Concentrated Industries:Chicken/Eggs.Ammunition

These industries that have few competitors & high cost of entry. Decades of lax antitrust enforcement allowing large firm to buy out smaller competitors concentration the industries into few hands. Those few hands colluding to keep production don to dive profits higher with little fear of new entrants into their industries. There really only 2 major firm in chicken/egg business & the same number in ammunition business. And those 2 firms set the prices in their industry by limiting production capacity.

https://mattstoller.substack.com/p/concentrated-firepower-wh…

Chris Leonard wrote about Tyson Food’s control of the poultry business, and how during the financial crisis this meant the entire industry could raise prices by all cutting production at once.
"Tyson cut its production by 5 percent in December. Around that time, the industry as a whole was estimated to have cut back the placement of new eggs between 6 and 7 percent.

In a matter of weeks, the price of a boneless, skinless chicken breast rose by about 20 cents, according to an industry estimate. Within a short few months, Tyson’s chicken business was profitable again.

What was remarkable about this plan was the fact that Tyson executives could even consider it. Decades of lax antitrust enforcement allowed Tyson Foods to buy most of it competitors, giving executives at company headquarters the ability to control production on thousands of farms and dozens of major poultry plants across the nation. In 2008, Tyson Foods and its competitor Pilgrim’s controlled more than 40 percent of the national market. The third-biggest company controlled just 8 percent."

If meat-packers were doing this fourteen years ago, then what is happening in the ammunition industry shouldn’t be a shock. Vista and Olin, in other words, are following the legal framework laid out more than a decade ago. In fact, we can see that within the ammunition industry itself, since Olin is more a chemical conglomerate, and its ammunition division is something of a sideshow. But that firm’s leaders are also excited about margins and price increases across their whole suite of products.

3 Likes

Tyson just got hit with a $99 million dollar fine recently:https://news.bloomberglaw.com/antitrust/tyson-pilgrims-other…

Cost of doing business.
https://www.nwaonline.com/news/2020/nov/17/tyson-posts-692m-…
For the past year, Tyson reported a gross profit of $2.14 billion compared with $2 billion in the twelve months that ended in 2019.

Just like JP Morgan. A dated listed of fines levied against the bank:https://www.usatoday.com/story/money/business/2013/10/19/jpm…

The same goes for big Pharma:https://en.wikipedia.org/wiki/List_of_largest_pharmaceutical…
https://projects.propublica.org/graphics/bigpharma

Just so many rogue underling employees that CEOs are afflicted.

3 Likes