A new era of a
ntitrust enforcement in agriculture? ...And how it figures in to Let's Move!
Friday's first-ever joint USDA/Department of Justice workshop on competition and regulatory issues in agriculture had a huge turnout, with about 700 farmers and agribusiness representatives flying in from states around the US to participate. Agriculture Secretary Tom Vilsack, US Attorney General Eric Holder, Jr., and assistant US attorney for anti-trust issues Christine Varney led the day-long event at the FFA Enrichment Center at the Des Moines Area Community College in Ankeny, Iowa.
Much of the discussion focused on seeds, from intellectual property issues with patented gene technology, to the potentially monopolistic practices of agribusiness giant Monsanto, but there were many other topics on the table, too. Consolidation has swept through all parts of agriculture, from livestock, through crops, poultry and dairy. (Above: Holder, l, and Vilsack, at the workshop)
Even as food prices have risen at supermarkets for food over the last few decades, farmers have nonetheless struggled to make a living, and land loss and farmers going out of business have plagued the American agriculture sector. Smaller and family farmers have been hit particularly hard. Critics note that concentration is part of the reason for this.
Vilsack and Holder held a joint news conference mid morning, and Vilsack said that the workshop “is about rural America, and what can be done to stop its decline.” He cited statistics on the loss of farmers and the rise in rural poverty over the last 25 years.
“Rural America has been in recession much longer than the rest of the country,” Vilsack said. “This isn’t just about farmers and ranchers."
That's true. The issues under discussion at the workshops have a direct impact on East Wing food initiatives. A pillar of First Lady Michelle Obama's Let's Move! campaign to eliminate child obesity is making healthy food affordable and accessible for all. The Healthy Food Financing Initiative, a model project designed to bring supermarkets into underserved areas, will in theory will help reduce obesity by enabling at-risk populations to purchase healthy food at fair prices. But if food prices are skewed from the ground up--beginning with seeds--that can only make this particular branch of the campaign more difficult to achieve. Healthy food might be more accessible if new supermarkets get built, but will it be affordable if food conglomerates are engaging in anti-competitive activities? On Tuesday, Mrs. Obama will meet with major food corporations in Washington to discuss their role in her campaign. Dean Foods will be among the companies represented; in January, Justice filed an antitrust suit against Dean Foods, over dairy concentration and pricing.
The price of foods that go into the federal nutrition programs is of course determined by farm prices and competition issues, too. Improving school lunches is another pillar of Let's Move!, and the cost of meals in the national school lunch program is a bone of big contention--from law makers who will be funding the Child Nutrition Act to citizen advocates alike.
On Friday, Holder announced that Justice is going to continue to scrutinize issues in agriculture, something that's already started. To date DOJ's activity in Ag regulation: Christine Varney has testified before the Senate Judiciary Committee on Ag and antitrust issues (read her testimony in Crisis On The Farm), and last October, Justice opened an investigation into Monsanto to determine if the seed giant has violated antitrust rules in trying to expand its dominance of the market for genetically engineered crops.
“Big is not necessarily bad,” Holder said. “But big can be bad if the power that comes with it is misused.”
“The central question is: Are farmers and ranchers in this country currently getting a fair shake?” Vilsack said. “Is the marketplace providing a fair deal for all?”
Fair deals for all begin with farmers and end with consumers. Government policy, obviously, hits both the supply side and the demand side.
Four more joint workshops are scheduled over the next year. Holder said that Justice will continue to scrutinize the ag sector, and added that the workshops represent a new era of antitrust enforcement in agriculture.
A rally at the Best Western hotel in Ankeny on Thursday night before the workshop drew about 250 citizens, and there were chants of "Bust up big ag!" It was sponsored by Food and Water Watch, and Food Democracy Now! Both groups work on small farmer issues--and school lunches. Farmers are rockstars, as Vilsack has recently said, and they're rock stars who have massive impact on every aspect of policy, but especially the changes the Obama administration is seeking in food access and school lunches. It's all connected....
Chris Clayton, Agriculture Policy Editor at DTN/The Progressive Farmer, does excellent coverage of the event, reprinted below. The schedule and panelists who spoke at Friday's workshop is here. A full schedule of upcoming workshops is at DOJ's website here.
Competition Workshops a Milestone Event
Attorney General says people want concrete action in markets
By Chris Clayton
Opening a workshop on agricultural competition, U.S. Attorney General Eric Holder marveled that the Department of Justice's collaboration with the Department of Agriculture was the first time the two departments had worked together to hold a serious conversation about competition in agriculture.
While the five workshops scheduled this year are an educational opportunity, Holder also pointed out that his department is active in antitrust cases involving agriculture right now. Without saying how the Justice Department or USDA could reverse the long-standing trend of consolidation in almost every agriculture sector, Holder nonetheless said people should expect "action, concrete action" from his department in challenging potential monopolies or unfair business practices in the industry.
"There has to be the will within the Justice Department to use the statutes that we have, the regulations that we have, the tools that we have to the extent we identify the need that we have," Holder said
Holder called Friday's meeting a "milestone event," considering the nation's antitrust law has been in effect for more than a century and the Packers and Stockyards Act is nearly 90 years old.
"In that time, not once have our nation's Departments of Justice and Agriculture come together for a public discussion on competition and regulatory issues in your industry," Holder said.
Topics were wide-ranging at the workshop, which drew an audience of more than 700 people to the Des Moines Area Community College campus.
Administration officials began by stressing that companies with significant market power carry a great deal of responsibility to ensure that market power is not abused. Holder said the question to be asked at the five scheduled workshops is: "Is today's agriculture suffering from a lack of free and fair competition in the marketplace?"
Later, speaking to reporters, Holder said the Department of Justice is "active right now" in working on antitrust investigations in agriculture, citing a case brought against dairy processor Dean Foods to stop the purchase of more processing facilities in the upper Midwest. Still, Holder said, the department doesn't have an agenda working on agricultural issues. "We're not looking to hurt anybody here, and we don't come into this with preconceived notions."
Secretary of Agriculture Tom Vilsack cautioned against "predetermining" what should come out of the workshops, but he added that they will help shape USDA's regulatory process on the Packers and Stockyards Act as well as help lay out issues as debate begins on the 2012 farm bill.
When asked by reporters about the Justice Department's investigation into Monsanto Co., Antitrust Division Chief Christine Varney said the department is not discussing aspects of the case other than to simply acknowledge that such a probe is occurring. "I don't want to link investigations we undertake with the workshops," Varney said.
When it comes to the overall seed industry, Varney said the department is examining possible anticompetitive practices and whether anyone would be abusing patents on biotechnology.
"There is a very robust patent system in this country, and if someone is abusing that system to extend a patent, that is not legal," Varney said.
When speaking to the crowd, Varney drew applause when discussing the need to challenge whether a company may be attempting to circumvent patent laws. "We are going to be looking very hard at any attempts to maintain or extend a monopoly through the patent laws," Varney told the audience.
Varney later added there are a number of steps the department will go through to determine if such abuse is occurring, saying there is an intersection between antitrust and patent law. "That is something we are looking at at the Department of Justice on a very broad level," she said.
Varney told the crowd that the antitrust division will commit to work with USDA on an "unrelenting quest" to find the right balance for farmers to do business and ensure market transparency to maintain competitive markets.
Farmers offered an array of perspectives throughout the day. Eddie Wise, an independent pork producer from Whitakers, N.C., told Vilsack that he and other farmers have struggled to effectively process and market an all-natural pork product and avoid signing contracts. Various rules he has encountered have affected him in both processing and marketing. Right now, his group needs $200,000 to help build a processing facility, but he's also afraid of taking on more debt.
"No matter what happens, I'm going to be an independent hog farmer," Wise said. "We're having a good time, but we're not raising that much money right now."
Eric Nelson, a cattle producer, grain farmer and seed dealer from Moville, Iowa, offered a perspective that the cash business in the cattle market may be only 20 minutes long all week while farmers can market their grain constantly.
"There are many more end users for grain, but on the cattle side, it's been very constricted," Nelson said.
With seeds, Nelson said choices also are becoming limited, though the seed companies are masking that somewhat. "What's bothersome to me is customers will think they are making different choices from different companies when in fact it's just the same product in a different bag from a different company," Nelson said.
Nelson later challenged the contract agreements that major seed companies sign with seed dealers or larger farmers that can often provide steep discounts. In some cases, Nelson said, he has seen a $70-per-acre advantage in seed buying go to a large producer over a small one. "So it's no surprise the large tend to get larger with an advantage like that," he said.
Bill Northey, Iowa's Secretary of Agriculture, defended some of the rise in seed costs, noting that herbicide prices have remained stable or declined in some cases while fertilizer prices have remained volatile. People have to compare the increase in productivity when considering the technology costs.
"Inherently, there are some increases of cost there, but that doesn't answer the question of whether we have competition," Northey said. He noted that when it comes to selling grain, Iowa has benefitted from 39 ethanol plants across the state. "Those are new markets that didn't used to be there."
*Photo at top of post by Chris Clayton; article reprinted with permission.
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