[alephnerd]

That's due to issues around monopolization in the Dairy and Cattle industry in the US [1].

70% of all processors in the dairy and cattle industry are now owned by 3 companies. Processors don't own cattle - they just process raw material like dairy and meat into cheese and pasteurized milk and handle the entire supply chain. But because they control the supply chain, distribution, and even the feed [0] used they can set rates and vendors used by farmers.

I posted an article about this earlier on HN, but it seems HNers like to talk about antitrust for search engines and not dairy and beef production.

Antitrust for me, oligopolic market forces for thee.

[0] - https://www.landolakesinc.com/what-we-do/animal-nutrition/

[1] - https://www.thebullvine.com/news/will-your-dairy-farm-surviv...

___________

To u/andrew_lettuce below:

Canada has the exact same issue of processor consolidation and oligopoly in agriculture as the US [0][1][2]

Arguably, it's worse than the US because this process started in the 1990s in Canada [3] versus the 2010s in the US.

[0] - https://ca.rbcwealthmanagement.com/terrence-galarneau/blog/4...

[1] - https://pmc.ncbi.nlm.nih.gov/articles/PMC7350140/

[2] - https://financialpost.com/commodities/agriculture/why-only-t...

[3] - https://www.eap.mcgill.ca/MagRack/RH/RH_E_97_05.htm

[andrew_lettuce]

This isn't true in Canada and we're seeing as big of price increases for beef, greater than the US for ground beef. This is a supply issue while demand has increased. Drought and costs have also impacted herd size

[HillRat]

Packer and ag consolidation is a huge problem, but the underlying issue here is climate change and long-lasting droughts; some of the issues with herd size — the smallest since about 1950 — come from COVID hangover when cows weren’t getting processed and price-per-head plummeted, but the immediate problem is that ranchers can’t support large herds due to lack of rain and cost of feed. We’re looking at long-term cost trends that are unlikely to reverse or even be significantly ameliorated anytime soon.

[alephnerd]

> the immediate problem is that ranchers can’t support large herds due to lack of rain and cost of feed

Ranchers that can support large herds (2,000+) are those who earn a net profit [0] and are consolidating because processors do not want to support small farms.

While environmental factors do play a role, saying it's the primary reason is greenwashing of the real oligopolies tendencies arising in American Ag industry.

[0] - https://www.thebullvine.com/news/will-your-dairy-farm-surviv...

[gruez]

Is this supported by the data? During the pandemic people were also blaming "monopolization" or "consolidation" for the rise in grocery prices, but in reality the margins of publicly traded supermarket companies went up by a percentage point or two.

[jncfhnb]

Profit margin increasing by a percentage point on a low margin business is potentially significant

[gruez]

It's certainly meaningful for the company involved, but a 1% increase in grocer margins means a $100 grocery bill becomes $101. It's at best an incomplete explanation for the ~20% price increase on grocery prices between 2021 and 2023.

[alephnerd]

Yep. To quote The Bullvine [0] (Axios for the cattle and dairy industry):

"Here’s another force reshaping the industry that has nothing to do with immigration: processor consolidation. According to industry analysis, just three major cooperatives—Dairy Farmers of America, Land O’Lakes, and California Dairies—now handle over 80% of the nation’s milk marketing.

These processors need massive, consistent volumes. New processing plants require millions of pounds of milk per day to operate efficiently. From a logistical standpoint, it’s far more efficient to contract with a dozen 5,000-cow dairies than 500 smaller operations.

I was at a dairy conference in Wisconsin last year where a DFA representative candidly admitted: “We’re building plants that need 4-5 million pounds per day. We can’t deal with 200 small farms—we need 10 large ones.”

This “processor pull” creates powerful incentives for farm-level consolidation. I’ve seen it happen firsthand in regions where a new mega-processing plant opens—suddenly, there’s pressure on every farm in the area to either scale up or get squeezed out"

Also [1]

-----------

The fact that a country like India can support 228 milk cooperatives each generating around $500M-2B in revenue and outcompete American dairy+cattle in production and even reducing environmental impact with marginal subsidizes [2] means distribution+processing consolidation and it's side effects (cattle monoculture, non-competitive prices given to farmers, dairy processers NOW becoming animal feed manufacturers) are a good example of market failures due to oligopolic control.

No one at the WI and MI state Dem level is chatting about this based on some of my own meeting with them recently. This is the kind of swing vote topic that can flip all 3 branches of government in 26 and 28.

If someone like me who has been somewhat hesitant about Lina Khan until after getting deep into the dairy industry recently, I think HNers should recognize the opportunity this provides. 84% of Americans consume dairy and dairy products [3] - this is an easy win if some sympathy was provided.

Yet, the comments I'm seeing here on HN (and with those who I chatted with at the state level Dems) are reminiscent to those who blamed autoworkers and coalworkers for not learning to code back in 2014.

[0] - https://www.thebullvine.com/dairy-industry/dairys-great-cons...

[1] - https://www.thebullvine.com/news/will-your-dairy-farm-surviv...

[2] - https://www.thebullvine.com/dairy-industry/from-extinction-t...

[3] - https://www.mckinsey.com/industries/agriculture/our-insights...

[ModernMech]

Market failures due to oligarchic control is the natural end state of capitalism. Everything is going as intended, the point of the system is to produce oligarchs, not efficient markets.

[alephnerd]

Not necessarily.

It is mainstream economic and political opinion to regulate in some manner to reduce market consolidation since the 1940s with the Herfindahl–Hirschman Index.

[ModernMech]

I think necessarily. I don’t think it’s possible to devise a capitalist system that doesn’t devolve into oligarchic control. Markets can’t be regulated like the theory wants, because capitalists just use their wealth to take over the politicians. They are able to do this because they control so much wealth. To prevent this hack, you’d have to take control of capital away from the capitalists, thus defeating the core idea of capitalism.

[chrisweekly]

> "capital away from the capitalists"

or find other ways to reduce the influence of money on public elections -- see eg Prof. Lessig (of "Creative Commons" fame) and his writings on "Fix Congress First" which led to Rootstrikers.org

[rcpt]

Lina Khan was in power for years and didn't do anything about this.

Closest thing was a case where she blocked Sanderson Farms from being acquired but that was poultry.

[alephnerd]

She was starting to concentrate on the Ag consolidation [0] but my interpretation is she targeted tech first due to the industry's somewhat weaker political position in both admins.

She also didn't touch Comcast - and they are the kingmakers in PA and DE.

[0] - https://www.law.nyu.edu/news/katzmann-lecture-lina-khan-talk...

[rcpt]

Yes going after tech is the populist thing to do and she did that.

As usual Comcast never gets touched and farm owners might as well write the laws themselves.

[gruez]

By "data" I was referring to data to support the claim that consolidation led to increase in prices (eg. margin expansion), not that consolidation was happening at all. It's the same with supermarkets. There's no doubt that consolidation was happening, and there's even evidence that it led to higher prices, but the absolute effect on grocery bills seems to be marginal.