Cattlemen Approach Concentration Cautiously

April 28, 2000

The American Farm Bureau insists that Congress get tough on agricultural concentration, but cattlemen are much more cautious when it comes to tightening up the nation’s antitrust process. Meat companies flatly oppose two bills pending in the Senate that attempt to make mergers and acquisitions tougher to complete.

"Farm Bureau believes that consolidation and the subsequent concentration within the agricultural sector is having adverse economic impacts on U.S. family farmers," Illinois Farm Bureau President Ron Warfield told the Senate Agriculture Committee. "To address this trend, we believe Congress must review existing statutes, develop legislation where necessary and strengthen enforcement activities."

Sen. Peter G. Fitzgerald (R-IL) said Congress needs to take "every reasonable step to keep American agricultural markets open and competitive ... I am concerned about the trend toward greater concentration ... and what that means for hard-working family farmers. We should search for a practical solution that ensures small family farms, many of which have existed for generations, are able to survive and flourish ..."

John Greig, Iowa cattleman and a member of the National Cattlemen’s Beef Association, told the committee that the cattle industry supports more, not less competition, but cattlemen have found ways to prosper and remain competitive even with only four companies slaughtering about 80% of all cattle. "The cattle industry (still) has witnessed highs and lows that are typical of the cyclical nature of the industry," Greig said. "To better cope with market downturns, cattle producers have formed ways to add value to their product."

Even as some agricultural sectors are going through a cycle of low prices, he said, cattle producers are seeing prices increase along with expanding product demand. "This is because the cattle industry has allowed the market to work for it and not relied on government intervention to fix or manipulate the market."

At the same time, he added, the cattle industry looks to the federal government to ensure the market is free from antitrust, collusion, price fixing and other illegal activities.

However, in a letter to senators, the American Meat Institute urged opposition to two bills being considered by the agriculture committee. The bills "seriously undermine current federal antitrust enforcement, single out the agribusiness community for different antitrust enforcement from the rest of the business community and politicize antitrust enforcement by inserting the U.S. Department of Agriculture into the pre-merger review process," said AMI.

Sen. Charles Grassley’s (R-IA) bill would place antitrust enforcement authority outside the Justice Department, "creating a politically charged antitrust process," said AMI. And the bill was introduced against a recommendation of the International Competition Policy Advisory Committee composed of antitrust experts appointed by the Justice Department, the AMI letter added.

A bill by Sens. Tom Daschle (D-SD) and Patrick Leahy (D-VT) is even broader than Grassley’s, said AMI. It would require industries "as diverse as banks, textile manufacturers, food processors, supermarkets, paper mills, tobacco companies, seed companies and farm machinery manufacturers to file separately with USDA (in addition to Justice) for pre-merger review and approval."

Also, "it would require those same businesses to disclose highly confidential information about contractual relationships and business alliances with USDA each year (and) extend the reach of USDA’s Grain Inspection and Packers and Stockyards Administration to enforce fair trading practice and competition statutes among all agricultural commodities."