Reprinted with permission
from the Tri State Neighbor
By Bruce Falk
Editor, Tri State Neighbor
VERMILLION - The South Dakota Law Review 2013 Symposium merged the worlds of law and agriculture March 15, bringing together thinkers from both fields to discuss the theme of Antitrust and Competition in America's Heartland.
Several participants hailed the appropriateness of such a discussion in the Midwest - and South Dakota in particular - where much U.S. antitrust legislation was born out of pioneer farmers' feeling of powerlessness in the marketplace against mighty Eastern financial interests such as banks and railroads.
USD panelists pointed out that today's agricultural producers - whether they grow crops, raise livestock to sell for meat or milk cows - share some of those same feelings of powerlessness. However, the forces behind those feelings have taken on new faces.
David Balto, a native Minnesotan and antitrust lawyer in Washington, D.C., representing farmers, small businesses, health care providers and consumer groups, set the tone for the program with a presentation emphasizing the small portion of the retail food dollar that goes to farmers and ranchers. He distributed a National Farmers Union handout showing that a farmer receives 18 cents for a loaf of bread that retails for $2.99; $2 for a pound of top sirloin steak that costs consumers $7.99; and $1.67 for a gallon of milk that sells for $4.12 at the grocery store.
Keep in mind that those numbers come during an era in which commodity markets have, in large part, been kind to producers, so the farmers' share often has been even lower.
The next panelist to speak was Bill Bullard, a former rancher from Perkins County in South Dakota. As chief executive officer of the Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America (R-CALF USA), he warned against the increasing concentration of market power of a few industry giants in the meatpacking industry.
Bullard said the trend is a continuation of the industry's merger mania of the 1980s.
By 2010, four firms controlled 85 percent of the marketplace, he said, adding that most of the largest feedlots are owned by the meatpackers themselves.
Such centralization has moved our cattle industry closer to the industrialization model such as exists in the hog and poultry industries, he lamented.
The result, he said, has been a massive loss of livestock operators, with the largest meatpackers able to manipulate the cash market for cattle to their advantage.
Bullard pointed out that cattle producers are dealing with a perishable product whose value can deteriorate sharply if not marketed soon after reaching prime condition. As a result, time is the friend of the meatpackers, whose systematic, artificial pressuring of the cash marketplace gives them an insurmountable edge over producers.
And it's a situation that makes it difficult for a new player to enter the scene, he said. Barriers to market entry are being tested right now in Aberdeen, S.D., he said, referring to the new state-of-the-art facility recently opened by Northern Beef Packers.
The next presenter, Peter Carstensen, said that much of the problem with the antitrust landscape in agriculture lies in the fact that it is reliant on an ancient legal structure.
The University of Wisconsin Law School professor noted that the Capper-Volstead Act, adopted by Congress in 1922,. remains the legislation in play for issues regarding associations of persons producing agricultural products, or cooperatives. Capper-Volstead provides certain exemptions from antitrust laws for such entities.
After 90-plus years of a statute, Carstensen said, it's probably time for some statutory revision.
The antiquated language of the act now allows pure cartel cooperatives to qualify for antitrust exemptions by using minimal production holdings, then manipulating the market dramatically. In the dairy industry, for example, it has led to many situations under which the dairy farmers are the ones that are getting milked.