Public Policies Affecting Consolidation &
Statement of Leland Swenson
President of the National Farmers Union
PUBLIC POLICY ACTIONS RECOMMENDED TO ADDRESS CONCENTRATION
The loss of family farms and other independently owned businesses is not
inevitable. The accelerated march toward a totally vertically integrated
production system can be turned around with action to strengthen the regulatory
system and revitalize independently owned businesses.
- Enact Moratorium - Congress should enact a moratorium on agricultural
mergers, to provide time enough to review what is happening with mergers and
take appropriate action if needed. Last fall the Senate rejected an amendment
calling for an 18-month moratorium on large agricultural mergers, i.e.,
mergers involving companies with assets of $100 million acquiring companies
with assets of $10 million or more. On April 12, Sen. Daschle, D-S.D., and
Sen. Leahy, D-Vt., introduced legislation to strengthen antitrust enforcement.
- Prohibit Packer Ownership of Livestock - Congress should prohibit
packer-ownership of livestock. Ownership allows the packer to control supply
in a way that results in the packers manipulating the market so that farmers
and ranchers receive less for livestock. Legislation is pending that would
limit packer ownership to 14 days prior to slaughter. This is a step in the
- Strengthen Mandatory Price Reporting - Congress should continue to
strengthen mandatory price reporting legislation. A good start was made in the
fiscal appropriation for Agriculture for 2000. USDA is currently promulgating
regulations that are expected to be in place by late summer this year.
- Report Concentration Data - Congress should require USDA to collect
concentration information. Currently, the University of Missouri collects
information to show the top 4 firms in many different commodity areas.
However, the problem is that some of the information is not readily available
to the university. USDA is in position to have the best access to the
- Disclose Joint Ventures - The Justice Department (DOJ) and the Federal
Trade Commission (FTC) should require firms to submit information on joint
ventures and alliances that are between firms above a certain size. In many
cases, firms that are participating in joint venture arrangement behave just
like firms that have merged. Yet, joint ventures and alliances have not been
subject to any scrutiny.
- Establish Permissible Level - Congress should consider enacting a
level of concentration that triggers an automatic antitrust violation to make
it easier for the Justice Department and the Federal Trade Commission to
prevent high levels of concentration.
- Disclose Merger Reasons - Congress should require the Justice
Department and the Federal Trade Commission to detail why mergers that are
subject to antitrust review are okay, if the decision is made not to oppose
the merger. This would improve accountability.
- Repeal Illinois Brick - Congress should pass legislation that would
allow farmers and ranchers to hold retailers responsible for price gouging.
Under current case law, farmers and ranchers cannot sue retailers due to legal
precedent set by Illinois Brick, a case where the court held that
farmers and ranchers have no legal standing for recourse against retailers
since they do not deal directly with retailers. As the retailers gain more and
more power within the marketplace, it is vital that they should at least be
liable for damage they cause due to market manipulation. Illinois Brick
has been repealed in 16 states.
- Require Economic Impact - Congress should require an economic impact
statement detailing the expected impact a deal will have on farmers and
ranchers prior to allowing an agricultural merger.
- Label for Country of Origin - Congress should enact country of origin
labeling to allow consumers to know where their food supply is being produced.
Country of origin legislation has been introduced in the House and Senate.
- Focus Research to Benefit Family Farms - Congress should ensure that
publicly-funded research is benefiting family-sized agricultural businesses
and surrounding communities.
- Target Development Grants - Congress should prohibit the use of rural
development grants for the creation of factory farms.
- Expand GIPSA Authority - The Senate should enact legislation to bring
poultry under the jurisdiction of USDA’s Grain Inspection, Packers and
Stockyards Administration (GIPSA). Legislation has already been introduced in
the House by Rep. Marcy Kaptur.
- Authorize Producer Bargaining - The Senate should enact legislation to
authorize contract producers to form collective bargaining units to negotiate
with integrators. Again, legislation has been introduced in the House by Rep.
- Fund Local Market Development - Congress should consider prioritizing
research on local and regional markets as well as research on small business
structure as part of the National Research Initiative (NRI). By offering
information, training, and financial assistance in the forms of grants and
loans, communities could foster the formation of food cooperatives and other
key small businesses.
- Prohibit Slotting Fees - Congress should prohibit slotting fees, i.e.,
the large fees charged to suppliers to put their product on the store shelf.
Slotting fees provide windfall profits to retailers and create an expensive
barrier for new firms and new products.
- Authorize Interstate Shipment – Allow interstate shipment of
state-inspected meat. Legislation has been introduced by Senators Daschle and