Windfall Profits for Big Food: Where's The Outrage?

As Food Prices Spiral, Farmers, Others Profit

WILLMAR, Minn. (AP) — The steepest run-ups in food prices since 1990 are hurting grocery shoppers, restaurants and school cafeterias but they're making others rich.

The winners in the new food economy include crop farmers selling corn and wheat for near-record highs after years of crushingly low prices. Ingredient makers like Cargill and ADM (ADM) are rife with profits. Fertilizer and tractor companies are cashing in.

Profits at seed and pesticide maker Monsanto Inc. (MON) reached nearly $1 billion last year — a 14-fold increase since 2003. They've tripled to $1.1 billion at agrichemical maker Syngenta (SYT) and agriculture divisions of DuPont Co. (DD) and Dow Chemical Co. (DOW) have also seen their earnings balloon. Cargill, which makes ingredients, boosted its profits to $2.3 billion, up nearly six-fold since 2001. Meanwhile, profits at agricultural processor Archer Daniels Midland Co. have more than quadrupled to $2.16 billion during the same period.

Question: Why don't the "obscene, windfall profits" of Big Food get the same attention as the profits of "Big Oil?" Where are the Congressional hearings and proposals for windfall profits taxes on Big Food? After all, the increase in profits for major food companies from 2005 to 2007 are ridiculously and obscenely higher than the paltry 12% increase in profits for Exxon Mobil (XOM) (see chart above).

Comments

[Gary Lucido]

I've been wondering exactly the same thing. Not only is there no outrage in congress but they just voted these guys another $307B of subsidies.

[redbaron]

Great article, and spot-on exactly correct. Our energy future is going to expand beyond oil and natural gas, but not in time to do anything meaningful about near-term future consumption of those products. Why beat up on 'big-oil' so severely, when we are going to near all the 'big-oil' supplies we can muster up. And at the same time, ignore 'big-Ag'.

[redbaron]

make that..........'when we are going to need all the big-oil supplies'.......note to self.....'proof read before posting'.

[Patriot`]

What? Large Profits? In America? I think we should all aim to fail. Just like the liberal Dems want us to. And they aren't doing so bad at it lately themselves. Take it to the convention Hillary, you crazy b#%4h.

[spoogeman]

Outrage fatigue.

[Georealist]

Interesting observation...the answer, of course, is that Congressional hearings would place legislators in a very dicey position...they were the ones mandating ethanol production increases...and the severe demands of corn crops has placed cascading problems on almost every imaginable foodstuff. Fertilizer...crop choice...animal feedstock..name it.
As for the oil execs..they should have told Congress to stick it! If someone wants to point fingers and blame then at least have the guts to start with those that control 80% plus of the world oil..National Oil Companies...of which I most certainly include Russia's Rosnft...See what kind of crap Putin takes under questioning....

[matthutch]

Answer: constituencies.

[PAPPY7]

The KEY word in this discusion is "barrel", as in "whoever has you over one will stick it to you" whether oil co. banker or farmer,etc. Everybody will maximisr profit when given a chance.

[europeaninvest]

great article!!!!!!!!!!!!!!!...

[CarlosSlim]

"Windfall Profits for Big Food: Where's The Outrage?"

Nowhere.

These people have no shame, whosoever.

They will repeat any lie.

They will "bear false witness against their neighbors" time and time again.

No sir, the only outrage they feel is if the GOP tells them to believe some propaganda talking point.

They have absolutely no problem with borrow-and-spend $3 trillion on a war based on lies.

Lies? What lies? They have no clue.

When the "dirty hippies" said back in 2000 that it would NOT be a good idea to let two OIL men run our country--there was no outrage.

What could possibly go wrong? They will surround themselves with "smart" people, they said.

You're just being a "boy who cried wolf".

"The sky is falling" they laughed, again and again.

Funny...when they fill up their F-350 trucks and SUVs, I don't hear them laughing now.

[TERN]

Nowhere in America.

[tbird]

If you are going to talk about profits,let's talk about the Government. When diesel is 5.19 a gallon like it is in California the Federal Excise is .244 cents State Excise is .18 cents and .0795 sales tax. That is eighty cents a gallon and no exspenses to pay. That is absurd.

[Brian Pursley]

Big Government taxes people at over 33%. Where's the outrage?

[sandhillbc]

Does no one understand that while crop prices have doubled for the "rich farmers", they rely on companies like Monsanto, Deere,etc. for their supplies which, as the article says, are quadruple or more profits. They, too, are paying $5 for diesel, and double for fertilizer and seed. Cattle prices are lower than 2 years ago, but feed for them is double. Farmers and ranchers in general are not corporate, and most of their subsidies come not from the government, but from jobs that furnish health care, etc. for the family. Some are even lucky enough to live in an area where they can work in the oil industry as an extra source of income. Good luck if we ever have to import all our food. These food prices will look pretty cheap then.

[Stocksraider]

This is a silly comparison. Had a company got a one penny a share of earnings in 2005 and 20 in 2007, this would be 2000% increase. Exxon was already printing money in 2005 and has just kept on doing it. Look at margins, look at actual profit compared to sales

JJ

[Georealist]

Red Baron..Try something with substance..if possible. Note..remember to capitalize..am sure you learned this in your last school year..6th grade.

[Georealist]

So Stockraider..your point is?? Exxon doesn't print money..they earn it. The next time they drill a $150 million dry hole maybe they can come to you for assistance? Of course..whiners like you can hardly cover filling up...

[nukldrager]

PAPPY7 says it all. Human nature. This outrage seems to come from some kind of utopian fantasy. Situational ethics. Why isn't there more and continued outrage at the bankers and CEO's and insiders that profited from the mess they created. And the government for allowing it, and even financing it. I think the barrel theory holds water.

[rentaprogrammer]

Wipe out the competition (little farmers) through legislation and subsidies for the corporations and you have exactly what the "people" (the ones whom elected the corrupt politicians) want.

Is along as we keep pulling the D (for dumb) and R (for dumber) levers, we'll continue to get the shaft.

[ussmls7]

All those that blame this & that for this crap, just look in the mirror! These lifers in Congress,know what they are doing, they have been doing it to Americans sence they failed the people in 1913, when the Federal Reserve was made Law, sence then,the same cycle repeats it;s self! There only one way to for real free markets, vote every incombent out, untill, we get a Congress that will go to back to the Founding Fathers Intent, It;s posted at Goldseek.com, read it, then I bet only a few would be willing to do the right thing!
Then If you want to really get sobered up, read former Governor Dick Lamm speech to a group in DC, How to Destroy America, A Suicide of America.
This Nation has been foolish, this Cap & Trade S.2191 has a fraze in the tilte(and For other Purposes) leaves a opened door for Trillions in Tax increases,Trade restrictions,that only benifits Congress itself, both partts will explote it & we will pay for it! Vote out all,but the Few,that up-hold the true Constitution,untill then, nothing will be changed!

[Brighteyes]

In this capitalist environment, someone with a good Idea can invent a product, and market it at any price he/she wants and the market will decide if it is too much or not. you do not have to buy $4 gas if you do not choose to; but the point is if you do buy $4 gas it is because it is worth it; not having to walk or take a bus. Having said that, The problem is you and me, and all the people around the world who choose to stop for gas. The congress or the president don't make you buy gas nor do the oil companies or the filling stations. In fact all of the blame-es are not responsible and that includes China, Chavis, Puton, General Motors or the food growers; It is us. We maybe don't like the effects of our decision but nobody asked us to like it. And increased food prices are the same thing. I remember the president's State of the Union address that suggested we stop our addiction to oil and everyone cheered and clapped at the idea of using Ethanol as an alternative source of energy.

Instead of grousing at this guy or that guy, why don't we just stop buying. Then the price will go down, that is if the people in China don't think it is more valuable than the price at which we stpped buying and then the price will likely go higher still.

I like this capitalistic system and that is why Iam over weight in oil investments. I don't mind if oil continues to rise, I paid double $4 in Europe.

[gashouse gorilla]

You guys blaming "liberal Dems" are overlooking GOP involvement. Dems don't "want America to fail". If you say nonsense like that, you're as bad as any liberal who makes dumb statement about Republican motivations.

The political divide does not stem from motivations. With the exception of 1% outliers, everybody's motivations (at least in the constituency) are pretty good. The differences in policy recommendations stems from different perceptions. Or, in the case of government, special interests lobby them for handouts. Members of both parties sign up for this, too often for *anyone's* tastes.

Let's not presume the worst of each other over the failings of some of our "leaders". Let's not be assh*les to each other.

More germane to the post, this myopia over "Big Food" and -- my personal favorite -- "Big Water" profit margins has nothing to do with "Dem" or "Rep". For example, I'm a liberal and I think oil company margins are just fine. Indeed, I don't like the constant tinkering with the tax codes, because a shifting regulatory/tax framework makes it more difficult to raise capital to invest.

[User 161128]

Congress doesn't have to investigate the source of excess profits for food
producers; they already know the culprit- themselves. They're not worried however, because the secret is Exxon doesn't vote to reelect Congress, but farmers do.

[rentaprogrammer]

User 161128,

What farmers vote? Are you talking about the 3-4 CEO's of the corporations that benefit from subsidies? Or the millions whom lost the family farms to corporate influence, lobbying, legislation and subsequent foreclosure?

[salty]

Re:rentaprogrammer comment
The farmers vote that counts is the CEO's of the corp's who bribe the congress with big $$. Majority of little farmers are just running around trying to survive on the crumbs. Most who are surviving also have day jobs somewhere else. But the MSM still call it a "Farm Bill" because they wouldn't know a cow from a bull.

[carlivar]

No one must get any profits! How dare anyone be successful! That's not FAIR. What? It doesn't say "fair" anywhere in the Constitution? Oh.

[rentaprogrammer]

carlivar,

I can give the government a better ROI. Give me $300B in subsidies and I will post a $299B profit (after overhead).

Profits are fine, but not at taxpayer expense. What happened to capitalism?

[Small town boy]

About 1/3 of those subsidies are used for food stamps to support the welfare program.

I know several farmers and unfortunately they are not much better off today than they were when prices were half the price. All their costs of fuel, equipment, rent, fertilizer, and everything else have doubled or tripled. They have no guaranteed income if the weather destroys their crop other than a small amount of relief from this subsidy program which is spread across the entire country.

If you want to truly point fingers at higher food costs, go directly to the food companies and retail stores. 1 box of cereal has about 17 cents worth of grain in it and it costs you $3.