Democrats Hear Views on Concentration Issues

April 6, 2000

The Senate Democratic Policy Committee Wednesday heard from farmers and members of the academic community on the complex issue of agricultural concentration and antitrust law. Sen. Tom Harkin (D-IA) said concentration was like an hourglass: farmers at one end, consumers at the other and in the middle "a choke point with just a few large agribusiness firm."

Peter C. Carstensen, University of Wisconsin Law School professor, said the open market process has been "weakened or eliminated" by "market dominating firms." To be "socially and economically desirable," he added, market conditions "demand prompt and significant changes" in the relationship between antitrust enforcement agencies and USDA and changes in the law authorizing the market constituting regulations administered by USDA.

He called the large agribusinesses "800 pound gorillas (who) trash the agricultural economy to protect and entrench their present and future position in the market." The farmer and rancher have no voice in shaping business policy, he said.

"The most fundamental proposition that I would advance is that concentrated market structure is not essential to achieve either economic efficiency or growth and change in the economy. There is a continuum of methods of organizing the production and distribution of goods that ranges from transactional markets to completely integrated single enterprises," he added.

Choices among potential market structures can be made, he said, and "such choices should consider the social, political and dynamic implications of the alternatives. The least relevant consideration is production efficiency, because in time almost any system can achieve similar results."

Paul Sobocinski, a Wasbasso, MN, hog producer, said the practice of major packers to capture supplies through contracts an direct ownership "is reducing the number of opportunities for small and medium sized farmers to sell hogs. Packers are closing out markets."

With fewer buyers and more captive supply, "there is less competition for independent farmers’ hogs. Lower prices result," said Sobocinski.

The Senate Agriculture Committee has scheduled a similar hearing on April 27, and antitrust legislation introduced by Sen. Charles Grassley (R-IA) will be a prominent part of the hearing.