It is shaping up to be a banner year for the big food monopolies. This week, Cargill’s wheat milling partnership (Horizon) announced a proposed merger with ConAgra Mills, joining two of the nation’s largest wheat flour milling operations. This is on top of two flour mills Cargill bought earlier this year.
Cargill already is probably the world’s largest grain trading company and the merger would only increase its stranglehold on the food supply—on the farmers that raise wheat and the consumers that eat, well, practically anything.
The new company, Argent, would control a third of the wheat flour market. Today, the top four flour making firms (Horizon, ADM, ConAgra and Cereal Food Processors) mill more than half the wheat flour in the country—sort of like making the flour in the bread for every other sandwich.
If the proposed merger is approved, the top four firms (Argent, ADM, Cereal Food Processors and Bay State Milling) will mill nearly two-thirds of the flour—like making the bread in two out of three sandwiches. The new Argent would mill the flour for one-third of all sandwiches.
A lot of reporters are calling this “flour power,” and it is all about the bread because the new company would sell about $4.3 billion in flour every year. Most of that is not in the $3 bags of flour we buy at the supermarket, but in the millions of loaves of bread sold in supermarkets and restaurants. The consolidation will affect the companies that buy flour to bake bread and the farmers that sell wheat, because a stronger Cargill-ConAgra partnership gives them more leverage as both buyers of wheat and sellers of flour. Bakery companies will have fewer competitive sources for flour, which could make flour more expensive.
Farmers will have fewer competitors bidding for their wheat, which tends to drive down the prices farmers receive for crops. Already, farmers get less than a slice of bread out of each loaf. According to the National Farmers Union, wheat farmers receive about 19 cents for every $3.00 loaf of bread or about 6 percent, well below the average farmer share for food of about 16 percent.
This may just be the beginning of a wave of mega-mergers. In the past six months, there has been the proposed big beer merger, the Ralcorp-ConAgra snack and frozen dinner merger, a proposed beef-packing merger between JBS and XL Foods, the takeover of Heinz ketchup and Hormel’s purchase of Skippy peanut butter. And the year has just begun.