Prepared Statement of Senator Chuck Grassley
2007 Senate Farm Bill Debate
Agriculture Competition Enhancement Amendment
Thursday, December 13, 2007
Mr. President, I ask unanimous consent to set aside the pending amendment so I can call up and discuss Amendment No. 3823, which deals with agriculture competition and increased consolidation in the agriculture industry. This amendment is cosponsored by Senators Kohl and Harkin.
I’ve been concerned with competition in the agricultural marketplace and increased concentration in the ag industry for quite some time now. Agriculture is a risky business. I know that from personal experience - I’ve lived and worked on a farm all my life. But for some time working in agriculture has become even more difficult for the little guy - the trend has been for companies in the agriculture sector to consolidate, creating new business giants and impacting competition in the marketplace for family farmers, producers and consumers.
Family farmers and independent producers are feeling the pressure of concentration in agriculture. Small and independent producers are seeing fewer choices of who to buy from and who to sell to. And all this consolidation in the industry, at both horizontal and vertical levels, leads to the very real possibility of fewer product choices and higher prices for consumers.
I don’t believe that all mergers are in and of themselves wrong or unfair. But we need to make sure that open and fair access to the marketplace is preserved for everyone. We need to make sure that large businesses are not acting in a predatory or anti-competitive manner. We need to make sure that family farmers and independent producers can compete on a level playing field. We need to make sure consumers have as many choices as possible. By looking out for these things, we keep our economy strong, our agricultural community vibrant and competitive, and our consumers happy.
So I’m offering Amendment No. 3823 which, as I said, is cosponsored by Senators Kohl and Harkin. The language of this amendment draws from a bill that Senators Kohl, Thune and I introduced earlier this year, S. 1759, the Agriculture Competition Enhancement Act of 2007, or “ACE Act” for short. However, I want to make clear from the start that the amendment we’ve offered to the Farm Bill is quite different from the ACE Act as originally introduced earlier this year. Amendment No. 3823 does not include all the provisions in S. 1759, and either eliminates provisions in that bill or incorporates many changes to address concerns raised by members of the agriculture industry, the Administration, as well as Senators on both sides of the aisle. I also worked with the Chairman and Ranking Member of the Judiciary Committee, and the Chairman and Ranking Member of the Agriculture Committee to address issues that they raised. Again, Amendment No. 3823 is the product of all these discussions.
Let me explain what Amendment No. 3823 does. First, the amendment would create an Agriculture Competition Task Force to study problems in agriculture competition, establish ways to coordinate federal and state activities to address competition problems in agriculture, and make recommendations to Congress. In particular, the Task Force would establish a smaller Working Group on Buyer Power to study the effects of concentration, monopsony and oligopsony in agriculture, and make recommendations to the Department of Justice and the Federal Trade Commission for agriculture guidelines. The Task Force will help give our federal antitrust regulators real insights and expertise specific to the farm community that I believe is currently lacking when they address competition issues in agriculture.
Second, the amendment would require the Justice Department and the Federal Trade Commission to issue agriculture guidelines, taking into account the special conditions of the agriculture industry, and require the Justice Department and the Federal Trade Commission to report to Congress on the guidelines. Both Senate Judiciary and Agriculture Committees heard witnesses in several hearings testify that there is a need for agriculture specific guidelines when the Justice Department and the Federal Trade Commission look at agriculture mergers. Currently, the Department of Justice and the Federal Trade Commission have guidelines for specific industries and issues, such as health care and intellectual property. It makes sense not just to me, but to many experts in agriculture and antitrust law, that our federal regulators should have agriculture guidelines because of the special circumstances and characteristics particular to the agriculture industry. Those special characteristics include monopsony - which is a situation where there is a single purchaser for goods - and oligopsony - which is a situation where there are a few buyers who have a disproportionate amount of market power.
Third, the amendment would formalize the Department of Agriculture’s review of agriculture mergers with the Justice Department and the Federal Trade Commission, requiring USDA to provide comments on larger mergers in the industry (mergers that submitted second requests for information under the Clayton Act). Currently, the Justice Department or the Federal Trade Commission informally consults with the Department of Agriculture when they analyze ag mergers. These agencies have a Memorandum of Understanding to consult with each other. But I believe that the current process does not sufficiently ensure that the farm community’s concerns are adequately considered.
Far more than the Justice Department or the Federal Trade Commission, the Department of Agriculture has extraordinary knowledge and expertise in agricultural matters. The Department of Agriculture formulates agriculture policy for the nation, and works closely with the farm community and agriculture industry about their various concerns. They have experts and economists who know and work with the data on a daily basis. The Department of Agriculture is the office that can best assess the true impact of agriculture mergers and other business transactions on farmers, ranchers and independent producers, as well as the trickle down effect on consumer. So that is why it makes sense that the role that the Department of Agriculture plays in the antitrust review of agriculture mergers be a permanent and formal role, not one that is informal and loosely contained in a Memorandum of Understanding. Moreover, having such a requirement of formal participation or consultation is not a novel idea – other agencies, such as the Federal Communications Commission and the Department of Transportation, formally participate in the review of mergers in their industry. They render formal decisions that are then shared with the Federal Trade Commission or the Department of Justice. Our approach in the amendment is a modest one – it basically puts in statute what the Justice Department and the Federal Trade Commission are allegedly already supposed to be doing with the Department of Agriculture. The approach we advocate in this amendment will ensure that all agriculture’s concerns and needs are fully discussed when federal agencies examine proposed ag business mergers. By guaranteeing inclusion and openness, we will go a long way toward alleviating understandable anxiety about an increasingly concentrated industry.
Finally, the amendment would provide for additional resources to the Justice Department and the Department of Agriculture GIPSA to enhance their ability to look at agriculture transactions and competition issues.
I want my colleagues to know that we worked very closely with several agriculture and antitrust experts on the language contained in this amendment. The amendment is supported by a number of farm groups, including the Organization for Competitive Markets, the Campaign for Contract Agriculture Reform, the Center for Rural Affairs, Food & Water Watch, the Institute for Agriculture and Trade Policy, R-CALF USA, Sustainable Agriculture Coalition, and the Western Organization of Resource Councils. I’d ask for unanimous consent to put a December 10, 2007, letter in the record in support of this amendment.
So my colleagues are clear, Senator Kohl and I listened very carefully to the concerns expressed by companies and groups who contacted us about S. 1759, the original ACE legislation, and in response to those concerns, we made significant changes and eliminations to the language which have been incorporated in this amendment. This amendment does not make any substantive changes to the antitrust laws. There is no new post merger review requirement. There is no mandatory adoption of Task Force recommendations on the guidelines. The constitutional issues raised have been taken care of, and the more contentious provisions have been eliminated. The bottom line is the concerns that were raised by certain companies, as well as the Justice Department and the FTC, about our previous iterations of the ACE bill have been taken care of in this amendment. The bottom line is that this amendment is very much an attempt to address everyone’s concerns and to reach a fair compromise, because I think we could have gone a lot farther and been a lot more aggressive in dealing with agriculture competition issues.
There is a real need for this amendment. We need it to beef up our ability to address competition issues in agriculture and to address concerns with consolidation in the industry. My amendment is an itty bitty step in the right direction. It’s a small step, but still a good first step at getting something done. I urge my colleagues to support the Grassley/Kohl/Harkin amendment.