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We are dying. That is the message farm state legislators have been getting from their agricultural constituents. Angry farmers and ranchers have protested on the Mall in Washington, D.C., and packed the halls during home-state meetings to complain about two things they say are killing off family agriculture: low prices and big agribusiness. In response, legislators have come up with a solution that could radically alter the agribusiness landscape: change antitrust laws to carve out a protective niche for the farmers, and bring in the Department of Agriculture for oversight. Many farmers and farming groups are cheering the move, saying it’s the least government can do to help the family farmer. But antitrust lawyers and food processors do not want agriculture getting any special favors or exemptions, and they are already hard at work on the Hill to slow the proposed legislation. The battle is shaping into the farm face-off of 2000. “This is the biggest issue in farm country,” said Tom Buis, vice president of government relations for the National Farmers Union. The Farmers Union is backing two bills in the Senate this year, one from Tom Daschle, D-S.D., and another by Charles Grassley, R-Iowa. Although very different, both would substantially change the playing field for agri-mergers. “I think merger mania would not be so automatic,” says Russ Feingold, D-Wisc. “I think the corporate powers-that-be will have to think about what they are doing and what harm they are causing. These are the robber barons of our time.” Both bills address a broad range of issues. Daschle’s bill requires use of plain language in contracts with farmers, who often enter into deals without legal advice. Grassley’s bill gives additional price protections to contract poultry growers. Both bills expand predatory pricing protections. USDA COMPETITION COUNSEL But the most revolutionary, and contested, sections involve merger reviews. Daschle’s bill would require all agriculture-related companies to file premerger documents with the USDA. The secretary of agriculture would have the power to review any merger for its potential to lead to future unfair pricing practices or to be “significantly detrimental to the present or future viability of family farms or ranches or rural communities.” The department could then recommend changes to the deal structure, such as a requirement for the merged entities to sell certain plants or grain elevators. Companies would face a $300,000 one-time levy, then a daily $100,000 fine for ignoring the department’s mandates. Grassley’s legislation would create a special counsel within the Department of Agriculture for competition matters, charged with reviewing proposed mergers to see whether they would “cause substantial harm to the ability of independent producers and family farmers to compete in the marketplace.” The special counsel would also issue recommendations, but would then have the power to challenge any disputed merger in court, just as the Department of Justice currently does. Either bill would expand the powers of the Department of Agriculture. But more important, the bills would fundamentally change the review standard of agri-mergers. Mergers would be evaluated not just on how they impact competition, but whether they “harm” or are “detrimental” to farmers — a standard that far more agri-mergers are likely to run afoul of. “Our reading is that they could basically ice a proposed merger,” says Sara Lilygren, senior vice president for legislative and public affairs at the American Meat Institute, which is leading a coalition of business groups against the legislation. “We feel current antitrust laws should be enforced vigorously. But we are strongly opposed to carving out a sector of industry for special antitrust regulation. That is just wrong.” Bill supporters agree the legislation could hold mergers to a higher standard. But they argue that will be beneficial. “Farmers and ranchers need a competitive marketplace where they get a fair price for their products,” Daschle said when he introduced his bill, which is backed by farm state Patrick Leahy, D-Vt., Byron Dorgan, D-N.D., and Robert Kerrey, D-Neb. “Today, that does not exist.” BLAME THE FREE MARKET? The bills illustrate the fault lines dividing any farm policy debate. There is no denying the rapid consolidation of the agriculture business and the problems of smaller farms. The question is whether those two are linked. In 1996, the United States moved toward a free market philosophy for its farmers with the Freedom to Farm Act. The bill dropped restrictions on what farmers could plant and grow, while also removing some of the economic protections they had previously enjoyed. But the success of that program has been disputed, because in the years since then Congress has had to approve billions in emergency support for failing farmers. In fact, last week Congress authorized a $15.3 billion aid package. Softness in overseas markets and disparities in production and demand have left farmers struggling. In the farmers’ eyes, so have agri-mergers. “I don’t think it’s special protections,” says John Crabtree of the Center for Rural Affairs. “The agriculture market is different, and the concentration is unprecedented.” In 1982, the four top hog processors controlled 36 percent of the market. Today, it’s 54 percent, according to Department of Agriculture figures. In the cattle business, the top four processors’ percentage has grown from 32 percent in 1982 to 70 percent today. There are similar statistics for grain processing. And the past few years have seen industry mega-mergers: the Monsanto Co. and DeKalb Genetics Corp.; Cargill Inc. and the Continental Grain Co. While those levels of concentration may not quite match that of the computer operating system market, farmers have to be concerned about geographic monopolies, such as when the number of grain elevators in a town drops from four to two to one. Farmers like Robert Mack of South Dakota argue that consolidation has killed off competition. Mack doesn’t sell hogs anymore. Just can’t afford to, he says. Years ago, hog farmers could expect a decent price at one of the two hog stations in Watertown. No more. Now there’s only one place in town that buys pigs. Today he sells cattle, but would like to return to hog raising. He doesn’t want to take a chance, though, on a product that has only one local purchaser. “The prices have kind of turned around, but in the meantime we don’t have any access to markets,” Mack says. “There is no competition. This is what we are up against in agriculture. It is such an amazing web that has been woven by these companies.” But don’t make that argument to agribusiness. In their eyes, mergers make sense. Economies of scale cut down on costs. Every other industry is undergoing consolidation. Mergers aren’t hurting the farmers; the free market is hurting the farmers. And the free market is what farmers now have to live by. “I think the premise that mergers in agribusiness have any adverse impact on economic conditions is unsustainable,” says James Rill, a partner with Howrey, Simon, Arnold & White, who testified on behalf of the industry coalition on this issue before Congress. The Clinton administration has not taken a stance. Agriculture Secretary Dan Glickman has been sympathetic to the farmers’ complaints. But the Department of Justice, while not commenting on the pending legislation, has been clear in saying that, in general, current antitrust laws are sufficient and rigorously enforced. “Our antitrust laws have stood the test of time,” said John Nannes, antitrust deputy assistant attorney general in recent congressional testimony. Antitrust analysts see a whole different side. Giving Agriculture oversight would politicize any future merger review, and exempt an entire industry from the antitrust standards. “I think they are shooting at the wrong target by challenging concentration,” says Connie Tipton, senior group vice president at the International Dairy Foods Association. “If they are unhappy about the prices they are getting, it’s because of overproduction in their markets. That has to sort itself out. If you have too many family-run grocery stores, they go out of business. You can’t blame it on someone else.” LOBBYING HEATS UP Of course, it doesn’t matter what both sides believe, what matters is who can win over Congress. Already the bills have some level of bipartisan support, a key ingredient. Richard Lugar, R-Ind., chair of the Agriculture Committee, has not taken a stand on either bill but has had enough concern about the issue to hold four hearings on agriculture concentration in the past year. Agribusiness has already been writing letters and visiting Congress. The Industry Standards Coalition comprises heavyweights like the National Association of Manufacturers and the Snack Food Association. Big agribusinesses like Monsanto and ConAgra are letting the coalition take the lead. Already, coalition members have visited every Republican member of the Senate Judiciary and Agriculture committees, and they are working their way through the Democratic side. “I don’t take anything for granted in an election year,” Tipton says. The farm groups are also lobbying extensively. Their success can already be measured in the two Senate bills. Daschle’s and Leahy’s staff members relied on farmers’ groups in drafting the legislation. The groups plan to bring individual farmers to Capitol Hill soon to advocate for the bills. But the concentration bills have not yet been endorsed by several of the mainstream groups, like the American Farm Bureau Federation or the National Cattleman’s Beef Association. Bill sponsors are promising action on the issue this year. Many are hoping that the bills can be blended into one bipartisan proposal. The Judiciary Committee is expected to hold hearings on the issue next month. Members say if they can’t get the legislation out of committee, they will consider taking the bills directly to the Senate floor. “This is not a Congress that has been willing to look after the interest of the family farmer,” says Dorgan. “This Congress has been far more interested in agribusiness. Hearings aren’t enough. Farmers are tired of talking.”

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