Justice Dept. looks into competition in agriculture
The Obama Administration is fulfilling its pledge to take a close look at monopoly-like concentrations in key U.S. industries, among them agriculture.
The Justice Department today begins a series of hearings focusing on competition in agriculture, with one today in Iowa.
In a speech last May at the Center for American Progress, a Washington think tank, Christine Varney, the Justice Department's assistant attorney general for antitrust, said too often lax antitrust enforcement has led to problems in the marketplace.
"Dominant firms have the ability to exclude competitive threats and stifle innovation," Varney said. "And they may have attempted to do so without fear of government prosecution."
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Varney promised that she would lead the effort to correct those mistakes.
"Competition advocacy and vigorous antitrust enforcement will be critical pieces of the government's response," Varney said.
Varney's words became action a few months later when the Justice Department launched an antitrust investigation of Monsanto, the world's largest seed company. Farmers have accused Monsanto of using its dominant position to unfairly raise seed prices, something the company denies.
Their goal is to get my cattle on their line as cheap as they possibly can.
About the same time the Monsanto investigation began, the Justice Department announced the series of hearings on competition in agriculture. Large agriculture businesses are very much against them.
"I think it's a colossal waste of time," said Richard Poulson, executive vice president of Smithfield Foods.
Poulson said his company, the nation's largest hog processor, will skip the Justice Department meetings.
Smithfield and three other companies process nearly two-thirds of the nation's hogs, according to a University of Missouri study. Some farmers say that sort of concentration violates antitrust laws, because it allows a handful of companies to keep the price of hogs artificially low. But Poulson said no study has ever supported that argument.
"When Keith Collins was the head economist at the department of agriculture, he found that concentration had nothing to do with lowering prices," he said.
Poulson said Smithfield's market clout allows it to require farmers to supply a certain type of hog, one that's low in fat for example. He said size can be a good thing.
Cattle producer Tim Henning has little time for the argument that anyone benefits from the huge scale of meat processing firms. He hopes the Justice Department hearings are a turning point in favor of the farmer.
One livestock group estimates that four companies account for about 85 percent of the nation's cattle slaughter. Henning believes that degree of concentration stifles bidding competition between the companies, keeping cattle prices low. And he feels no one is looking out for the farmer's interests.
"I've never had a packer come out here and say 'Tim, what do you need for a break even?,' " Henning said. "Their goal is to get my cattle on their line as cheap as they possibly can."
Government regulators have done little through the years to help farmers maintain marketing power, Henning said. He doubts whether the current round of hearings will have much of an impact either.
That's because antitrust actions in agricultural rarely have the farmer in mind, he said.
