American Agriculture and the Problem of Monopoly: The Political Economy of Grain Belt Farming, 1953-1980

Jon Lauck, American Agriculture and the Problem of Monopoly: The Political Economy of Grain Belt Farming, 1953-1980. Lincoln: University of Nebraska Press, 2000. xiv + 259 pp. $45 (cloth), ISBN: 0-8032-29322-1.

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Reviewed for EH.NET by Bruce Gardner, Department of Agricultural and Resource Economics, University of Maryland, College Park.

Jon Lauck has produced an unusually multifaceted book addressed to concerns “that monopolistic corporations manipulated farm prices and would ultimately take over agricultural production” (p. 161), and related issues in market power. The focus is on post-World War II U.S. agriculture in the Midwest, up to about 1980, but the author has much to say about earlier history and about currently debated issues involving market power and farmers. He reviews trends in farmers’ worries about monopoly power, the actual situation with respect to such power, farmers’ attempts to organize countervailing power, and political responses to farmers’ complaints.

The book’s predominant tenor is of the kind of writing one finds in narrative history, heavy on wide-ranging quotations of data and opinion, interspersed with anecdotes that when successful provide a vivid context in which the reader may more readily see why the data and opinion matter — a mixed approach reflecting the author’s calling as editor-in-chief of the Minnesota Journal of Global Trade together with his varied and recent academic background. Much relevant work in economics, law, and politics is discussed. It is also notable, and refreshing, that Lauck’s treatment avoids tendentiousness and is scrupulously fair to proponents of a variety of opposing views in this hotbed of contention.

Six chapters offer discussions of specific problem areas: corporate farming, grain trading, processing of grain and meats, and farmer cooperatives and bargaining associations. The episodic approach, with less overarching organization of the material than would be ideal, stems from the origin of most of the chapters as previously published journal articles. The structure of each chapter is roughly: farmers’ concern with and actions taken in response to an issue of market power facing them is documented; politicians’ rhetorical and legislative reactions are described; and where available economists’ analyses and policy recommendations are reviewed. Introductory and two concluding unnumbered chapters attempt an overall assessment of the meaning, importance, and substantive correctness of various positions taken by a wide variety of proponents.

Lauck is patient with farmers’ expressions of pain and protest, of economists’ claims of monopoly power related to market structure, and is critical but fair in discussing “Chicago School” (the term he uses) claims that a small number of competitors is not sufficient to warrant antitrust action. The detailed chapters are in sympathy with farmers’ concerns but in substance mostly deflationary of their economic importance, as is the “Conclusion” chapter, which wanders off into interesting but diffuse ruminations on rural culture that I took as matters to talk about in solidarity with farmers after dismissing the substance of their populist agenda.

It is therefore somewhat surprising when the closing “Epilogue” ends by inviting the Courts to smite concentrated agribusiness more firmly. Lauck endorses “post-Chicago” analysis that “allows for greater consideration of the particulars in antitrust cases,” (p. 181) such as information availability and the sophistication of firms; and he appears to believe that since legislation has promoted the enhancement of farmers’ market power, the Courts should too. His general even-handedness has deserted him here. The facts and literature he cites do not make the case that any significant part of farmers’ economic problems is attributable to the market power of firms that buy from them. One could as well use Lauck’s text to argue that, in antitrust cases against agribusiness, the unreadiness of courts to take into account politicians’ verdicts as expressed in farm legislation is a virtue of an independent judiciary, not a vice.

Because the book ends most of its detailed assessments around 1980, it misses a recent diminution in concerns about the market power of agribusiness. A telling contrast is between the considered opinions of people speaking for farmers from the 1920s through the 1950s and today. When the post-World War I price collapse of 1920 triggered the first sustained farm crisis of the century, a commission was convened that placed lack of farmers’ bargaining power near the top of the list of causes, leading to antitrust recommendations and to the Capper-Volstead Act and other legislation that Lauck addresses. Lauck cites evidence of the continued intensity of these concerns in the 1950s and 1960s. Yet during price collapse of 1998-2000, antitrust issues were practically invisible in the policy debate. The Commission on 21st Century Production Agriculture, created by the FAIR Act of 1996, issued a final report in 2001 which almost completely ignored agribusiness power as a problem needing remedy. Even the Clinton Administration’s Small Farm Commission, which included more representatives of traditional opposition to agribusiness, gave no salience to antitrust.

It would be wrong to conclude this review on a carping note, for Jon Lauck has produced a most valuable account of key issues in the market power of agribusiness in the 1950-1980 period. The specifics he lays out of farmers’ complaints and actions, historians’ assessments, politicians’ effusions, and economists’ mix of assertion and analysis is both informative and entertaining to read. And his general good sense and effort to be fair to all sides make this a book one can read and learn from without unduly raising one’s blood pressure, whatever one’s prior views.

Bruce Gardner is Distinguished University Professor, Department of Agricultural and Resource Economics University of Maryland, College Park. He is author of American Agriculture in the 20th Century: How It Flourished and What It Cost, forthcoming from Harvard University Press, 2002.

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