000204 Senators Press White House to Curb Agri-Mergers

Washington - Farm-state senators pressed the Clinton administration on Tuesday to curb agribusiness mergers, blamed in rural America for weakening crop and livestock prices by reducing the number of buyers.

Farm-country sentiment has surged against agribusiness consolidation at the same time market prices have wilted in the past two years. Whether beef and hog slaughter or grain processing, a handful of firms dominate the sector.

“You ought to go out and take pre-emptive action,” North Dakota Democrat Kent Conrad told Agriculture Department officials at a Senate Agriculture Committee hearing. He said agricultural fair-trading laws could be utilized.

“The secretary has substantial authority here that hasn't been exercised.”

Wisconsin Democrat Russ Feingold called for passage of his bill for a moratorium on mergers of large firms. A similar proposal for an 18- month moratorium was defeated soundly in the Senate last fall.

Four other senators expressed frustration at the pace of consolidation in agribusiness.

“We all want to do something but we don't know what,” said Kansas Republican Pat Roberts, who warned that hasty action might unwittingly handicap new-style farmer-owned businesses that let producers reap some of the profits of processors.

Agriculture Undersecretary Mike Dunn was sympathetic to complaints that mergers were a factor in lower farm-gate prices but disagreed that the department could block them.

The Justice Department has jurisdiction over antitrust laws, he said, while Agriculture can act on unfair trade practices when it has evidence harm has been caused.

“We have to have the facts in hand before we can take action,” said James Baker, head of the Grain Inspection, Packers and Stockyards Administration.

The Organization for Competitive Markets, which favors independent farmers, said the Agriculture Department had far more power than it used to assure fair markets. It said the law allowed action to cut off harmful practices from their inception, rather than waiting for damage to accumulate or having to prove malicious intent.

Congress should resolve the situation by outlawing packer ownership of livestock, preferential price contracts between farmers and packers and “forward” contracting of livestock sales prices unless traded openly, the senators said.

In 1999, 36% of hogs were sold through price formulas and 44% were sold on the “spot” market, a huge change from 1994, when 71% were sold on the open market.

Purdue University professors suggested two ways to give farmers an equal voice on prices.

One would be an alliance of farmers producing 300,000 to 500,000 head a year, enough to influence prices. The other would be creation of so-called marketing orders that set prices in a region.

“With current knowledge, we cannot recommend breaking up existing packer concentration,” Associate Professor Ken Foster said in written testimony. “However, public policy can assist producers in gaining countervailing market power.”

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