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Large Agribusiness - Weakened Local Economies

Local economies suffer the most from our growing international food supply and corporate-owned farms.

Multiple middlemen

When food has to travel farther distances, more middlemen are involved in the transaction, and less money ends up in the hands of the farmer, the one producing the good.

Studies have shown that in the U.S., farms typically receive only 7¢ - 20¢ for every dollar paid for their produce.

Large agribusinesses undersell fair market value

Now add a huge farming corporation competing with the small, family farm. They are vertically integrated, where their profits come from their processed goods, and they have financial reserves to set commodity prices at artificially low levels.

How do you compete when you're forced to sell below the fair price? Most small farms can't, and are either pushed out of business or bought by their large competitor. The regional, diverse crop staples are then typically switched to single "cash crops" for export.

Farmers paid less or displaced completely

Most often, agri-businesses employ the previous farmers via contracts - for notoriously low wages. As Time Magazine described it, farmers end up working "as serfs on their own land." Alternatively, big businesses hire even lower paid migrant workers to displace the previous farmers altogether.

Money leached out of local communities

In a 1997 study from the WorldWatch Report, farms in a typical Midwest region:
  • spent $947 million in farming costs (pesticides and fertilizers),
  • received only $866 million from sales to distant suppliers,
  • and received subsidies from the government to cover part of the difference.

Meanwhile, residents of that same farming region bought $500 million of food, almost exclusively from farms outside their region. The study estimated the current structure "extract[ed] about $800 million from the region's economy each year."

We're exporting food to distant regions, and then buying food back from distant regions. This is obviously inefficient.

Research has shown that farms in North America, Asia, and Africa have suffered the most from free agricultural trade. Rural communities are shrinking or completely impoverished. Meanwhile, the few leading corporate food companies are reaping the profits and expanding their markets.

Need for change

Why not supply our own regions, and keep money circulating within our own economy? Keeping our money within our communities increases jobs and wages. Supporting smaller, local farms spreads the wealth, prevents farmers from being undersold, and minimizes our overall dependency on global farming corporations.

Fair Trade organizations and the Fair Trade Certification are helping enable sustainable economies around the globe.


More about:
Lower Quality, Less Variety
Ideas for Change