State joins call to reverse agriculture consolidation

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Published: March 22,2010

Tags: agriculture, antitrust

HELENA, Mont. — Montana is leading an effort by 16 states, including Mississippi, to save small farmers and ranchers by urging the federal government to use antitrust weapons and enlist the states’ help to fight increasing consolidation in agriculture.

The feds are listening. Attorney General Eric Holder and Agriculture Secretary Tom Vilsack say a series of workshops on competition in the industry is an unprecedented act of cooperation between their agencies. But they also say it’s not clear what actions will come from the hearings, which are examining competition in U.S. dairy, seed, meatpacking and crop production.

Montana Attorney General Steve Bullock, who is spearheading the agricultural states’ effort, said too much consolidation has resulted in unfair trade practices that tip the balance against farmers and ranchers. With Justice Department and USDA cooperation, he said, “This will be a watershed moment to have actual enforcement capabilities.”

Bullock and the other attorneys general are calling for a halt of any further consolidation or integration in the agricultural sector without a critical review coordinated with the states.

They submitted recommendations to federal officials on what needs to be done. Among them:

• Study the seed industry’s concentration and property rights claimed to see whether there is any way to change existing laws. Five companies own the most commercially successful trait technologies for crops, and those transgenic seeds account for 80 percent of corn planted in the United States, 92 percent of soybeans and 86 percent of cotton.

• Repeal antitrust exemptions for railroads that have been in place since the 1980s and make transportation more accessible to small producers.

• Explore how states can help enforce antitrust laws under the Packers and Stockyard Act, passed in 1921 to ensure fair competition and fair trade practices in the marketing of livestock, meat and poultry. States have not historically brought cases under that federal law, and the attorneys general say cooperation could better regulate an increasingly concentrated buyers market in the livestock industry.

• Review the antitrust immunities given to certain dairy cooperatives and the laws governing how milk is marketed to make sure they still protect farmers and don’t become a vehicle for large entities to exclude smaller farmers from the market.

Smaller farmers and ranchers generally agree that fewer suppliers, shippers and buyers resulting from consolidation can lead to antitrust practices. In Montana, agricultural consolidation has reduced the number of grain elevators in the state from nearly 200 in 1984 to fewer than 50 today, Bullock said. The four largest packers process 85 percent of the nation’s beef, while the four largest pork packers process about 65 percent of the nation’s pork, he said.

Jan French, a cattle rancher from Hobson, Mont., and head of the state’s Livestock Board, welcomed the state’s involvement.

“It’s always good for agricultural producers to be listened to on a federal level,” she said. “All expenses are passed down to us, and we can’t pass it down to anybody.”

Some farmers have taken matters into their own hands.

The Montana Grain Growers Association and the Montana Farm Bureau spent four years negotiating an agreement with the state’s predominant railroad shipper, BNSF Railway Co., that establishes an abitration process between the railroad and the farmers.

Lola Raska, executive vice president of the grain growers, said the agreement gives producers a way to appeal high shipping rates. Before, challenging the rates was too expensive and wheat and barley farmers simply had to accept whatever BNSF charged, she said.

“We are in a captive situation — we have only one railroad that serves the state,” Raska said. “We’ve tried to develop a working relationship with the railroad.”

BNSF referred questions to the Assocation of American Railroads. Obie O’Bannon, the association’s senior vice president of governmental affairs, said Thursday the group supports what BNSF has done with the Montana growers.

However, the association is not seeking any changes along the lines of what Bullock and the other attorneys general are recommending. Any change in law or repeal of the railroads’ antitrust immunities would have to be done in a way that ensures the railroads make enough money so they can reinvest and expand their infrastructure, O’Bannon said.

“We are not opposed to the idea,” O’Bannon said. “So long as it’s done in a coordinated fashion.”

Besides Montana, the attorneys general who signed the recommendations are from Delaware, Iowa, Louisiana, Maine, Maryland, Mississippi, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Vermont and West Virginia.

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