The Chokepoint Companies

In 2020, more than 400 companies that had publicly committed to eliminating deforestation from their supply chains by 2020 missed the deadline.¹ They did not miss it narrowly. Most had made no measurable progress. The pledges, announced at climate summits and sustainability conferences and printed on corporate responsibility reports, turned out to be exactly what the companies’ critics had said they were: public relations instruments with no enforcement mechanism, no penalty for failure, and no structural connection to the procurement decisions that actually determine whether forests stand or fall.

The pledges failed for many reasons. But the most important reason is structural, and it has less to do with the companies that made the pledges than with the companies that did not. The global food system is organized around a small number of corporate chokepoints: firms that control the trading, processing, and distribution of commodities at such scale that they effectively determine the terms on which food is produced. These firms did not make zero-deforestation pledges, or made them in qualified form, or made them and did not comply. Their market position means that the pledges of downstream companies (consumer brands, retailers, restaurant chains) are functionally meaningless unless the chokepoint firms cooperate. And the chokepoint firms, for the most part, have not cooperated.

This is the architecture of the global food system. It is not an accident. It is the product of specific policy choices, made over decades, that permitted and encouraged the concentration of market power in a small number of firms. Understanding those choices is necessary for understanding why the world’s forests continue to burn.

The grain traders

The global grain trade is dominated by four companies known collectively as the ABCD traders: Archer-Daniels-Midland (ADM), Bunge, Cargill, and Louis Dreyfus Company.² Together, they control an estimated 70 to 90 percent of the global trade in grains and oilseeds, including wheat, corn, soybeans, and palm kernel products. The range of the estimate reflects the opacity of the market; these are private or partially private firms that disclose limited information about their trading volumes.

Their dominance is not limited to trading. The ABCD firms operate port terminals, rail networks, shipping fleets, storage facilities, and processing plants. They finance producers. They provide crop insurance. They operate in futures markets, giving them advance visibility into supply and demand conditions that their competitors and customers do not have. They are, in the precise sense of the term, vertically integrated: they control the commodity from the farm gate to the export terminal, and in many cases beyond.

Cargill is the largest privately held corporation in the United States.³ Its annual revenue exceeds $150 billion. It operates in 70 countries. It is the largest cocoa processor, one of the largest beef processors, one of the largest animal feed producers, and one of the largest soybean crushers in the world. It has been linked by Mighty Earth, the environmental organization, to more than 60,000 hectares of deforestation in South America, primarily through its soy and beef supply chains.⁴

The deforestation linked to Cargill is not primarily driven by direct land clearing by Cargill employees. It is driven by the procurement relationships that Cargill maintains with producers who clear land. Cargill buys soybeans from farmers in the Brazilian Cerrado and Amazon regions. Those farmers expand their operations by clearing forest and savanna. Cargill does not hold the chainsaw, but it provides the market that makes the clearing profitable.

The company has made sustainability commitments. It pledged in 2014 to eliminate deforestation from its supply chains by 2020. It missed the deadline. It revised the pledge. It continues to source from regions where deforestation is accelerating.⁵

The other ABCD traders operate similarly. Bunge, which is publicly traded and headquartered in St. Louis, has been identified by Forest 500 (a project of the Global Canopy initiative) as one of the companies with the weakest deforestation policies relative to its exposure to deforestation risk.⁶ ADM has expanded aggressively into South American soy markets. Louis Dreyfus, the most private of the four, discloses the least and faces the fewest external accountability mechanisms.

The meat processors

The concentration in meat processing is, if anything, more extreme than in grain trading.

In Brazil, three companies process approximately 70 percent of the country’s beef: JBS, Minerva Foods, and Marfrig Global Foods.⁷ Brazil is the world’s largest beef exporter. Its beef industry is the single largest driver of deforestation in the Amazon basin and the Cerrado, the biologically rich tropical savanna that has lost nearly half its native vegetation to agricultural expansion.

JBS is the largest meat company on Earth. Its annual revenue is approximately $26 billion. It operates in more than 20 countries and processes beef, pork, and poultry at a scale that no other company approaches.⁸ It supplies major global brands, supermarkets, and fast-food chains.

JBS’s history includes multiple corruption scandals. In 2017, the company’s controlling shareholders, Joesley and Wesley Batista, were implicated in a bribery investigation that involved payments to more than 1,800 politicians, including multiple Brazilian presidents.⁹ The investigation, part of the broader Lava Jato (Car Wash) corruption probe, revealed the extent to which JBS’s market position was built not only through commercial skill but through systematic corruption of the political institutions that were supposed to regulate it.

The company has also been repeatedly linked to deforestation in the Amazon. A 2021 investigation by Repórter Brasil and the Bureau of Investigative Journalism found that JBS purchased cattle from ranches that had been established through illegal deforestation, including ranches in protected areas and indigenous territories.¹⁰ JBS has implemented a satellite monitoring system for its direct suppliers, but the system does not cover indirect suppliers (the ranches that sell cattle to intermediaries, who then sell to JBS), a gap that accounts for a substantial portion of the company’s deforestation exposure.

In the United States, beef processing is similarly concentrated. Four companies, Tyson Foods, JBS (through its subsidiary JBS USA), Cargill, and National Beef Packing Company, control approximately 85 percent of the U.S. beef market.¹¹ This level of concentration, often referred to as the “Big Four” of meatpacking, has been the subject of antitrust scrutiny, congressional hearings, and producer complaints for years. The concentration depresses the prices paid to cattle ranchers, elevates the prices paid by consumers, and allows the four companies to capture a disproportionate share of the value in the supply chain.

The Packers and Stockyards Act, passed in 1921, was designed to prevent exactly this kind of concentration in the meatpacking industry.¹² The law prohibits unfair, deceptive, and anticompetitive practices in the buying and selling of livestock. It has been weakly enforced for decades. The Department of Agriculture, which administers the Act, has brought few significant enforcement actions against the major packers. The concentration has increased steadily, from roughly 36 percent (four-firm share) in 1980 to 85 percent today.

The palm oil bottleneck

Palm oil is the most widely consumed vegetable oil in the world. It is found in approximately half of all packaged products in a typical supermarket, from processed foods to cosmetics to cleaning products.¹³ Global production is concentrated in Indonesia and Malaysia, where oil palm plantations have replaced millions of hectares of tropical rainforest.

The trading and processing of palm oil is dominated by a small number of firms. Wilmar International, a Singapore-based company, controls approximately 45 percent of the global palm oil trade.¹⁴ The company operates refineries, plantations, and distribution networks across Southeast Asia, Africa, and China. Its market position gives it extraordinary leverage over the terms on which palm oil is produced and traded.

Wilmar adopted a “No Deforestation, No Peat, No Exploitation” (NDPE) policy in 2013, the first major palm oil trader to do so. The policy was widely celebrated by environmental organizations as a potential turning point for the industry. The implementation has been uneven. Monitoring by organizations including Greenpeace and the Rainforest Action Network has identified ongoing sourcing from suppliers linked to deforestation and peatland destruction.¹⁵ The gap between policy adoption and supply chain compliance is characteristic of the palm oil sector, where the fragmentation of production (millions of smallholders alongside large plantations) makes full traceability extremely difficult.

The palm oil chokepoint is significant because it determines the environmental impact of an entire commodity chain. If Wilmar enforces its NDPE policy rigorously, the incentive structure for millions of producers shifts toward sustainability. If it does not, the incentive structure rewards land clearing. A single corporate procurement decision, made in a Singapore boardroom, has more effect on deforestation in Borneo than any number of consumer boycotts, NGO campaigns, or government regulations that lack the enforcement capacity to monitor millions of hectares of tropical forest.

The soy-deforestation link

Soybeans are the connective tissue between the grain traders and the meat processors. Approximately 80 percent of global soybean production is used for animal feed.¹⁶ The global appetite for meat, and particularly for industrially produced poultry and pork (which are fed soy-based rations), drives soybean demand, which drives land clearing, which drives deforestation.

Brazil is the world’s largest soybean exporter. The expansion of soybean cultivation in Brazil has been the primary driver of deforestation in the Cerrado and a significant contributor to deforestation in the Amazon. The Amazon Soy Moratorium, agreed in 2006 by major traders and the Brazilian government, has been partially effective in reducing soy-driven deforestation within the Amazon biome itself.¹⁷ But it has not been extended to the Cerrado, which has lost approximately 50 percent of its native vegetation, with the pace of conversion accelerating in recent years.

The ABCD traders are the primary purchasers of Brazilian soy. Their procurement decisions determine whether soy produced on recently deforested land enters the global supply chain. If they refuse to buy soy from deforested areas, the economic incentive to clear land diminishes. If they buy without discrimination, the clearing continues.

The traders have resisted binding commitments on Cerrado soy. They have argued that a cutoff date for land clearing (the mechanism used in the Amazon Soy Moratorium) would be economically disruptive, would penalize farmers who cleared land legally under Brazilian law, and would require monitoring and verification systems that the traders are unwilling to fund. These arguments are not without merit, but they are also not without self-interest. The traders profit from cheap soy. Soy is cheap, in part, because the land it is grown on was acquired by clearing native vegetation, a process that transfers the ecological value of the landscape into the commodity price without compensating the public for the lost ecosystem services.

The financial architecture

Behind the chokepoint companies sits a financial architecture that enables their operations: the banks, asset managers, and investors that provide the capital for commodity trading, processing, and production.

The Forest and Finance database, maintained by a coalition of environmental organizations, tracks financial flows to companies linked to deforestation.¹⁸ The 2023 edition found that financial institutions had earned approximately $26 billion in revenue from financing companies with significant exposure to tropical deforestation, including the ABCD traders, JBS, and major palm oil firms. The largest financiers are global banks and asset managers headquartered in the United States, Europe, and East Asia.

The financial flows are not hidden. They are documented in corporate filings, bond prospectuses, and lending records. The banks that finance JBS know that JBS has been linked to deforestation. The asset managers that hold shares in Cargill (to the extent they can; Cargill is private) know Cargill’s sourcing record. The information is available. What is lacking is not information but consequence. The financial returns from commodity trading are sufficiently large that the reputational and regulatory risks of financing deforestation have not, to date, outweighed the financial incentives.

This is beginning to change, slowly. The European Union’s deforestation regulation, which entered application in 2024, requires companies placing certain commodities (including soy, beef, palm oil, cocoa, coffee, rubber, and wood) on the EU market to demonstrate that those commodities were not produced on land deforested after December 31, 2020.¹⁹ The regulation applies to importers and traders, meaning that it reaches the chokepoint companies directly. Compliance requires traceability systems that link specific shipments to specific production sites.

The regulation is significant because it is the first major market-access rule that ties deforestation to trade. Its effectiveness depends on implementation and enforcement, both of which remain uncertain. But its existence changes the calculus for chokepoint companies: the cost of sourcing from deforested areas now includes the risk of losing access to one of the world’s largest consumer markets.

The antitrust dimension

The concentration of the global food system is not a natural outcome of market competition. It is the product of policy choices, and specifically of the decline in antitrust enforcement that has characterized the United States and, to a lesser extent, the European Union since the 1980s.

The Chicago School of antitrust economics, which became the dominant framework for competition policy beginning in the Reagan administration, held that the primary goal of antitrust law should be consumer welfare, measured primarily by price.²⁰ Under this framework, mergers and acquisitions that did not demonstrably raise consumer prices were presumed to be efficient and therefore permissible. The framework did not consider the effects of concentration on producers (farmers and ranchers paid less for their products), on workers (meatpacking wages declined as concentration increased), on innovation, on political power, or on the environment.

The result was a wave of consolidation across the food system. The four-firm concentration ratio in U.S. beef packing increased from 36 percent in 1980 to 85 percent by the mid-2020s.¹¹ The ABCD grain traders expanded through acquisitions and vertical integration. JBS grew from a single slaughterhouse in Brazil to the world’s largest meat company, partly through acquisitions financed by Brazil’s national development bank (BNDES) under terms that critics described as subsidized consolidation.²¹

The Packers and Stockyards Act of 1921, the primary federal statute addressing concentration in the meatpacking industry, was designed to prevent this outcome.¹² It prohibits practices that give “any undue or unreasonable preference or advantage to any particular person or locality” and practices that create “an unfair, unjustly discriminatory, or deceptive practice or device.” The language is broad enough to reach the conduct that has produced the current level of concentration. The enforcement has not matched the language.

The Biden administration, through executive orders and USDA rulemaking, took steps to reinvigorate Packers and Stockyards Act enforcement and to promote competition in agricultural markets. The effects of these measures are difficult to assess against the scale of concentration that has accumulated over four decades. Restructuring a food system that has been organized around a small number of dominant firms is not a project that can be completed through regulatory action alone, particularly when the dominant firms have the resources to challenge every proposed rule in court.

The cost of concentration

The environmental costs of food system concentration are measurable.

Deforestation in the Brazilian Amazon and Cerrado, driven primarily by cattle ranching and soy production channeled through a small number of firms, is responsible for approximately 1.5 to 2 percent of global greenhouse gas emissions annually.²² This figure includes both the carbon released when forests are burned or cleared and the ongoing emissions from the agricultural systems that replace them.

The biodiversity costs are harder to quantify but equally significant. The Amazon contains approximately 10 percent of all species on Earth. The Cerrado, despite receiving less attention, is one of the most biodiverse savannas on the planet, with more than 5,000 endemic plant species. The conversion of these ecosystems to cropland and pasture is not a temporary disturbance. It is a permanent transformation.

The economic costs of concentration accrue to producers and consumers in the form of suppressed producer prices and elevated consumer prices. A 2022 study by the National Farmers Union estimated that the four-firm beef packing concentration costs U.S. cattle producers billions of dollars annually in reduced competition for their livestock.²³ The margin between cattle prices and wholesale beef prices, known as the “packer margin,” has widened as concentration has increased, indicating that the packers are capturing an increasing share of the value chain at the expense of both producers and consumers.

The public health costs include the conditions in meatpacking plants (among the most dangerous workplaces in the United States), the antibiotic resistance associated with industrial livestock production (the animal agriculture sector uses approximately 65 percent of all antibiotics sold in the United States), and the diet-related health effects of a food system that is optimized for the production of cheap calories rather than nutritious food.²⁴

These costs are externalities: they are real, they are borne by the public, and they are not reflected in the prices charged by the chokepoint companies. The companies capture the revenue. The public absorbs the ecological destruction, the climate emissions, the biodiversity loss, and the health consequences.

The structural choice

The global food system did not have to be organized this way. The concentration of market power in a small number of firms is the result of specific decisions: the decision to relax antitrust enforcement, the decision to allow vertical integration across the commodity chain, the decision to provide subsidized credit for consolidation, the decision to not enforce the Packers and Stockyards Act, the decision to allow commodity traders to operate with minimal transparency, and the decision to treat the environmental costs of food production as externalities rather than as costs to be internalized by the firms that generate them.

Each of these decisions can be reversed. Antitrust enforcement can be reinvigorated. Vertical integration can be limited. Supply chain transparency can be mandated. Environmental costs can be internalized through carbon pricing, deforestation regulations, or trade conditionality. The EU deforestation regulation, whatever its implementation challenges, demonstrates that market-access rules can change the incentive structure for chokepoint companies.¹⁹

The question is whether the political will to make these changes can overcome the economic and political power of the firms that benefit from the current arrangement. Cargill, JBS, ADM, Bunge, Louis Dreyfus, Tyson, and Wilmar are not passive participants in the policy process. They employ lobbyists. They make campaign contributions. They fund trade associations. They litigate against regulations. They have, in the case of JBS, directly corrupted the political institutions responsible for regulating them.

The pledges made at climate summits, the zero-deforestation commitments printed in sustainability reports, the marketing campaigns featuring green imagery and responsible sourcing language: these are the visible surface of the system. Beneath the surface, the structure remains. Four companies control the grain. Three companies process the beef. One company controls nearly half the palm oil. And the forests continue to burn.

The system is not failing. It is performing exactly as designed. It concentrates profit in a small number of firms, externalizes costs to the public and the environment, and resists structural change through the exercise of market and political power. Changing the outcomes requires changing the structure. Changing the structure requires confronting the firms that built it and the policy choices that allowed them to do so.

Four companies. Ninety percent of the grain. That is not a market. It is a chokepoint. And chokepoints, by their nature, are where control is exercised, and where the consequences of that control are most clearly visible.