Antitrust and Agriculture: Summary of DOJ/USDA Workshops and New Article on Capper-Volstead

By on January 14, 2011

by Greg E. Heltzer, Carrie G. Amezcua and Jennifer L. Westbrook

The DOJ and USDA just completed a series of five workshops on competition in the agriculture industry.  The two agencies have a renewed their focus on competition in this industry and have promised more activity in this area.  The highlights from each of the workshops is described below.

An overview of all five workshops:
Issues of Concern to Farmers, March 12, 2010, Iowa

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • There was discussion about concentration in the seed industry and lack of choice among seed trait companies.  Also, farmers voiced concern about patents that nearing expiration where there are no generics yet in the pipeline.  (Subsequent to this workshop Monsanto announced it would pay for all regulatory approvals of Round Up Ready soybean patent through 2021 even though the patent expires in 2014).
  • The discussion from pork and livestock farmers centered on fairness, transparency and increased enforcement of existing laws such as the Packers and Stockyards Act.

Poultry Industry, May 21, 2010, Alabama

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • Mr. Holder announced the launch of the Agriculture Competition Joint Task Force, which is comprised of individuals from the DOJ and USDA.
  • There was discussion about the fairness of poultry contracts and transparency in the industry.
  • There were also comments on the lack of concentration of poultry processing companies, which reduces the choice farmers have.

Dairy Industry, June 25, 2010, Wisconsin

  • Opening statements and roundtable remarks by Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack. (AG Eric Holder did not attend).
  • There was discussion about the gap between the prices consumers pay (relatively high) and prices that dairy farmers are paid by processors (relatively low).  The farmers are getting squeezed and having to sell below cost.
  • Consolidation in grocery retailing and the price pressure exerted by large retailers on dairy coops, as well as consolidation in dairy processors, were cited as a cause of low prices to farmers.

Livestock Industry, August 27, 2010, Colorado

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • The workshop focused on issues regarding the ability of cattle and hog producers to earn sustainable returns.
  • There was discussion about whether reducing the market power of the packers and increasing bid competition for cattlemen’s animals would raise prices that cattlemen could obtain.
  • There was also discussion about how concentration of packers and concentration among retail grocers negatively affects prices producers can get for their livestock.

Margins, December 8, 2010, Washington, D.C.

  • Opening statements and roundtable remarks by Attorney General Eric Holder, Assistant Attorney General Christine Varney and Secretary of Agriculture Tom Vilsack.
  • The workshop focused on margins at each stage in the farm to table process.
  • There was discussion about the gap between the prices consumers pay (relatively high) and prices that producers in all industries are paid by processors (relatively low).  The farmers are getting squeezed and cannot meet their costs.
  • There was discussion about retail and that there is fierce competition in the retail (grocery) industry.  It was also noted that consumers are demanding more information about the source of the food that they are buying.  The producers noted that they are not seeing the same competition and transparency at the producer level that is at the retail level.
  • There was general discussion on the need for more transparency and fairness across the board, and perhaps a change in the antitrust laws, or new laws altogether are needed.

Relatedly, an article on the Capper-Volstead Act by Christine Varney (https://www.americanbar.org/content/dam/aba/publishing/antitrust_source/Dec10_FullSource.authcheckdam.pdf) references these workshops and discusses enforcement of the Act.  The article discusses the origins and history of the Capper-Volstead Act generally, then focuses on the production restriction debate, including a brief highlight of pending lawsuits suits against United Egg Producers, Inc., United Potato Growers of America, Inc., and United Potato Growers of Idaho, Inc.  Varney points out that whether the Capper-Volstead Act immunizes production restrictions between cooperatives and their members is of particular interest to the Division.  While the Division has historically contended that the Capper-Volstead Act does not exempt production limits, it will be monitoring developments in the courts to evaluate any potential impacts on antitrust enforcement.

STAY CONNECTED

TOPICS

ARCHIVES