immediate release -- Thursday, May 17, 2001.
Contact Bob Brammer, 515-281-6699
Protect Farmers Threatened
Concentration in Agriculture
Iowa Attorney General Tom Miller today outlined steps that state and
federal officials are taking and should take to protect farmers who are
threatened by what he called "the rapid trend toward both horizontal
and vertical consolidation in agriculture."
Miller testified Thursday
before a U.S. Senate Agriculture Appropriations subcommittee hearing on
agriculture market concentration [Miller's Testimony]. He leads a group
of state attorneys general who are focusing on concentration and contracting
"My worry is
that the conglomeration of economic power may lead to anti-competitive
practices that reduce the prices paid to farmers for their commodities
and increase the price paid by consumers for food," he said. "It's
a double-whammy that hits the nation's farmers and ranchers hardest, but
it will affect everybody else, too."
Miller described four
main areas for action:
enforcement by the states and federal government. State and federal officials
have worked closely to review several huge mergers and acquisitions in
agriculture, Miller said, and states obtained a multimillion-dollar settlement
with major chemical manufacturers for alleged anti-competition violations.
But he said there are limits on the use of antitrust law, especially with
restrictive court interpretations of recent decades. "Antitrust law
is only one part of a possible solution to the problems farmers face,"
· State action
on contracting. Many state legislatures are considering various elements
of a model "Producer Protection Act" prepared by a group of
state attorneys general led by Miller. The rapid growth of contracting
poses risk to producers such as unfair shifting of risk to producers,
loss of "market transparency," and a greater and greater disparity
between processors and farmers with respect to bargaining power and market
information. "The goal of our model act is to provided protections
needed by farmers without overburdening processors," Miller said.
· Federal legislation
on contracting. "I strongly support the concept of enacting federal
protections that mirror the states' proposals," Miller told the Senators.
He urged the Congress to establish producer protections such as banning
confidentiality clauses in contracts, requiring written disclosure of
risks in plain language, and making it an unfair practice for processors
to retaliate against producers who are "whistleblowers" or join
· Federal legislation
strengthening the ability of producers to organize associations to bargain
with processors, contractors and cooperatives. "There is no question
that farmers and ranchers now more than ever need to join together to
bargain for better contractual terms with large agribusinesses,"
Miller said. He backed federal legislation that has been introduced to
establish a process for voluntary producer associations to receive USDA
accreditation and authority to bargain with large processors, contractors
and cooperatives - with mutual obligations to bargain in good faith imposed
on all parties. "This law would give farmers and ranchers the power
to band together and negotiate agreements to give them their fair share
of the profits created in production agriculture," he said.
Any federal legislation
should not preempt the States' power to act, Miller said. "We must
be able to grant producers protection based on the specific needs in a
state," he said.
"The use of production
contracts and marketing contracts by firms with ever-growing market shares
has dramatically increased vertical integration in American agriculture,"
Miller told the Senate committee. Sometimes producers are "contracting
with near monopolists," Miller said, citing a phrase used by Dr.
Neil Harl, the noted Iowa State University agricultural economist and
attorney. "This is particularly true in some agricultural sectors
where there is a high level of horizontal concentration combined with
vertical linkages through contracts," Miller said. "It poses
serious risks for producers and, ultimately, for consumers."
For example, Miller
said, federal contracting legislation should prohibit confidentiality
clauses in agricultural production and marketing contracts - an element
of the states' model "Producer Protection Act" that already
is in effect in Iowa. "Except in Iowa, ag contracts routinely contain
strict confidentiality clauses, with some so restrictive that farmers
are reluctant to consult with their lawyers and financial advisors,"
he said. "As a result, most agricultural contracting is conducted
in virtual secrecy, which severely limits the ability of farmers to compare
contracts and negotiate the best, or even a fair deal."
Using the protection
of Iowa law, Miller said, his office's Farm Division has been able to
post at its web site about 70 different types of contracts provided by
producers, with producers' names deleted. (The web site is www.IowaAttorneyGeneral.org
-- click on "farm advocacy.") "We have had thousands of
hits on our web site," Miller said. "This is one of the few
places in the nation where producers can obtain information they need
to compare price and other terms and conditions of contracts. They need
that kind of information to negotiate better deals. We would like to see
this protection and other safeguards enacted in both state and federal