On Monday, April 20, 2020, the price of crude oil went negative. The Coronavirus pandemic had all but stopped international demand, and people with excess supplies of oil on their hands were paying $37.63 a barrel for someone else to take it.
Yikes! What a catastrophe, especially if, like a lot of small-scale oil drillers, you did not have a big supply of cash on hand to ride out what everyone knew was a temporary petro-jam.
On the other hand, for big oil companies, for big-time capital investors in the energy industry, the negative price for oil was a great opportunity. They had the cash reserves or the ready sources of investment capital to buy out the small-timers caught in the squeeze.
The net-net of negatively priced oil? In a word — consolidation. The number of independent operators in the oil business went down and, in the classic paradigm of capitalism asserted itself, the rich got richer and the poor got lost.
This pattern, what a lot of small retailers on America’s Main Streets used to call Wal-Mart-ization, became, during the lockdowns and social restraints of the pandemic, the Amazon-ification of everyday commerce. Brick and mortar business crumbled as the wave of online-business struck.
Economies of scale, backed by bankrolls of credit enable mega-companies to roll with the punches of up-and-down economies that can knock out less favored competitors. Sometimes, those punches come from outside sources, like the pandemic, but sometimes, the blow that knocks out the small fry is actually initiated by the big winners.
When it comes to food supplies in America, the last 40 years have been a stormy sea for family farmers, ranchers, and dairymen and women. The rise of corporate entries into the foodstuff competition has produced greater efficiencies and, often, for consumers, lower prices. But one after the other, producers of beef cattle, pork and chicken have seen the corporate giants lower their prices — if not into literally negative numbers — to levels too low to keep cash flowing to those who need it.
The same phenomenon has hit the dairy industry, with the same result: a few big corporate producers have been buying up family-sized farms and incorporating them into industrial-scale operations.
Sometimes, selling out is just one of two options corporate farms offer. When Riverview, a huge and growing beef, dairy and feed-farming company wanted to buy up a Minnesota dairy farmer’s smallish outfit they said he could keep his property by partnering up with them. Riverview would buy the farmer’s corn for feed, and sell manure to him as fertilizer. But the farmer found two faults with the offer. “You’re not paying enough for the [feed],” he said. “and you’re charging too much for the manure.”
He’s holding onto his land, but he expects to be the last generation of his family to do so. As Sonny Perdue, Donald Trump’s Secretary of Agriculture summed it up. “In America, the big get bigger and the small go out.” You can bet, he smiled as he said it.
Tony Davis is the environmental reporter for the Arizona Daily Star. He’s been covering the environment in the Southwest since 1981, minus 2 years, 10 months in the Pacific Northwest. He and Debbie Weingarten recently completed an excellent investigative report on Riverview and its impact on neighboring farms and communities in Arizona and Minnesota.