Posted November 1, 2007 by
Next week, the U.S. Senate will have an important opportunity to level the playing field for farmers and ranchers in the marketplace. The Farm Bill coming out of the Senate Agriculture Committee includes important provisions to restore fair markets (see discussion of Livestock Title here). When the bill reaches the Senate floor, there will undoubtably be attempts to gut those provisions as agribusiness lobbyists go to work. And as IATP's Dennis Olson wrote recently, it is an increasingly concentrated agribusiness sector that has reaped most of the benefits from past Farm Bills.
Most economists agree that if the top four companies control over 40 percent of a market there is some level of market manipulation going on. If that's the case, it's hard to explain the lack of government action to protect farmers and ranchers in agricultural markets.
According to a study published by the National Farmers Union by University of Missouri professors Mary Hendrickson and William Heffernan, markets that exceed the four company/40 percent threshold include: beef packers (83%), pork packers (66%), broilers (58%), turkeys (55%), flour milling (top 3 at 55%), and soybean crushing (80%).
For several decades the USDA's office in charge of ensuring market competition, along with the Justice Department's Antitrust division, have said idly by as the agriculture sector has rapidly concentrated. In some cases, the USDA has actually blocked enforcement of competition laws. In the real world, this means that farmers have fewer companies to buy from (seed/inputs/equipment) and fewer companies to sell to. Instead of being able to bargain for the best price, farmers and ranchers have to take what is offered.
Ultimately, competitive markets are important for farmers, consumers and taxpayers. Farmers stand a better chance of getting fair prices. Consumers can have more choices in the marketplace. And taxpayers wouldn't have to pick up as much of the bill, as they do now when the big agribusiness companies push farm commodity prices down below what it costs farmers to produce it.
Unfortunately, the House Farm Bill did not address competitiveness in agriculture markets. To keep competition provisions in the Farm Bill, Senators will have to stand up to one of the most powerful special interests in Washington. Agribusiness is one of the biggest campaign contributors and spends tremendous amounts of money lobbying. It won't be easy.