AP NEWS

Report from Washington-based thinktank makes the case to bust up ag monopolies

May 9, 2019

SCOTTSBLUFF — A report released Tuesday by a Washington-based thinktank argues that powerful agribusiness corporations are squeezing out small, independent farmers.

A Fair Deal for Farmers: Raising Earnings and Rebalancing Power in Rural America,” from The Center for American Progress (CAP) paints a portrait of dire conditions for farmers and makes a case to bust up big ag monopolies. The report’s sole endorsement from the ag sector came from the Lincoln-based Organization for Competitive Markets.

“Family farmers who have suffered from stagnant earnings for the past two decades are increasingly imperiled by the rise of powerful agribusiness firms,” the report says. “As agricultural input companies, processors, and marketers grow more concentrated, small family farmers face increased costs and suppressed commodity prices.

“If this market power remains unchecked, America may lose the last of its family farms, dealing a deadly blow to agriculture-dependent rural communities.”

The report calls for four major policy planks: restoring competition through anti-trust laws, guaranteeing farmers a fair share in profits, contract reforms, and the creation of an Independent Farmer Protection Bureau similar to the Consumer Financial Protection Bureau, which policed banks following the economic collapse of 2008.

Dire straits for family farms

The report’s authors Andy Green, CAP’s managing director of economic policy and former U.S. Securities and Exchange Commission (SEC) lawyer, and research assistant Zoe Willingham, were joined on a conference call with reporters Tuesday by OCM Executive Director Joe Maxwell, a former Missouri lieutenant governor and fourth-generation hog farmer, and J.D. Scholten, a self-described rural advocate and Iowa Democrat who ran unsuccessfully for Rep. Steve King’s congressional seat in 2018.

“Since 2000, about three-fourths of America’s industries have become less competitive,” Green said. “From technology to healthcare, rising monopoly power is squeezing America’s workers and communities, short-changing consumers, pushing aside small businesses and threatening democracy.

‘Rural America is no exception’

Green said higher costs and lower incomes seen in agriculture are driven by failures of federal regulatory agencies to enforce anti-trust and anti-predatory practices laws. CAP’s report calls on Congress, the Federal Trade Commission and the Department of Justice to create a moratorium that would press the pause button on big agribusiness mergers and acquisitions, and to apply concentration caps to ensure a diverse market for farmers. Further policing of alleged monopolies would be done by a special task force that would investigate violations of anti-trust laws and break up conglomerates if necessary.

“Farmers ultimately need a dedicated fighter on their side in Washington, D.C.,” Scholten said.

Same old story, same old song and dance

In September 2009, then-Assistant Attorney General Christine A. Varney spoke during a field hearing of the Senate Judiciary Committee about dairy issues in Franklin County, Vermont. During her remarks, Varney said competition issues in agriculture were her personal priority as the leader of the Obama Justice Department’s Antitrust Division. She also referenced a new partnership that DOJ formed with the Department of Agriculture to co-host “an unprecedented series of workshops” to examine the state of competition in agriculture markets.

That “unprecedented series” (five workshops to be exact) played out over the course of 2010, starting with farmer concerns in Ankeny, Iowa, that March, followed by the Poultry Industry round-table in Normal, Alabama, that May. In June, the Dairy Industry workshop was held in Madison, Wisconsin, followed by a Livestock Industry workshop two months later in Fort Collins, Colorado. Rounding out the year was a Margins workshop in Washington, D.C., that December.

From those meetings, the departments generated 1,895 pages of transcripts, which were distilled down to a 22-page report released in May 2012. The departments concluded that anticompetitive practices abound in agriculture, from price fixing and collusion schemes, to mergers that have consolidated the market and dampened competition for inputs, commodities or grower services, and the sale of food products downstream. The remedies to these observations were left purposefully vague and littered with platitudes.

Existing laws and where to find them

Anti-trust laws exist that are meant to put a check on big agribusiness interests. Yet, lax government enforcement of those laws have left few options outside of civil action, such as the petition R-CALF USA filed recently against the four major beef packers — a lawsuit that Maxwell said OCM supports.

“It’s a shame that these producers have to find another avenue,” Maxwell said. “Government within our capitalist economic model, the way it has worked and needs to work, is that the government provides the safeguards for the market, either through transparency or through regulatory action to prevent predatory, discriminatory or retaliatory type practices or collusion that harms both the farmer and gouges the consumer.”

‘We can’t turn away from these battles’

In the current political environment, it would require significant political capital in order to secure the kinds of reforms CAP recommends.

“The data has gotten even more depressing, but it doesn’t mean we can turn away from these battles,” he said.

“I really think it’s time for folks in Washington and folks across the country to raise the alarm about this, because farmers have been putting up with this long enough,” Willingham added. “Now is an opportunity to raise awareness on this and push farther.”