Occupy's Next Move: Agribusiness?

If there's one big take-away I think we can all agree on from the Occupy Wall Street movement, it's this: We value balance and diversity. That being the case, I believe the agribusiness sector could be fertile ground for protesters searching for their next cause.

But first, why balance and diversity are so important
I'll get to agribusiness in a minute, but first we should lay some groundwork.

It was a lack of diversity in the types of bets our biggest institutions made on derivatives that led them to the brink of bankruptcy three years ago. And it was the lack of balance within the banking industry that led us to bail out the largest banks.

Take a look at the total deposits that the big four banks -- Bank of America (NYSE: BAC  ) , Citigroup (NYSE: C  ) , Wells Fargo (NYSE: WFC  ) , and JPMorgan Chase (NYSE: JPM  ) -- held all the way back in 2001.

Source: Federal Reserve, March 31, 2001, figures in trillions. Includes all banks with more than $100 million in deposits.

That type of disparity alone looks alarming. Bank of America, Citigroup, JPMorgan, and Wells Fargo accounted for about 28% of all deposits held by U.S. banks. But take a look here to see how fast and furious bank consolidation has been. By this summer, the picture looked much, much worse.

Source: Federal Reserve, June 30, 2011, figures in trillions.

It's clear that where there once was some semblance of balance, there is now an alarming concentration of power.

This type of situation becomes lethal whenever a threat moves in on the dominant powers. Without a balanced system, problems in one bank can lead the entire system to disaster. And this isn't just the case in banking -- it's true everywhere in society.

Put half of your portfolio in one stock, and the failure of that company will prove disastrous to your retirement prospects. Build your sports franchise around one player, and the loss of that player could ruin a season (hello, Colts!). You get the idea.

Now, to the business of agribusiness
The same type of distortion in balance and diversity that we see in the banking industry is also true for big agribusiness. Consider the following statistics provided by the National Family Farm Coalition:

  • 58% of all corn seeds are provided by just two companies: DuPont (NYSE: DD  ) and Monsanto (NYSE: MON  ) .
  • Just three companies control 90% of the global corn market: Archer Daniels Midland (NYSE: ADM  ) , Cargill and Bunge.
  • Four companies control 85% of the global high-fructose corn syrup: ADM, Cargill, Staley Manufacturing, and CPC International.

Why this is a problem
If we are all up in arms over an industry (banking) where the four biggest players control 50% of the cash, surely we should be wary of the fact that 90% of our most consumed food (corn, whether for human or animal consumption) is in the hands of just three companies!

Just last year, U.S. Attorney General Eric Holder "told the crowd of farmers, labor and consumer groups and corporate representatives that the Justice Department sees erosion of competitive markets as a significant threat to the U.S. economy, thus a national security matter."

Aside from the economic concerns such a monopoly raises, agribusiness is also harmful to our health. When a team of professionals from MIT and Columbia were recently asked to come up with a simple way to improve the health of Americans, they said, "a diversified, regional food economy -- could be the key to improving the American diet."

Right now, our diet -- which consists largely of corn and soy byproducts -- is anything but diverse. Of course, we all have a level of choice over our diets, but as long as we allow large agribusiness to control such large swaths of both our food supply and the land used to make that food, that choice will be under assault, and largely a luxury of the wealthy.

Finally, the result of such an imbalance both within the food industry and our diets has played a huge role in our sky-high medical costs being passed on to the 99%. According to the Center for Disease Control, three-quarters of health-care spending now goes to treat "preventable chronic diseases."

Many of these diseases can be traced back to our overconsumption of corn- and soy-based products that dominate our dietary choices. As Todd Dawson, a plant biologist at Berkeley, pointed out, "it's not that corn per se is bad, but it's the sweetener made from corn that gets into many of the foods that Americans are probably consuming too much of, and we now see that showing up as obesity and heart disease and potential for type 2 diabetes."

For protesters trying to figure out how to help the 99%, their deteriorating health, and their rising medical costs, focusing on the companies that profit from these trends provides some food for thought.

Fool contributor Brian Stoffel is aware that he didn't even get into farm subsidies, which would've doubled the length of the article but is still worth discussion. He does not own shares of any of the companies mentioned. You can follow him on Twitter at @TMFStoffel.

The Motley Fool owns shares of JPMorgan Chase, Bank of America, Wells Fargo, and Citigroup. The Fool owns shares of and has created a covered strangle position on Wells Fargo. Motley Fool newsletter services have recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (27) | Recommend This Article (35)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 22, 2011, at 10:11 AM, mm5525 wrote:

    Ah yes, another Motley Fool article about investing. Oops, my mistake, it turned out to be another Motley Fool pro-Occupy Wall Street "movement" article instead.

  • Report this Comment On November 22, 2011, at 10:28 AM, TMFCheesehead wrote:

    @mm5525-

    More than pro-Occupy, I think this is about being pro-balance and diversity. And it has everything to do with investing, as a lack of balance and diversity wiped out billions in retirement savings for many.

    Brian Stoffel

  • Report this Comment On November 22, 2011, at 11:01 AM, Tygered wrote:

    Great article. I believe one of the biggest problems in this nation today is the rush to merge and acquire. We need the balance and diversity of many thousands of truly competing companies in food and in other industries as well. We should return to a more Jeffersonian country where we have thousands and even millions of small businesses serving their local regions instead of a handful of mega-corps dictating every aspect of our lives.

    As far as agribusiness goes, I plant my garden every year and shop at local farmers markets during the winter. It won't stop them, but it helps my health.

  • Report this Comment On November 22, 2011, at 11:05 AM, TMFCheesehead wrote:

    @Tygered-

    Thanks for the shout-out. I think every little bit helps. We, too, shop at farmers markets (and Whole Foods) for most of our needs. If anything's going to change, companies need to be incentivized to do so. Voting with your feet does make a difference.

    Brian Stoffel

  • Report this Comment On November 22, 2011, at 11:08 AM, Larrymicke wrote:

    Two problems with this article.

    First, there is no leadership within "Occupy" so the movement, such that it is, can't think or react strategically.

    Second, and more importantly, agribusiness isn't as sexy and blaming banks. The media will not follow the movement to rural Nebraska, rural Minnesota, etc.

    The merge/acquire activity among banks was to acquire customers in a relative inexpensive manner and then create efficiencies.

    One reason that the economy is having a hard time getting re-started is that businesses, large and small, have realized they can do more with less. Being more efficient may be good for a business but can be bad for employment.

  • Report this Comment On November 22, 2011, at 11:13 AM, TMFCheesehead wrote:

    @Larry-

    I agree, there's no defined leadership, and agribusiness ain't too sexy. OWS has surprised before, so I'm not counting out that they'll all hop on a bus and end up in Iowa, though :)

    Brian Stoffel

  • Report this Comment On November 22, 2011, at 11:15 AM, cattywampus wrote:

    I can incorporate this info into my diet, chock-full of micro-nutrients and essential minerals. Interesting take on agri-business.

  • Report this Comment On November 22, 2011, at 11:45 AM, mm5525 wrote:

    Brian, my issue with your article is you seem sad that the OWS "movement" has deteriorated and are suggesting another monopoly for them to go protest about just to try to keep it going. The fact someone must offer something to protest about rather than the protest being organic tells me enough in and of itself that it is trying to be propped up by many.

    The attack on the big banks largely failed. Bank Transfer day was a snoozer. And, I can assure you any protest on agribusiness will fail due to a sheer lack of interest. If you then suggest they protest about the lack of diversity or balance among cola makers such as KO, PEP, and DPS that, too, will fail.

    Here's an idea: Why not write an article about the lack of balance or diversity in Washington DC instead? There are only two players in that town, and they both stink. That monopoly stinks. How about an article about that?

    It's time for the people who love the OWS "movement" to offer solutions and ideas rather than just pointing out monopolies and inequality. Monopolies have been around much longer than the board game. Diversity is great. Tell us how to accomplish it. You told us "why this is a problem" but where is the sub-heading "how to fix it?"

    Happy Thanksgiving to all.

  • Report this Comment On November 22, 2011, at 11:47 AM, overley wrote:

    Another risk to agribusiness would be the much needed reduction or elimination of farming subsidies by the federal government.

  • Report this Comment On November 22, 2011, at 11:51 AM, cabezas100 wrote:

    Wake up. all kinds of protest movements are already onto agribusiness, even if they are not calling themselves OWS. Just look at what the Haitian peasant movements did when Monsanto offered what they called a poisoned gift to Haiti by offering GM seeds. You don't have to search at the bookstore (In Defence of Food, M Pollan for one) or far on the internet to see that people are already protesting against monopolies by agribusiness (Grain, Etc group, FoE, etc.)

  • Report this Comment On November 22, 2011, at 12:08 PM, TMFCheesehead wrote:

    @mm-

    I appreciate the constructive response. I think talking about DC is important as well, but a lot of my Fellow Fools have covered that already, especially with talk about the STOCK Act. I was just offering an alternative area of interest. I realize that it'll be far more difficult to perceive change in agribusiness, but that doesn't mean the lack of balance or diversity aren't important.

    As for your "how to fix it" suggestion, I think that makes for a great idea for a future article.

    Brian Stoffel

  • Report this Comment On November 22, 2011, at 12:32 PM, TMFTomGardner wrote:

    MM et al, I assure you -- there are problems in both our political and commercial worlds that need fixing. I'm convinced that we won't solve them if paid lobbyists on one side and the other push that "all of the problems are in government" or "all of the problems are in business." Those talking points just don't play well -- whether it's Bernie Sanders saying it's all commerce or the Chamber of Commerce saying it's all government. The truth -- as is so often the case -- is right in the middle. I know it's time to stop watching the ping-pong match between either side...and instead, to get in the middle, issue by issue, and start working to fix our problems. Foolishly, Tom Gardner

  • Report this Comment On November 22, 2011, at 1:29 PM, Darwood11 wrote:

    @Larrymicke,-

    I suspect taking on agribusiness won't attract the current breed of "occupiers." However, it the movement morphs into something that is more mainstream and less MoveOn.org inspired, we might see some progress in that area.

    Commenting on the article, centralization of these sectors into few businesses is very dangerous.

    For example, the day could come when a foreign country or company purchases an agribus behemoth and appropriates all production to somewhere else, which pays more or in better currency or terms. Think it couldn't happen? OK, then let's just say the businesses don't change, they simply ship most product overseas where they get better prices.

  • Report this Comment On November 22, 2011, at 2:22 PM, Gato337 wrote:

    you mean PIZZA IS A VEGETABLE now?

  • Report this Comment On November 22, 2011, at 2:25 PM, Gato337 wrote:

    ^^^ result of powerful agribusiness lobbies

    *FACEPALM*

  • Report this Comment On November 22, 2011, at 2:48 PM, TMFCheesehead wrote:

    @Gato337-

    Same thing happened with ketchup back in the 1980's

    Brian Stoffel

  • Report this Comment On November 22, 2011, at 10:46 PM, CaptainWidget wrote:

    I didn't really catch a takeaway? End food subsidies? Reign in the scope of patent law and intellectual property? Socialize the food industry? Appoint a central planner to determine how much food, money, and resources each american business is allowed to posses???

  • Report this Comment On November 25, 2011, at 5:21 PM, gamblegold wrote:

    i'm sorry but this really isn't a very good article from several different standpoints -- not the least being that its intellectual wanderings border on vacuous and its logic is . . . er, well kinda none existent.

    you attempt to make connections here between business and personal health. i don't disagree that you can have that as your personal feeling but your clear lack of science knowledge makes you an unqualified spokesman for the points you attempt to make. which, quite frankly, mostly elude me.

    some of the things which strike me particularly oddly was the apparent interchangeable use of the words total assets, cash, deposits which, to my understanding, quite different things.

    your two charts at the beginning make no sense since they do not provide the same quantitative data examination and do not display the same information in the same way (thus making easier for people to grasp the comparison you seem to be attempting). you did not, e.g., show the relative change in assets held by the none-big-four banks.

    you did not make a case for why this is inherently bad. OWS movement, so far as i can understand the nearly meaningless gibberish pulsating from the media, is as much about excessive salaries/benefits to a very select few who are, in essence, not answerable to anyone for the pathetically poor jobs they do.

    the supposed facts you cobbled together to support your agribusiness thesis, even if they are accurate (and i suspect some aren't) don't add up or really tell us anything about why those things are inherently bad -- particularly since these corporations don't mediate their business risk with financial derivities of their own making.

    none of that has ANYTHING to do with the average american's diet. you may eat mostly corn but don't speak for me or nearly anyone i know. and, by the way, sugar is sugar -- do you know where most of the other sugar comes from in your diet? and NONE of that has anything whatever to do with investing.

    i'm fine with TMF having a relatively positive spin on OWS. but this article strings together unrelated things exercising poor logic and reasoning skills to draw conclusions that are not supportable by anything other than the author's ill-informed opinions.

    that's not what i participate in TMF for . . .

  • Report this Comment On November 25, 2011, at 5:54 PM, DJDynamicNC wrote:

    @mm5525 "It's time for the people who love the OWS "movement" to offer solutions and ideas rather than just pointing out monopolies and inequality. Monopolies have been around much longer than the board game. Diversity is great. Tell us how to accomplish it. You told us "why this is a problem" but where is the sub-heading "how to fix it?"

    1) We've actually made numerous suggestions for how we think society could be improved, ranging from re-instating Glass-Steagall regulations to a financial transactions tax to appropriate capital gains and estate tax levels to credit union endorsement and so on.

    2) There are people whose job it is to manage the global economy. You get upset that the Occupy movement isn't offering solutions (even though it is), and yet you seem to blithely accept the titans of Wall Street crashing the economy and getting off not just without punishment but in many cases with golden rewards. Basically, you're mad at Occupy for not doing Lloyd Blankfein's job.

    3) Pointing out the problem is the first step to EVERYONE contributing to the solution. Even if we weren't proposing any solutions - and again, we absolutely have been, if you've been listening - we've certainly gotten people talking about it. It wasn't that long ago when the only debate in nation was over how much to cut taxes on the wealthy and cut services for everyone else. An oligarchy of wealthy elites is about as un-American a system as you could ever think to achieve, and yet the only debate we had going was over how much richer we should make them with our own productivity. That's changed now. And we will ensure it stays that way.

  • Report this Comment On November 25, 2011, at 5:56 PM, DJDynamicNC wrote:

    As to the article - very interesting piece. I quite enjoyed it. I consider myself a high information person when it comes to food and diet, but there was a lot in here I didn't know, so thanks for that!

  • Report this Comment On November 25, 2011, at 7:25 PM, mm5525 wrote:

    DJDynamic, I don't accept "the titans of Wall Street crashing the economy and getting off not just without punishment" but apparently your little OWS "movement" does because otherwise they'd have been protesting in the right places - not just Wall Street, but also Washington DC outside the SEC and our Justice Department. Might as well throw in the "titans" over at Fannie Mae and Freddie Mac, too, and for good measure the Federal Reserve. There were plenty of bad actors in this play. Yet the OWS "movement" gives the public sector a free pass. The rating agencies are not even mentioned by the OWS "movement" either, even by you.

    That's strange, I never saw those guys banging drums ever mentioning bringing back Glass-Steagall and the other things you mentioned, and even if they were, there are far more productive ways to get your point across other than destroying private property and causing distruption to local businesses. Perhaps occupying a voting booth would be a start.

    Where did all those protesters of that "movement" go anyway? Once municipalities were tired of this wandering crime-ridden movement with no directional point other than general malaise and discontent, the protesters got kicked off private property. What happened after that? Did they just go back home for Thanksgiving and back to living in their parents' basement?

    Our MSM media and other sypathizers are so sad this "movement" ended with a thud. I'm sure the big union money will do it's best to bring them out of hibernation sometime when it's warm enough to sit in a tent and complain about the world not being fair.

  • Report this Comment On November 25, 2011, at 9:21 PM, TMFCheesehead wrote:

    @gamblegold-

    Your point about the two charts not matching up is well taken. The fact is, back in 2001, they included all banks with over $100 million in assets, but by 2011, it was all banks with $300 million. The jist is still there, but to make a pie chart that showed the same thing wouldn't have been accurate, so I chose instead to just show how much the assets have grown.

    The connection between business and health is very clear. I suggest watching Food, Inc, Forks Over Knives, or any number of documentaries now available. It's estimated that over half of the food the average American eats is somehow a derivative of corn--including much of the meat we eat, since the animals are fed corn instead of their natural diet.

    Further, there certainly are differences between banks taking big risks with derivatives and big agribusiness. However, big agribusiness holds an enormous amount of the land we use for food, and I would argue that's an even bigger valuable resource than money.

    Brian Stoffel

  • Report this Comment On November 25, 2011, at 9:21 PM, TMFCheesehead wrote:

    **PS** "They" in the first paragraph is the Federal Reserve.

  • Report this Comment On November 26, 2011, at 2:05 AM, NOTvuffett wrote:

    Mr. Stoffel,

    I believe there are some things to be concerned about in the ag-business sector:

    1. The small number of players in the seed business could result in insufficient genetic diversity, so a failure of one particular hybrid could have catastrophic consequences.

    2. ADM's control of a significant portion of corn production means they have politicians of all stripes in their back pockets. This means it will be hard to defeat any legislation that directly benefits them at the expense of others.

    Why do residents of the USA pay much more for cane sugar than people in other countries? To protect the producers of cane sugar from cheaper foreign imports.

    I haven't seen any compelling study on why fructose would be worse for you than any other sugar.

    If the USA is going to insist upon the truly asinine policy of ethanol content for motor fuel, why does it put a fairly large tariff on imported ethanol from Brazil? (many studies have been done that show little to no to even negative energy gains from the conversion of corn into fuel)

    Having said all that, I must take exception to your point about the banks. gamblegold made a good point: "some of the things which strike me particularly oddly was the apparent interchangeable use of the words total assets, cash, deposits which, to my understanding, quite different things." These are not interchangeable terms. Furthermore, you make the assumption that measuring by this ill-defined metric proves your thesis. I would like to see figures on equity, in inflation adjusted dollars with the mark-to-market rules in place.

    The large banks were also basically forced to acquire the banks with untenable assets. I was an investor in WFC for example, and I thought there was a good case to be made for their acquisition of Wachovia, not for immediate gain but positioning for the future. I traded in and out several times and made good money, but I finally gave up on bank stocks. Their balance sheets are totally opaque and their bottom lines depend on the fickle winds of Washington and beyond.

    One last point, I think in the end few of the regular folks will be impressed with the OWS cause.

    Sorry that I went on for so long, lol.

  • Report this Comment On November 26, 2011, at 7:35 AM, jasenj1 wrote:

    "they'd have been protesting in the right places - not just Wall Street, but also Washington DC outside the SEC and our Justice Department."

    They are protesting all across the country in various cities. They are protesting where people already are, and they are protesting where cameras will cover them. Certainly there are other places they could also be protesting, but it started at Wall Street to protest the corruption and collusion that symbolically originates from there.

    I agree that the OWS protestors are a mix of ill-informed, dirty hippies, and have shot themselves in the foot quite a bit by not being orderly, flag waving, clean shaven folk like the Tea Party. But that does not make their core message invalid. It is the same core message as the Tea Party: Greed has corrupted our political system.

    My suspicion is that if you interviewed random Republican and Democrat devotees, they'd be just as ill-informed as many of the OWS people we've seen on TV. But where are the informed OWS folks? Why haven't the coherent ones been given screen time?

    http://www.guardian.co.uk/commentisfree/cifamerica/2011/nov/...

  • Report this Comment On November 26, 2011, at 10:22 AM, TripleEFocus1 wrote:

    Great article Brian. That your article sparked so much polarized conversation validates the fact that balance is missing in our economic and political system. If OWS begins our return to balance then they will have served the nation best. In this regard Alyce Lomax's Rising Star portfolio with it's emphasis on sustainable companies leads the way: focusing on building Economic Capital, Social Capital and Natural Capital simultaneously. Fool on all. TMF is the best!

  • Report this Comment On November 27, 2011, at 9:37 AM, seekthetruth wrote:

    Thank you for a great article. Equating agribusiness' monopolization with that of the financial institutions is very apt. Consumers need to get educated; greed will cause these few companies to cut corners and produce foods that are worthless and detrimental to our health -moreso than they have already!

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