ATLANTA — Two American food supply companies are now a source of concern for Georgia’s top farming official.
Georgia Agriculture Commissioner Tyler Harper wants the U.S. Department of Justice and the Federal Trade Commission to investigate Sysco and Restaurant Depot in an anti-trust action over their potential merger.
Harper wrote a letter to federal officials highlighting his “significant concerns over Sysco’s growing market share, increasing consolidation in America’s food supply chain, rising costs for American consumers and the involvement of private equity firms.”
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The merger was announced by Sysco at the end of March.
Harper said the merger is an example of a “troubling trend of corporate consolidation in the agriculture industry and food supply chain.”
He said mergers like the one proposed between Sysco and Restaurant Depot “squeeze American farmers” and limit options for supply chain services.
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“This proposed acquisition will dramatically reshape America’s food supply chain, making it more fragile and increasing costs on American restaurant operators and their customers,” Harper said in a statement. “American consumers cannot absorb another price shock in our food supply chain.”
According to the Agriculture Department, “decades of mergers” have had large impacts on farming and the supply chain across the United States.
As examples, the department said:
- 4 largest equipment manufacturers control 51% of market
- 4 largest US meatpackers control 85% of market
- 7 retailers control 70% of crop input, sale services
- 4 companies control 62% of agrichemical market
- 2 companies control 90% of American corn, soybean and cotton trait acres and cotton seed genetics
In his letter to federal officials, Harper said Sysco alone controlled almost 20% of the food service market, even before the proposed merger.
Harper said he was also concerned with the role private equity companies are playing in the merger.
While Sysco is a publicly traded company, its largest shareholders include BlackRock and Vanguard, both of which are private equity firms. Restaurant Depot is privately owned, according to state officials.
Harper also cited the impact of private equity on the American housing market as cause for concern over the impacts to the agriculture and supply chain industries, if the merger happens.
“America’s food supply chain is an essential part of our nation’s national security, it is not a profit center for private equity firms to maximize,” Harper stated.
Channel 2 Action News has reached out to Sysco for a response.
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