2007 Farm Bill must address
competition and concentration
By the Organization for
September 1, 2005
Organization for Competitive Markets (OCM) is
launching the effort to include pro-competition
provisions in the next U.S. Farm Bill. OCM joined,
in a letter to Congress, more than 200 other
organizations representing farmers, ranchers,
consumers, labor, and faith-based groups to launch
"The federal government needs to establish and
enforce the rules of the marketplace," said OCM
President Keith Mudd. "Congress should focus upon
increasing choice, price, and entrepreneurship for
America's independent farmers."
The USDA is now holding hearings around the
country seeking comments about the next Farm Bill.
Agriculture Secretary Mike Johanns has not included
competition and market fairness among the topics of
"Today, a small handful of corporations
dominate the nation's food supply, and the
concentration continues to accelerate. Price
manipulation risks increase accordingly. Livestock
producers, in some areas, have only one packer
available, and no competition. Poultry growers are
forced into deceptive, changing contracts which
take away their Seventh Amendment right to a jury
trial in a dispute. Smithfield Foods is buying
cattle feedlots with enough production to supply
90 percent of its needs, if it buys the Swift
Foods cattle processing plants."
OCM is urging Congress to enact the following
legislation in the 2007 Farm Bill:
- Prohibition on Packer-Owned Livestock:
Packer-owned livestock is a major market tool for
large meat packers. This practice fosters
industrial livestock production, and freezes
independent farmers out of markets. Prohibiting
packer-owned livestock addresses the problem of
captive supplies, which packers use to manipulate
- Producer Protection Act: This
legislation would set minimum standards for
contract equality in agriculture, by addressing
the worst abuses of production contracts. The
legislation would include:
- clear disclosures of producer risks;
- prohibit confidentiality clauses;
- prohibit binding arbitration in contracts of
- recapture of capital investment, so that
contracts that require a significant capital
investment by the producer cannot be
capriciously canceled without compensation; and
- a ban on unfair trade practices including
"tournament" or "ranking system" payments.
- Captive Supply Reform Act: This
legislation would bring secret, long-term contacts
between packers and producers into the open, and
create a market for these contracts. The Captive
Supply Reform Act would restore competition, by
making packers and livestock producers bid against
each other to win contracts. Currently, forward
contracts and marketing agreements are negotiated
in secret, in a transaction where packers have all
the information and power, with the end result
that these contracts and agreements depress
prices, and shut small and independent producers
out of markets.
- Closing Poultry Loopholes in the Packers &
Stockyards Act: The USDA does not have the
authority to bring enforcement actions against
poultry dealers. The P & S Act omits this
authority. This legislation would clarify that
USDA's authority over poultry applies not only to
broiler operations, but also to growers raising
pullets, or breeder hens.
- Mandatory Country of Origin Labeling
(COOL): COOL was passed as a provision of the
2002 Farm Bill. This measure allows consumers to
make informed food purchases, as to where the
products were grown and processed. It also
showcases U.S.-grown-and-processed food products.
This legislation would limit the ability of global
food companies to source farm products from any
country, while passing them off as U.S. in origin.
Meat packers and retailers have, thus far,
successfully stymied efforts to implement the law.
Congress should immediately implement COOL, to
benefit both domestic producers and consumers, as
intended in the current law.
"The upcoming Farm Bill represents a new chapter
for America's agricultural producers," noted Mudd.
"This is an opportunity to correct the imbalance of
market power and influence. We ask Congress for
nothing more than fair, competitive markets, which
can be easily achieved, by incorporating certain
mechanisms into farm bill legislation. OCM will lead
this effort in the upcoming farm bill debates."
The Organization for Competitive Markets is an
independent, nonpartisan, nonprofit public policy
institute working for American food producers,
consumers, and rural communities.