Vanessa Frias and her family raise Certified Animal Welfare Approved by A Greener World (AGW)…
DOJ, USDA Investigate Big Ag for Antitrust Violations: It’s About Time
In a major move for the Obama administration, the US Department of Justice (DOJ – Antitrust Division) and the USDA has opened an investigation into whether any illegal monopolies exist among the major agricultural companies dominating the market. The focus is primarily on three sectors: seed companies, beef packing and dairy production. In the absence of antitrust regulation and a history of exemption for agricultural companies, the industry as a whole has become extremely concentrated. This concentration is measured in terms of “CR4”, or concentration ratio (relative to 100%) of the top four firms in a specific food industry.
For instance, in beef packing, the top four companies (listed below with daily processing capacities) control 83.5% of the market.
1. Tyson (36,000 head/day)
2. Cargill (28,300 head/day)
3. Swift & Co. (16,759 head/day)
4. National Beef Packing Co. (13,000 head/day
Source: Concentration of Agricultural Markets, April 2007, Mary Hendrickson and William Heffernan. http://www.nfu.org/wp-content/2007-heffernanreport.pdf
Similar levels exist in other agricultural industries, including pork processing and genetically modified seed production. In any other industry, this would be a red flag. Perhaps the recent banking crises has shed some light? In the words of our friend at Rural Advancement Foundation International Scott Marlow, “If they’re too big to fail, they’re too big. Enforce antitrust.” Spoken at Farm Aid this past September, his call to action asked the audience, “Now is the time and here is the place. If not us, who, if not now, when?” Regardless of the cause of this shift in focus, we predict a heated debate and a wide range of opinions on the subject. To voice yours, follow the directions on the DOJ website to submit your comments in hardcopy or electronic form.
You can also contribute to the discussion in person. As part of this investigation, a series of workshops will be held across the country to “promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector.” A schedule of the workshops is listed below, please see the aforementioned DOJ website for detailed information and physical locations.
Dates, Locations, and Topic
March 12, 2009 – Ankeny, Iowa (not sure if this is right date – from the website though)
Issues of Concern to Farmers
Introduction to the workshops series with a focus on the issues facing crop farmers. Discussion topics may include seed technology, vertical integration, market transparency and buyer power.
May 21, 2010 – Normal, Alabama
Poultry Industry
Discussion topics may include production contracts in the poultry industry, concentration and buyer power.
June 7, 2010 – Madison, Wisconsin
Dairy Industry
Discussion topics may include concentration, marketplace transparency and vertical integration in the dairy industry.
August 26, 2010 – Fort Collins, Colorado
Livestock Industry
This workshop will focus on beef, hog and other animal sectors. Topics may include enforcement of the Packers and Stockyards Act and concentration.
December 8, 2010 – Washington, D.C.
Margins
This workshop will look at the discrepancies between the prices received by farmers and the prices paid by consumers. As a concluding event, discussions from previous workshops will be incorporated into the analysis of agriculture markets nationally.
In a major move for the Obama administration, the US Department of Justice (Antitrust Division) and the US Department of Agriculture have opened an investigation into whether any illegal monopolies exist among the dominant agricultural companies.
The focus is primarily on three sectors: seed companies, beef packing and dairy. With a history of exemption from antitrust regulation, the industry as a whole has become extremely concentrated. This concentration is measured in terms of “CR4,” or concentration ratio (relative to 100%) of the top four firms in a specific food industry.
For instance, in beef packing, the top four companies (listed below with daily processing capacities) control 83.5% of the market.
1. Tyson (36,000 head/day)
2. Cargill (28,300 head/day)
3. Swift & Co. (16,759 head/day)
4. National Beef Packing Co. (13,000 head/day)
Source: Concentration of Agricultural Markets, April 2007, Mary Hendrickson and William Heffernan.
Similar levels exist in other agricultural sectors, including pork processing and genetically modified seed technology. This lack of competition has had serious implications for the independent producer; in any other industry it would be a red flag. Perhaps the recent banking crisis has shed some light? In the words of our friend at Rural Advancement Foundation International, Scott Marlow, “If they’re too big to fail, they’re too big. Enforce antitrust.” Spoken at Farm Aid this past October, his call to action challenged the audience, “Now is the time and here is the place. If not us, who, if not now, when?” Regardless of the cause of this shift in focus, we predict a heated debate and a wide range of opinions on the subject. To voice yours, follow the directions on the DOJ website to submit your comments in hard copy or electronic form.
You can also contribute to the discussion in person. As part of this investigation, a series of workshops will be held across the country to “promote dialogue among interested parties and foster learning with respect to the appropriate legal and economic analyses of these issues, as well as to listen to and learn from parties with experience in the agriculture sector.” A schedule of the workshops is listed below, please see the aforementioned DOJ website for detailed information and physical locations.
Dates, Locations and Topics
March 12, 2009 – Ankeny, Iowa
Issues of Concern to Farmers
Introduction to the workshops series with a focus on the issues facing crop farmers. Discussion topics may include seed technology, vertical integration, market transparency and buyer power.
May 21, 2010 – Normal, Alabama
Poultry Industry
Discussion topics may include production contracts in the poultry industry, concentration and buyer power.
June 7, 2010 – Madison, Wisconsin
Dairy Industry
Discussion topics may include concentration, marketplace transparency and vertical integration in the dairy industry.
August 26, 2010 – Fort Collins, Colorado
Livestock Industry
This workshop will focus on beef, hog and other animal sectors. Topics may include enforcement of the Packers and Stockyards Act and concentration.
December 8, 2010 – Washington, D.C.
Margins
This workshop will look at the discrepancies between the prices received by farmers and the prices paid by consumers. As a concluding event, discussions from previous workshops will be incorporated into the analysis of agriculture markets nationally.