Wednesday July 28, 1999 / By PHILIP BRASHER AP Farm Writer
WASHINGTON (AP) -- Low crop prices aren't being caused by agribusiness mergers such as Cargill Inc.'s planned acquisition of Continental Grain Co., says the Justice Department's antitrust chief.
"That price decline is not a product of increased concentration" in agribusiness, Assistant Attorney General Joel I. Klein told the Senate Agriculture Committee on Tuesday. "There are other factors."
Economists attribute the recent decline in crop prices to a worldwide glut of grain and economic problems in Asia and Europe that cut into their food imports. There is no significant difference in competition in the industry now than in 1996, when commodity prices peaked, Klein said.
But with the agricultural economy stuck in its worst downturn since the mid-1980s, many lawmakers have been pointing to declining competition among food processors, pesticide makers, seed companies and other agribusinesses as the culprits. For example, four meatpackers control 80 percent of the nation's beef, up from 36 percent two decades ago.
The Justice Department came under criticism this month from congressional Democrats for allowing Cargill Inc., North America's second-largest grain trader, to acquire the grain operations of Continental Grain Co. even though the companies were required to sell some of their assets.
After Tuesday's hearing, Sen. Kent Conrad, D-N.D., said Klein was ignoring a long-term decline in commodity prices relative to what consumers pay for food. "Power in the marketing chain gives you a greater share of the retail dollar," Conrad said.
As for the Cargill deal, Sen. Tom Harkin, D-Iowa, told Klein the forced divestiture wouldn't "mean a darn thing back on the farm."
The Agriculture Department estimates Cargill and Continental control 42 percent of U.S. corn exports, a third of soybeans sold overseas and at least 20 percent of wheat exports.
The Justice Department's action will ensure buyers are still available to compete for farmers' grain, Klein said. It's in farmers' interest for U.S. companies to cut their costs because they have to compete overseas, he said.
"If we don't compete efficiently in Asia, if we don't compete efficiently in Europe to sell products, that's going to hurt the family farm," Klein said.
Klein also told the panel antitrust laws generally are adequate to protect farm interests, although he thinks Congress should give Justice responsibility for approving railroad mergers.
The Surface Transportation Board, which has authority over acquisitions in the railroad industry, approved a $5.4 billion merger three years ago between the Union Pacific and Southern Pacific over the opposition of the Justice, Transportation and Agriculture departments.:
