JANDOS ROTHSTEIN/ISTOCK
This article appears in the April 2024 issue of The American Prospect magazine. Subscribe here.
Barons: Money, Power, and the Corruption of America’s Food Industry
By Austin Frerick
Island Press
In January of 2022, more than 8,000 employees at King Soopers stores in the Denver area went on strike demanding higher wages, better health care coverage, and stronger store security. After ten days, they reached a tentative agreement with the grocery chain, which is owned by Kroger.
According to the union, the new contract included wage increases of $2 or more per hour in the first year for more than 95 percent of workers, topping out at an increase of $5.99 per hour. King Soopers agreed to invest more than $170 million in wages throughout the three-year agreement, plus more for health care.
Leading up to the strike, the King Soopers union encouraged customers to move their shopping and prescriptions to the chain’s competitor, Albertsons. Once the King Soopers contract was ratified, the United Food and Commercial Workers (UFCW) Local 7 union was able to leverage the threat of another strike to persuade Albertsons to implement the same wage increases, according to a Federal Trade Commission complaint filed in late February. The union capitalized on competition between leading employers to secure higher wages across the board. (It’s possible the retailers worked together behind the scenes to limit the impact of this strategy: A 2024 lawsuit filed by the Colorado attorney general alleges Albertsons promised not to poach any King Soopers employees during the strike.)
Months later, King Soopers’ parent Kroger announced plans to purchase Albertsons in a $24.6 billion deal. It was the largest proposed supermarket merger in the history of U.S. grocery, and would bring Kroger- and Albertsons-owned brands under the same umbrella, including Harris Teeter, Safeway, Ralphs, Fred Meyer, Shaw’s, Acme Markets, and more. A subsequent lawsuit alleged that the retailers’ close relationship preceded the merger announcement.
Had this merger happened before the 2022 strike, the outcome for King Soopers workers might have been very different. As the Federal Trade Commission (FTC) wrote in its complaint, “the combined Kroger/Albertsons would likely be able to impose terms on union grocery workers that slow wage increases.” Arguing that the merger had the potential to raise prices for customers while simultaneously weakening unions’ bargaining power, the FTC sued to block the deal in late February 2024. Several state attorneys general joined the lawsuit, including the Republican attorney general of Wyoming.
How did a handful of businesses come to dominate virtually every facet of the food industry, from grocery stores to coffee grinds?
News of the government’s intervention came at a time of heightened political scrutiny of the food industry. The cost of groceries has risen by more than 25 percent since February 2020, the fastest since the 1970s. As President Biden fights for re-election in November, an internal White House analysis recently showed that grocery prices are the single largest factor dragging down consumer economic sentiment, The New York Times reported.
The Biden administration has linked food-industry inflation to corporate consolidation, arguing that a handful of powerful companies are taking advantage of their overwhelming market share to hike prices and goose profit margins. In public appearances, the president has been harping on “shrinkflation”—a phenomenon in which companies quietly reduce the amount of food in a package without lowering the price—targeting snack brands in a Super Bowl–themed ad and working the concept into the State of the Union address.
Anti-monopoly messaging seems to have some bipartisan appeal. Republican Sen. J.D. Vance (R-OH) said FTC chair Lina Khan was “one of the few people in the Biden administration that I think is doing a pretty good job” the day after the Kroger lawsuit was filed. (Elsewhere, Republicans have been hitting the food-cost angle hard, but many blame rising prices on Biden’s economic policies, not corporate greed.)
In addition to the bully pulpit, President Biden has promised to challenge food-industry power players by fighting mergers like the Kroger-Albertsons deal, promoting competition, and prosecuting anti-competitive behavior throughout the industry. The prosecution side of the equation, largely handled by the Department of Justice, has had uneven results: Various Antitrust Division actions have ended in acquittals for executives charged with price-fixing and settlements for chicken companies accused of wage-fixing. The Antitrust Division last year issued another lawsuit against Agri Stats, a company that provides granular information to meat processors that prosecutors say is used as an illegal collusion tool to raise prices.
Regardless of whether the FTC’s lawsuit is successful, the agency’s action on Kroger and Albertsons sends a message about the administration’s priorities. In the pecking order of U.S. grocery stores, Kroger and Albertsons each fall somewhere near the top. A 2021 ranking of grocery retailers measured by sales put Kroger at number three and Albertsons in eighth position. The FTC is questioning whether permitting their merger will worsen grocery prices and lower workers’ pay. Kroger and Albertsons are questioning whether they can continue to compete successfully with Walmart and Amazon without joining forces.
A timely new book asks a third question: How did a handful of businesses come to dominate virtually every facet of the food industry, from grocery stores to coffee grinds?
IN BARONS: MONEY, POWER, AND THE CORRUPTION OF AMERICA’S FOOD INDUSTRY, former Treasury Department official Austin Frerick charts the rise of seven food-industry giants, many of which are not household names. He follows hog farmers Jeff and Deb Hansen as their confined swine operations fan out across his home state of Iowa; sweeps through the 150-year expansion of the grain empire assembled by Cargill, Inc., which he calls “arguably the most powerful private corporation in modern history”; and digs into the history of the family-run German conglomerate JAB Holding Company, which owns a dizzying array of coffee brands including Peet’s, Caribou, Stumptown, La Colombe, Intelligentsia, and Green Mountain—plus Keurig, which sells individually portioned “K-Cup” pods filled with grinds from its sister subsidiaries.
We also meet the couple behind the milk brand Fairlife, the Driscoll family responsible for reshaping the strawberry business, and the bribery-prone Batista brothers who run JBS, the largest meatpacking company in the world. The book finishes with the Walton family and Walmart, their cutthroat superstore chain that either does or doesn’t threaten the ongoing existence of Kroger, depending on who you ask.
Frerick is an agricultural and antitrust policy expert and a current fellow at the Thurman Arnold Project at Yale University. He worked as the co-chair of the Biden campaign’s Agriculture Antitrust Policy Committee and advised several of the leading Democratic presidential candidates on agricultural policy leading up to the 2020 election. He has also run for election to the Iowa state Senate (in 2022) and the U.S. House of Representatives (in 2018).
That Frerick could have chosen from any number of other food-industry barons speaks to the prevalence of this kind of story in the food industry. He could just as easily have focused on Monsanto’s capture of the seed industry, Coca-Cola’s soda success, Tyson’s takeover of chicken, AB InBev’s dominance in the beer aisle, or even the rise and fall of the Walmart precursor A&P. (His choices may have been influenced by the fact that excellent books have been written about all five: Bartow J. Elmore’s Seed Money and Citizen Coke, Christopher Leonard’s The Meat Racket, Julie MacIntosh’s Dethroning the King, and Marc Levinson’s The Great A&P.)
The most salacious story of the bunch is that of Brazil’s Batista brothers, who have grown from a five-cattle-per-day slaughterhouse operation their father launched in 1953 to the largest meatpacking company in the world. (Perhaps not surprisingly, JBS is also the world’s largest leather processor.) In the aughts, the brothers went on a $20 billion global acquisition spree, made possible through $148 million in strategic bribes to more than 1,800 Brazilian politicians and government officials. These off-the-books payments resulted in low-interest development loans obtained with government support. Later, the brothers also allegedly bribed Brazilian meat inspectors to allow salmonella-contaminated meat into the export market and expired meat into public schools. That scandal burst into view in 2017, and the brothers made history again that year when Joesley Batista wore a wire to discuss bribes with then-president Michel Temer as part of a plea bargain related to his own corruption charges. The tape leaked, and Temer finished his term in disgrace.
For the last 15 years or so, JBS has quietly made inroads in the U.S., purchasing a majority stake in chicken supplier Pilgrim’s Pride and pork producer Swift & Company. The company does not sell meat under the JBS name in the U.S.; instead, it owns 45 different brands sold domestically. This is a recurring feature of Frerick’s book: Barons’ products are sold under a wide variety of brands, maintaining the appearance of competition even as many are controlled by the same parent company.
JBS has been back in the spotlight in recent weeks as it moves toward an initial public offering (IPO) in the United States. In January, a bipartisan group of 15 senators including Democrats Elizabeth Warren and John Fetterman and Republicans Marco Rubio and Josh Hawley, along with independent Bernie Sanders, asked the Securities and Exchange Commission to reject the listing, arguing that JBS’s track record of “corruption, human rights abuses, monopolization of the meatpacking market, as well as environmental risks” represents a threat to potential shareholders. New York Attorney General Letitia James followed up with a February lawsuit accusing the company of misleading the public about its plans to address climate change. JBS has promised to hit net-zero emissions by 2040; prosecutors say it has no real plans to do so.
In Frerick’s telling, the success of the JBS expansion, combined with rampant consolidation elsewhere in the meat industry, is at least partially responsible for the current state of affairs in which Americans are overcharged for meat, ranchers have few options to sell their cattle, and workers labor under dangerous conditions. In response to all this, Secretary of Agriculture Tom Vilsack has announced a plan to promote competition by distributing a billion dollars to new, independent slaughterhouses.
In my favorite line of the book, Frerick writes: “This plan is like dumping a billion dollars on Ask Jeeves and wishing the company good luck against Google.”
TAKEN TOGETHER, THE STORIES OF THE BARONS PAINT A PICTURE OF A FOOD SYSTEM in which the abundance of options at the grocery store is just an illusion. Yet the story of the quiet, creeping consolidation of the U.S. food industry is just as much about policy as it is about business. Frerick’s greatest strength is in drawing out the federal, state, and local policies (and policymakers) that fueled the rise of the captains of industry he profiles. In Iowa, the Hog Barons got a huge assist from then-Gov. Terry Branstad, who signed a 1995 law stripping counties of their authority to block proposed hog farms. The Grain Barons spent years lobbying against New Deal–era federal farm policy issues, an effort that eventually resulted in a more pro-business approach in the periodic congressional updates to agricultural policy, what Frerick calls the “Wall Street Farm Bill.”
Frerick points to the reinvigoration of antitrust enforcement as one possible tool for reversing the trends exemplified by his barons. The Biden administration has embraced this project, issuing new merger guidelines that, while not legally binding, will be put to the test in the Kroger case.
Washington has been less hospitable to Frerick’s other ideas. He points to the farm bill as a potential vehicle for a sea change in food policy. Reauthorized once every five years, the omnibus legislation has long coupled government spending on federal food assistance programs like SNAP and WIC with crop subsidies. It’s been an often-uncomfortable political marriage between urban and rural legislators; many experts have argued that the safety net and farm country might look very different if welfare spending were uncoupled from commodity subsidies.
Like many Democrats, Frerick would like to see robust spending on food assistance without also subsidizing corn and soy. But the most recent farm bill expired in 2023, and such an upheaval is not looking likely. At present, legislators are currently eyeing a 2025 reauthorization as they fight old battles: Democrats are trying to protect SNAP (and now, climate funding), and Republicans are demanding higher payouts for farmers.
Nor is the Department of Agriculture likely to pursue the aggressive reforms Frerick would like to see. The author is candid about this: “[W]e need to have a conversation about the US Department of Agriculture,” he writes. “Laws and policies are only as good as the enforcers. Through administrations of both parties, the USDA increasingly seems to serve the interest of the barons and Wall Street.” Many hoped Biden would select a progressive secretary of agriculture when he took office in 2021, but the president signaled a degree of comfort with the status quo with his selection of Tom Vilsack, who is currently reprising a role he first filled under President Obama. He spent the intervening years promoting dairy exports under a checkoff program Frerick would like to see sunsetted. The Department of Agriculture did recently follow through on a campaign promise to strengthen protections for livestock growers, the second of four expected rules promoting competition in the meat industry.
Farm advocates have been fighting food-system consolidation for decades, but the trend lines have remained stubbornly constant. Antitrust advocates have found a friendly ear in President Biden, but as Frerick points out, it will take more than a few splashy lawsuits to fix the food system.
