Resolved: That the United States should substantially change its federal agricultural policy.
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|Source: Successful Farming, March 2000 v98 i4 p9.
Title: The clock is still running for the `end game' for family
Full Text COPYRIGHT 2000 Meredith Corporation
It was cold and slippery from ice and snow in Washington in early February, just after St. Louis had won the Super Bowl by stopping Tennessee's offense with a tackle near the goal line.
I was in town with Iowa and Minnesota farmers who were visiting Washington to make their own goal line stand for independent markets and tougher antitrust enforcement.
At times their reception in Congressional offices was as cold as the crusty piles of snow on the Capitol steps. Sometimes it was as slippery as the streets outside where taxis unloaded well-dressed lobbyists.
But in a few offices, this group of independent producers, who had travelled to Washington at their own expense, found warm smiles, straight talk, and ideas that just might bring a last-minute victory.
Don't be fooled by a fake play
An election-year partisan battle over farm aid was starting. Over the last two years Congress has spent billions, and national farm income is near a record. Yet many producers are going out of business.
Don't be fooled by federal trinkets.
What you haven't gotten is real power in the marketplace -- tougher antitrust and fair trade laws and just plain enforcement of some laws. Stopping the concentration of processors is the key to your survival -- even if you think you're doing OK now, even if contracts seem like a good deal. Competition and openness in contracting will ensure they remain so. This is the real goal line stand for family farms and ranches. And it's the last quarter of the game.
Senate Ag Committee chair Dick Lugar (R-IN) held a hearing on ag concentration and whether USDA is enforcing the Packers and Stockyards Act, which was passed in 1921 to create and maintain competition in meat packing. One expert who testified was Michael Stumo, a former Iowa hog and cattle buyer who became a lawyer and now works for the Organization for Competitive Markets (The group was featured on pages 25-26 of our February 2000 issue.) Stumo summed up the situation well:
[Graphic omitted]"I come before you today with a sense of urgency," he said. "This is not just another farm crisis. This is the 'end game' of independent, family farm agriculture. The crux of the issue is industry structure. There are tremendous amounts of money being made in the food industry. The farm sector is not receiving that money because of the oligopsonistic [buyer shared monopoly] meat packers, and the oligopsonistic retailers have positioned themselves to capture the bulk of that profit. Thus, high retail margins, high packer margins, and the end of the family farm."
He added: "How did we get here? First the meat packers consolidated horizontally. Now they are appropriating the food chain vertically. If packers own or control livestock, there is no independent livestock agriculture. PERIOD."
Purdue University ag economist Philip Paarlberg testified about his study that estimates how the use of market power by hog packers could influence open market prices if concentration continues. By 1997, eight packers controlled 76% of the hog slaughter -- the equivalent of 10 firms of equal size. If consolidation continues, to the equivalent of eight firms, they'll have enough power to cut hog prices paid to producers by 18% from what a truly competitive market would pay.
How you can get involved
It is very late in the game, but not quite too late. Until next November, you have the threat of the ballot box to counter the influence of power and money in Washington.
* Contact the Organization for Competitive Markets (OCM) in Lincoln, Nebraska. Their attorney, Michael Stumo, argues that USDA always had the power to write rules that would prevent unfair livestock pricing -- and squandered it. He believes the ability to investigate unfair pricing should be given to the Justice Department and the Federal Trade Commission should write rules.
* Contact Senate Ag Committee staff. They're gathering information from producers who are concerned about concentration.
* Support a bill by Rep. David Minge (D-MN) for an agribusiness merger moratorium (exempting co-ops). It strengthens antitrust laws by allowing all injured parties in a marketing chain to recover lost payments. It sets up a bipartisan commission to review agricultural market power and recommend changes in laws.