AFF Sentinel Vol.4#45

The Senate is now conducting floor debates on amendments to the Farm Bill. A single objection is all that is required to stall action on proposed amendments. Enough calls from constituents to convince one Senator to object can sidetrack dangerous or obstructive legislation.

Several amendments are problems but two in particular deserve your attention NOW in order to avoid more legal chaos. Your action would be required today.

There are those who believe that more attorneys, more investigation and more lawsuits are the answers to any problems. We've already discussed the Office of Special Counsel, a new special prosecutor's office similar to the existing one within the Justice Department, which would create a new fleet of attorneys and investigators to hunt for P&S violations. That is already in the current version of the Farm Bill.

Sen. Grassley (D-Ia.). has a new idea (Amendment 3823): an Agriculture Competition Taskforce made of 18 government officials, attorneys, academics, farmers, ranchers and processors. The stated purpose of the group would be to investigate competition problems in agriculture, establish ways to coordinate government "activities to address unfair and deceptive practices and concentration" in agriculture and identify "abusive practices." The taskforce would submit to Congress reports on the state of family farmers and ranchers and the "impact of agricultural concentration and unfair business practices on rural communities."

The Taskforce would establish a working group to investigate the effects of buying power concentration (oligopsonies and monopsonies) in agriculture. Of course, hearings and staffs of investigators and attorneys are authorized.

The language notes that concentration has occurred on the buying side of agricultural commodity markets. It holds that antitrust challenges to these mergers didn't happen in part because there were no special agricultural guidelines for the Justice antitrust enforcement officials to use in considering enforcement. Of course, no mention is made of all the studies that have been done to bolster common knowledge that efficient and free competition exists overall in the industry.

It does note that transportation costs, quality impacts and geographic distance factors enter into the equation. What it does not admit is that no Taskforce - at least one hunting for competition problems - can remove those problems by study or legislation. The problems of marketing for feeding operations located long distances from packing plants are very real. But these producers need real help -- like more plants and fewer regulations and cost burdens on packers -- not more attorneys hunting phantoms.

The amendment trots out tired bogeymen like "absence of effective competition" and possible "collusion" and "unfair, discriminatory...acts" as justification for this study. It ignores what observant cattle feeders or packers know. Basic beef supply and demand is closer to being aligned in recent years than in decades. This is because demand is up and supply is down. Unfortunately, that leaves the industry with excessive packing capacity and excessive feedyard capacity. If anything, that has increased competition for fed cattle from packers and for feeder cattle from feedyards, in order to stay closer to optimum operating levels.

That is further why feeders and packers in certain areas away from the High Plains are more frequent users of marketing agreements, contracts and even cattlemen-owned packing plants in order to overcome volume problems created by geographic distances. Congress is trying to take those tools away.

The Taskforce is to combat the forces of concentration to protect consumers under existing antitrust laws. The amendment doesn't mention that consumers are enjoying more new products and more high quality meat offerings than ever in history. They have responded to their perception of quality and convenience value by spending record amounts for meat.

This Taskforce would spend money, investigate non-existing problems, create problems for the livestock industry and fail to solve real problems a far- flung livestock industry needs to grapple with.

The other important amendment is Amendment 3666, sponsored by Sen. Tester (D-Mt.). This amendment is another attempt to encourage more packer lawsuits by removing business justification as a defense for using contracting or marketing agreements for supply management in a packing plant. Manufacturers worldwide use long-term contracts to maximize production efficiency. Some people feel packing plants should not be able to do this -- in processing a perishable product, no less.

We suggest you contact your Senator now to express your opposition to these amendments: U.S. Capitol switchboard: (202)224-3121.

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