog industry was chicken knives. Driscoll’s is my berry baron, you know, they chickenization the berry space. And so, I don’t want to romanticize the past in the food system, but there are some good things we can learn from. But we’re also seeing a lot of dark undercurrents from the past, you know, show their ugly selves again.
Kimberly Adams
You also mentioned that Walmart plays a big role in consolidation in the food industry, why specifically Walmart?
Austin Frerick
Walmart, I have to be honest, when I first started this book, I didn’t plan to write about Walmart because I didn’t think of them as a grocery store. But once you start looking into it, they are at a level we’ve never seen before. I mean, they sell one in three groceries. Their market share is the same as a second, third, fourth, fifth, sixth, seventh and eighth grocery store combined. They are the king of kings. I mean, Driscoll’s became a berry baron because they saw the rise of Walmart, you know, Driscoll’s, realize Walmart wants one company to do four berries year-round for 4000 stores. Part of Walmart’s existence is because we had this regulatory framework called the Robinson-Patman Act essentially collapse. So, Walmart gets, you know, gets all this market power. And then what I had a lot of suppliers tell me is you don’t negotiate even with Walmart. It’s very much supply and demand. And I almost think of it as the closest example we’ve ever had in America to a Soviet Union style politburo because Walmart just has so much market power, that can really dictate to the food system what it wants, and how it wants things grown and produced.
Kai Ryssdal
So, how do we get from where we are to where you would like things to be? Because it’s not just a regulatory fix. It’s not just companies changing their minds. There’s a lot of moving parts on this thing.
Austin Frerick
I mean, part of the reason why I use that robber baron framework is to show people we’ve been here before we know what to do. I mean, we’ve dealt with meat trust before. I mean, this isn’t rocket science. Some of it is just breaking up companies. You know, unwinding certain mergers. But the other part too, is just, you know, enforcing basic regulations we’ve ignored for decades. I mean, the second you regulate hog manure like human manure that industrial hog model breaks. I mean, just so your audience understands, like, a hog defecates three times more than the human. Iowa has 25 million hogs. That’s as much manure as 75 million people That’s Texas, Illinois, and California. And that regulatory structure is basically collapse. You start enforcing basic things like that, then you put the negative externalities into the price and it’s no longer economically viable.
Kai Ryssdal
We are going to end right there on a veritable mountain of pig feces.
Austin Frerick
Sorry.
Kai Ryssdal
That’s all right, man. Look, you drove it home. You ended with a kicker. You ended with a kicker. That’s all we can ask. Austin Frerick. He’s at Yale. He’s the agriculture and antitrust policy fellow. His book should you want to know more is called “Barons: Money, Power and the Corruption of America’s Food Industry.” Austin, thanks a lot. I appreciate it.
Austin Frerick
Yeah. Thanks for having me on.
Kimberly Adams
Thanks, Austin. Oh man. Yeah, it’s not like they have to make it flushed down a toilet and be treated and stuff like that. You’re like no, more. No more. Welcome back from holiday. But yeah, you know, I’m very fascinated at, you know, this kind of research and others where there’s this guy on TikTok, I think who goes to the grocery store and like will show this whole wall of groceries and point out how it’s like three or four companies doing all of them, especially if you go all the way up the chain to like private equity and stuff like that. And how it’s this illusion of choice that we have when it comes to what we eat. And there are, you know, as Austin was just saying, so many things going on in the world. It’s hard to kind of additionally take on that, and we need to think about this problem, too.
Kai Ryssdal
Yeah, no, totally. I learned a ton in there. And not just about hog manure.
Kimberly Adams
Yeah, me too.
Kai Ryssdal
So, there you go.
Kimberly Adams
Yeah. Got smarter. Okay, well, we want to know what you all think about Big Food and how it’s impacting consumers aka you. You can let us know at 508-827-6278, also known as 508-U-B-SMART, and we will be right back.
Kai Ryssdal
News. Kimberly Adams, you may go first.
Kimberly Adams
Just a couple foodish related price issue related stories that popped into my radar, onto my radar today I should say. In the AP: Major retailers are offering summer deals to entice inflation-weary shoppers.” This was reported out a bit last week as well, that Target and Walmart are rolling out all of these price cuts because consumers are finally starting to buckle under these higher prices and the shrinkflation and they’re downgrading to store brands or they’re shopping in different places. And I’m going to read here: “The latest quarterly earnings reported by Walmart, Macy’s and Ralph Lauren underscored that consumers have not stopped spending. But multiple CEOs, including the heads of McDonald’s, Starbucks and home improvement retailer Home Depot, have observed that people are becoming more price-conscious and choosy. They’re delaying purchases, focusing on store brands compared to typically more expensive national brands, and looking for deals.” I am this person. I walk a lot in the city. And so, I actually wear out my shoes, and I needed some new shoes. And I wanted to get from this particular company, but I couldn’t find a coupon, and I literally had the shoes in my cart, and I was just like, I’m not doing it. I’m not doing it. And then, I waited a couple of weeks. And then sure enough, they had a sale. And then, I bought my shoes because I just wasn’t going to do it. And I think a lot of folks are making those same choices. And then over in Bloomberg, I was surprised to see that we were finally seeing an uptick in consumer confidence for the first time in four months, the conference board metrics surprised people, that consumer confidence rose in May for the first time in four months. I think it’s a mixture of people getting used to inflation and adapting to it. And also, you know, maybe some of the, you know, factually good economic news is seeping in. But there was an interesting in one of the Axios newsletters, they pointed out that when the vast majority of people are thinking about inflation, they are thinking about the price level, not the rate of price growth. And that’s why most people think inflation is extremely high even when the rate of inflation is not. And they had this really interesting chart showing how if you ask your average American what inflation is they’re going to say it’s like close to 20%, which just so happens to be a very popular talking point that the Trump campaign is parroting everywhere. But if you ask economists, it’s closer to what it actually is, which is like around 3%.
Kai Ryssdal
Yeah, it was an interesting piece by Felix Salmon at Axios. And while I understand what he’s saying, I don’t think it’s very constructive for commentators of Felix’s stature or others to say, oh yeah, well, you know, consumers are a little confused about what inflation is, so let’s just say inflation is high because they feel price levels are high. I don’t think that’s super helpful because you know, these words actually mean something when you’re talking about what is actually going on in the economy. That said, I get it. I totally get it.
Kimberly Adams
Well, and what was interesting in like, the bottom of that was, he was saying that when people hear that inflation isn’t what they think it is, they feel like they’re being quote mansplained. And I agree with you that it’s not helpful to just be like, oh, we should just change what it means. I think it behooves us to do better at explaining to people what’s going on and this gets back to the conversation we were having last week about the sort of the cop out, you know, do we just say, oh well, people are upset, and they want to be upset, and they don’t want to hear it. So, there we are. Or do we actually do something to change the narrative and keep telling people? No, this is not the truth.
Kai Ryssdal
Yeah. Yeah.
Kimberly Adams
Anyway, what’s your news?
Kai Ryssdal
So, this one. It was actually Friday, but I just saw it today. So, you know, that makes it my news. News for me. Boeing and NASA have said they’re going to go ahead with the first launch of Boeing’s commercial space taxi on June the first, and here’s the operative sentence: “Without fixing a small helium leak that was discovered during an earlier launch attempt.” So, spaceflight is scary. It tries to kill you, and Boeing and NASA are going to launch with this known problem. Not that helium is going to kill you, but hmm, that’s very interesting. But what this made me think of is the difference in approaches that Boeing and SpaceX have taken, right? Boeing and SpaceX around the same time got around the same kind of contract 4 or $5 billion to launch commercial space vehicles to and from the International Space Station, right? And SpaceX did what a company like SpaceX does, right? They iterated super-fast. They failed super quickly. And they now have done like 60 missions in the space station, of which some not insignificant number had been crewed missions, right? Missions with astronauts on board. And SpaceX has just blown Boeing out of the water. Boeing can’t even get off the launch pad because Boeing is an old-style company used to operating on what are called cost plus contracts where they get to spend whatever they want, and then build a government for the excess. That’s an oversimplification. But basically, it was no risk to the manufacturer. It worked that way in aircraft, it worked that way in defense systems, and Boeing could not get its brain around operating the way SpaceX has been operating for damn near a decade now. And it’s super interesting that Boeing is going ahead now saying, man, we’re behind the power curve. We’re going to launch this, helium leak or not. And SpaceX is like, yes, it’s a space station.
Kimberly Adams
You know, that’s so fascinating. I hadn’t thought about it that way because, you know, the narrative around SpaceX for so long was that, you know, they keep blowing up rockets over and over again. And then, every time they blew up a rocket, it was not a story because they’d been blowing up rockets. And then, what actually became a story was not then blowing up rockets, but them successfully landing spent, you know, you know, reusable rockets. That was the story because they’re still blowing stuff up, but it’s just like, they always blow stuff up. But look at this accomplishment. They’re moving forward. And Boeing is just nothing.
Kai Ryssdal
Literally stuck on the pad, and we’ll see what happens on June the first. You know, and look, will it 99.9% chance to be safe? Yes, of course. That’s of course.
Kimberly Adams
Would you do it?
Kai Ryssdal
I probably would. Yeah. You know, why not? Right? I’m an old guy. I got nothing to lose.
Kimberly Adams
Okay. All right, that is it. That’s it for the news. Let’s do the mailbag.
Mailbag
Hi Kai and Kimberly. This is Godfrey from San Francisco. Jessie from Charleston, South Carolina. And I have a follow up question. It has me thinking and feeling a lot of things
Kai Ryssdal
Alright, so as Kimberly was just talking about last week, we talked about this poll that I had seen that showed a majority of Americans believe the United States isn’t in a recession. It is not what we talked about. I talked about how frustrating it was to see Americans not grasp what is actually going on. And Kimberly pointed out that really what’s happening is they are not getting accurate information. They’re getting misinformation. And yeah, it’s really difficult to make them think otherwise. And Roger says this.
Roger
Although I couldn’t agree more with Kai that individual voters bear responsibility for educating themselves on the true state of the economy, I don’t think the solution is as straightforward as improving our collective media diet. Several quarters worth of GDP growth and the growth of the S&P 500 are certainly positive, but that growth is largely an increase only experienced by only the richest Americans. For many Americans, it could be the case that persistently high prices have eroded any sense of well-being they would otherwise feel in good economic times. And I think because of that, a lot of folks could be more receptive to negative messages about the economy in general.
Kai Ryssdal
Yeah, can’t argue with the thing Roger said. Totally.
Kimberly Adams
No, it’s absolutely true. And even though like, and I did a story about this the other day, purchasing power across the board has improved since before the pandemic. The biggest increase in purchasing power was among the wealthiest Americans, like by huge margins. And the second largest was that people at the bottom of the income scale, not by nearly as much, and when you’re already strapped, you probably don’t think of it as a great thank you. But people in the middle barely felt it. And then there’s other research, I think it came out of Brookings a couple months back, that found when people experience wage growth, they think it’s because they did a good job. And when people see price growth, they think it’s because the economy sucks more broadly. So, you don’t attribute your own personal wage growth and the fact that you’re making more money with the fact that the market is more competitive, and that the economy is growing. And that’s why you’re able to, you know, get more money for your work. But that is because you’re a great worker, and you did a good job. But when prices overall go up, it’s like, ah, the economy is conspiring against us. And you know, I’ve definitely been in that boat before I’m like, good on you, Kimberly, you’re doing such a great job. Now the market is competitive in the moment and then it’s not.
Kai Ryssdal
Yeah. Yeah, totally.
Kimberly Adams
All right, before we go, we’re going to leave you with this week’s answer to the Make Me Smart question, which is what’s something you thought you knew, but later found out you were wrong about. To wrap up Mental Health Awareness month, this week’s answer comes from Mikey Jensen. She’s a clinical psychology professor who made us smarter about how smartphones impact teens’ mental health a few weeks back.
Mikey Jensen
For a long time, I in the field more broadly, had been thinking of adolescents as somewhat passive victims of negative online content. However, new data out from Common Sense Media and Hope Lab suggests that youth actively and constructively curate their social media feeds. They filter out and control content that they find offensive, inappropriate, or that they just plain dislike. More than three quarters of social media using youth report putting these types of measures in place to control their content exposure, and this is even more true of youth who might be at the most risk online. So, I was pleasantly surprised to learn about the active role teens are taking to try and manage their online experiences and those potential impacts on their mental health.
Kai Ryssdal
Yeah, that’s interesting.
Kimberly Adams
That is.
Kai Ryssdal
And good.
Kimberly Adams
Did you ever notice your kids doing that? Just sort of how they filter their content.
Kai Ryssdal
No. We talk. So, the short answer is no. The longer answer is we talked about it. We trust them to negotiate their own social media presences with occasional checks. And so far so good. You know?
Kimberly Adams
Okay. May it continue to be so. All right. We want to hear your answer to the Make Me Smart question. Again, our number is 508-827-6278, also known as 508-U-B-SMART.
Kai Ryssdal
Make Me Smart is produced by Courtney Bergsieker. Ellen Rolfes writes our newsletter. Today’s program was engineered by Drew Jostad. Jesson Duller is going to mix it down later. Our intern is Thalia Menchaca.
Kimberly Adams
Ben Tolliday and Daniel Ramirez composed our theme music. Our senior producer is Marissa Cabrera. Bridget Bodnar is the director of podcasts. Francesca Levy is the executive director of Digital. And Marketplace’s Vice President and General Manager is Neal Scarbrough.
Kai Ryssdal
I seriously don’t know why he wants the Tuesday credit instead of the Friday credit, but whatever.
Kimberly Adams
Doesn’t he get the Friday credit on your show?
Kai Ryssdal
He gets Friday girl on my show. He doesn’t get the Friday credit here.
Kimberly Adams
Yeah, exactly. I mean, he’s gotta spread out the credit.
Kai Ryssdal
I guess. I guess.
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