Iowa Public Television

 

Concentration of agriculture evident comes under congressional fire

posted on April 28, 2000


THE ENVIRONMENTAL WORKING GROUP HAS LONG BEEN CRITICAL OF GOVERNMENT FARM SUBSIDY PROGRAMS. THIS WEEK THE ORGANIZATION RELEASED A STUDY CONDEMNING THE DISBURSEMENT PATTERN OF GOVERNMENT FARM PAYMENTS. ACCORDING TO THE STUDY MORE THAN 60 PERCENT OF FEDERAL FARM SUBSIDIES IN THE YEARS 96 THROUGH 98 WERE DIRECTED TO JUST 10 PERCENT OF THE RECIPIENTS. PAYMENTS WERE ESPECIALLY CONCENTRATED IN MISSISSIPPI WHERE 10 PERCENT OF THE RECIPIENTS RECEIVED 83 PERCENT OF THE GOVERNMENT DOLLARS. BUT EVEN IN IOWA, THE STATE WHERE THE PAYMENT PATTERN WAS THE LEAST CONCENTRATED, THE TOP TEN PERCENT OF RECIPIENTS RECEIVED 45 PERCENT OF THE PAYMENTS.

MANY IN CONGRESS DEFEND THE CURRENT STRUCTURE OF FARM PROGRAMS. INDEED LAST FALL CONGRESS DOUBLED THE CEILING ON SUBSIDY PAYMENTS. YET, AT A CONGRESSIONAL HEARING THIS WEEK THERE WERE SIGNS OF GROWING CONCERN OVER THE CONCENTRATION OF AGRICULTURE'S MEANS OF PRODUCTION INTO FEWER HANDS.

THE HEARING BEFORE THE SENATE AGRICULTURE COMMITTEE PONDERED TWO BILLS THAT WOULD ALLOW USDA TO BLOCK AGRIBUSINESS MERGERS OR TO FORCE THE DIVESTITURE OF ASSETS.

ONE OF THE BILLS, INTRODUCED BY SOUTH DAKOTA DEMOCRAT TOM DASCHLE, ALSO WOULD GIVE USDA MORE AUTHORITY TO REGULATE THE BUSINESS PRACTICES OF FOOD AND AGRICULTURE COMPANIES.

THE POWER TO APPROVE CORPORATE MERGERS LIES WITH THE DEPARTMENT OF JUSTICE. IN CASES OF AGRIBUSINESS MERGERS, USDA CURRENTLY HAS ONLY A CONSULTATIVE ROLE.

KENT CONRAD, SENATOR NORTH DAKOTA (D): "really, the problem we're facing here is a problem of a few buyers, and that is the problem that farmers confront all across America."

AT THE HEARING, FARM STATE LAWMAKERS WERE HIGHLY CRITICAL OF THE DEPARTMENT OF JUSTICE, WHICH IN RECENT MONTHS HAS APPROVED MERGERS BETWEEN SOME OF THE WORLD'S LARGEST AGRIBUSINESS FIRMS.

Warfield: "we believe broadened USDA responsibility and official consultation with DOJ will ease much of the concern regarding the concentration of agribusiness."

YET MANY ECONOMISTS ARGUE THE LOW COMMODITY PRICES THAT SPARKED THE ANTITRUST DEBATE WERE CAUSED BY OVERPRODUCTION, NOT MERGER AND ACQUISITION. INDEED, PRICES IN THE HEAVILY CONCENTRATED BEEF AND PORK INDUSTRIES HAVE REBOUNDED AS DEMAND HAS INCREASED.

AHEAD OF THE HEARING, IOWA REPUBLICAN CHARLES GRASSLEY TOUTED THE ADVANTAGES OF ANTITRUST LEGISLATION HE UNVEILED IN MARCH.

GRASSLEY'S BILL DIFFERS FROM THE DASCHLE LEGISLATION IN THAT IT GIVES USDA THE RIGHT TO ISSUE FEDERAL COURT CHALLENGES TO DEPARTMENT OF JUSTICE APPROVAL OF MERGERS IT CONSIDERS HARMFUL TO COMPETITION IN AGRICULTURE.

THE BILL ALSO EXPANDS USDA's ABILITY TO INVESTIGATE AND DISCIPLINE THOSE WHO ENGAGE IN UNFAIR BUSINESS PRACTICES.

CHARLES GRASSLEY, SENATOR IOWA (R): "Farmers don't need to be protected from the marketplace, but my bill protects their access to the marketplace."

GRASSLEY ALSO CLAIMS HIS BILL WOULD PREVENT FURTHER CONCENTRATION IN AREAS LIKE THE MEATPACKING INDUSTRY AND THAT, OVER TIME, IT MAY EVEN DILUTE EXISTING MARKET CONCENTRATION.

GRASSLEY: "The extent to which this legislation would not be too little and too late is the extent to which our entrepreneurial system encourages other people to get in and compete against the big boys."

SOME OF THE CONGRESSIONAL VOICES PUSHING FOR TOUGHER ANTITRUST LAWS WERE THE ONES LAST YEAR CALLING FOR MANDATORY LIVESTOCK PRICE REPORTING. BACKERS OF MANDATORY DISCLOSURE SAY IT'S NECESSARY BECAUSE JUST FOUR COMPANIES DOMINATE U.S. MEATPACKING PURCHASES. THEY ARGUE THE CONTRACTING PRACTICES OF THOSE COMPANIES MAKE IT DIFFICULT FOR SMALLER PRODUCERS TO RECEIVE FAIR MARKET VALUE FOR THEIR LIVESTOCK.

CONGRESS APPROVED A WATERED DOWN PRICE REPORTING BILL LAST YEAR THAT CHARGED USDA WITH FORMULATING A DISCLOSURE PLAN. BUT THE NATION'S BIGGEST MEATPACKERS HAVE LASHED BACK. THEY CLAIM USDA's INITIAL PROPOSAL WOULD BE TOO COSTLY TO IMPLEMENT AND COULD JEOPARDIZE U.S. EXPORTS. A FINAL PRICE REPORTING PLAN IS NOT EXPECTED FOR SEVERAL MONTHS.

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