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USDA/DOJ Hold Last of Competion in Agriculture Workshops

posted on December 16, 2010

The Renewable Fuels Association praised the compromise saying lawmakers "struck a blow to the oil status quo and extended important tax policies that will allow America's ethanol industry to grow and evolve."

That sentiment was echoed by the American Soybean Association, which noted the expiration of the biodiesel tax credit at the end of 2009 resulted in a 35 percent reduction in U.S. biodiesel production in 2010.

That's likely to change in the months ahead, since the measure signed into law by President Obama Friday includes a retroactive extension of the $1 per gallon biodiesel tax credit.

While the deal has bullish implications for corn and soybean prices, livestock producers aren't likely to sing its praises. Faced with higher feed costs, some also claim a lack of transparency in markets threatens their survival. And last week, the Obama Administration took a closer look at profit margins in the agricultural supply chain.

USDA/DOJ Hold Last of Competion in  Agriculture Workshops As the last of five joint workshops began between USDA and the Department of Justice, Secretary Vilsack made clear the aspirations and fears of the producers in America's agricultural sector.

Sec. Tom Vilsack, USDA: "Producers want to have or maintain marketing options, they want transparency, they want access to markets, they have fewer buyers with whom to do business with, they struggle with debt and face challenges accessing capital, and last, they just want to be treated fairly and be respected."

In the first-ever partnership between the two government agencies, the workshops were designed to be all inclusive covering topics like commodity trading practices, retail sales and business concentration. Last week's meeting was designed to explore profit margins.

Vaughn Meyer, Cattle Producer, South Dakota: "Indirectly all costs, when the consumer quits buying, come back down to the producer. They come back down to the wholesaler. And the wholesaler has one of two things, he can either drop his price to you or he can cut production. Well, he has fixed costs that he has to meet and production lines that he has to keep busy, so usually, the alternative, I'd say nearly 100 percent of the time, is to lower his procurement costs to us. So, indirectly all costs do come back to the producer."

While it became clear the manner in which prices are determined is murky, those speaking on behalf of various farmer and rancher groups expressed concern over the limited number of outlets.

Ben Burkett, Producer and Local Distributor, Mississippi Association of Cooperatives: "Under the current structure we have where, now with the concentration in the poultry industry and the dairy industry and, especially in my industry, growing vegetables, with only four or five major buyers. And I think that should be, I don't know how you can change it in the future, it definitely needs to be restructured where it can be opened up to different avenues of marketing."

But after the session was over, critics were already questioning if the proceedings were no more than glorified hand-holding.

General Eric Holder, U.S. Attorney General: "I think you can certainly grade us on what we have done, so far, but there is a promise that comes out of wheat we have done and I think you'll have to see if we make good on that promise. I'm confident that, given the partnership that exists between agriculture and justice that we will make good on that promise."

And Assistant Attorney General Christine Varney was quick to point out that the formal gatherings had already yielded results.

Assistant Attorney General Christine Varney, Department of Justice: "We have several investigations, we have several leads that have come out of these workshops we're following up on we're doing that in consultation in partnership with our colleagues at the Department of Agriculture which has not happened before. So when we find instances of potential wrong doing in a very unique, and some cynical might say 'small setting' and we're able to go to our colleagues at Agriculture and say, 'Look we're hearing about this practice.' And they can help us determine if it's a more widespread that needs to be prosecuted on a broader basis or if it is a smaller or more contained practice."

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