Feds will examine competition issues in agriculture industry

Aug 14, 2009
Feds will examine competition issues in agriculture industry

Federal officials told farmers and academics earlier this month that they will take an unprecedented look at market concentration and transparency issues in agriculture through a series of planned workshops by the U.S. Department of Justice (DOJ) and USDA. “We’re going to get out in the countryside,” said Dudley Butler, administrator for USDA’s Grain Inspection, Packers & Stockyards Administration.

“We know we have an imbalance of power in some of the industries now.” Butler spoke at the annual meeting for the Organization for Competitive Markets (OCM), a group that has spent more than a decade trying to get federal officials to pay more attention to consolidation throughout the agricultural sector.

Phil Weiser, DOJ deputy assistant attorney general in charge of policy, appellate and international matters, noted that he was giving his first speech in his new job to an agricultural markets group, further emphasizing the importance that DOJ is placing on agricultural antitrust practices.

Weiser told the group that DOJ will look at issues regarding “buyer power” and “seller power” regarding the potential dominance of larger players in different sectors of agriculture.

DOJ also wants to see if the federal antitrust act, the Sherman Act, can be applied to modern agricultural businesses. “We are interested in learning whether the controls of the act are relevant to the way businesses are run today and whether the law is being implemented effectively to promote competition,” Weiser said. Weiser’s and Butler’s attendance at the OCM meeting was a reflection of OCM’s rising status as federal officials look to address competition issues. As a group, OCM has traditionally struggled to generate attendance or key federal officials. More than 100 people attended the recent gathering.

The DOJ-USDA workshops, which will likely begin early next year, will examine issues of competition in agriculture, the impact of vertical integration, concerns about buying power and market transparency.

Weiser also emphasized that the talks will not only look at areas that may need antitrust action. “We want to do a comprehensive and broader picture,” Weiser said. Other speakers at the OCM meeting highlighted challenges facing livestock and poultry producers due to vertical integration and concentration among the nation’s largest packers and retailers. Further criticism and research focused on concentration in the seed business for grain producers.

DOJ understands there are concerns regarding the level of concentration in the seed industry, particularly for corn and soybeans, Weiser said. “In studying this market, we will evaluate the emerging industry structure, explore whether new entrants are able to introduce innovations, and examine any practices that potentially threaten competition.”

While DOJ and USDA officials are encouraging commentary about market challenges, some groups, such as OCM and others, are planning to collect comments from producers who say they are concerned about publicly criticizing some companies for fear of market retaliation.

“I understand the concept of retaliation,” Butler said. The talks will also pay attention to the dairy markets and consolidation that has occurred in that industry over the past decade.

Further, the meetings will look at other aspects of the livestock markets for meat. “We are cognizant of the fact that competition is frequently local or regional in nature, meaning that the nature and extent of competition-related concerns will differ across different parts of the country and that broad national statistics can be misleading,” Weiser said. Two weeks ago, U.S. Sen. Bernie Sanders, I-VT, and two other senators wrote a letter to DOJ asking to revise an investigation into dairy monopolies by major milk buyers. Weiser said he could not offer specifics regarding what DOJ is now investigating regarding dairy.

Butler stressed that producers need to be ready to comment on several proposed rules this fall on competition and pricing issues stemming from last year’s farm bill. He encouraged people to write their own letters about experiences to comment on the rules.

“There is nothing more important than your comments,” Butler said. — Chris Clayton, DTN