Structural Changes in the U. S. Grain Marketing and Processing Sector throughout the 1980's

Abstract

The U. S. grain marketing and processing sector has been under the significant structural changes throughout the 1980's. One of the general conditions which commenced and has been directing these changes is that the expanding investment stimulated by the grain export boom in the 1970's went into the excess capital. Another is the expansion of the grain processing industries in contrast with the shrinking export and its increasing importance within the whole sector. These changes has been implemented through the 4th merger and acquisition wave of the U. S. capitalism as well as stimulated by it. The M & A movement in the grain sector has been led by the large diversified agri-food businesses. This movement included the gain of the oligopolistic market share within each industry by acquisition of the exsisting mid-size or even large firms on the one hand, and the withdrawal from certain industries where they could hardly expect any advantage of the growth, the high profitability, or the oligopolistic marketshare on the other hand. The results are the formation and the strengthened status of the vertically integrated and diversified grain firms which became less in number. And they have got the core position among the larger market share both in each marketing stage and in each processing industry. Fundamentals of the distributing grain marketing system are finally wiped out by this process, and the transition toward a new system is being urged. That is, the intermediate wholesale commerce as an independent stage is shrinking totally or partially and its function is now replaced by other forms of vertical coordination between entities within each firm or each group of firms. The changes throughout the 1980's can be recognized as the transition process toward the vertically organized grain marketing system based on higher concentration in each marketing stage.