Feds to review competition in agriculture

Education for policy-makers or support for pre-determined policies?

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An ominous release on the Department of Justice Web site Aug. 5, 2009, indicated that a joint Department of Justice and Department of Agriculture initiative will be launched to “explore competition issues in the agriculture industry.” In a joint statement Attorney General Eric Holder and Agriculture Secretary Tom Vilsack announced a series of public workshops sponsored by the two departments. The stated objective is to determine the “appropriate role for anti-trust and regulatory enforcement in the agricultural industry in the 21st century.”

The workshops are intended to address competition within the various agricultural markets and will also review buyer power and vertical integration. This does not appear to be an academic exercise as the comments will guide future policy and legislation. The joint initiative will solicit input from “farmers, ranchers, consumer groups, processors, agribusinesses and other interested parties” (note the peck order). Although the statement indicated that the workshops will “promote dialog among interested parties and foster learning with respect to the appropriate legal and economic analyses” there is concern that current practices relating to contractors and integrators in the poultry industry may come under scrutiny. The existing system has worked to the benefit of all parties and consumers since inception. Recently plant closures, downsizing and consolidation in the broiler industry have resulted in cancellation of contracts resulting in cessation of income for growers who are unable to obtain replacement contracts from other integrators within their areas of operation.

The question of oligopoly in the broiler and turkey industries and the acquisition of independent and family-owned operations by large integrators in the egg industry have apparently raised concern in both federal departments. It must be remembered that then Senator Obama campaigned on the promise of supporting family farms. Appointments by Agriculture Secretary Tom Vilsack in the upper ranks of the Department of Agriculture certainly suggest a bias toward organic and sustainable farming which heralds a reversion to a pre-Depression structure.

The highly integrated and coordinated production of food in the U.S. is based on application of land, financing and technology to achieve efficiencies and yields which are unrivaled by other nations. Government interference in a free market economy is counterproductive. Centralized planning and support schemes which disrupt and distort markets create problems which are ultimately reflected in increased prices, shortages and the cost is inevitably borne by consumers.

The proposed “workshops” may serve a useful purpose in educating policy makers in the Departments of Justice and Agriculture especially in the time honored maxim of “if it ain’t broke don’t fix it.” Alternatively, the workshops may be window dressing to provide support for predetermined policies and legislation which will be to the detriment of U.S. agribusiness and the poultry industry.   

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