[Congressional Record Volume 145, Number 140 (Friday, October 15, 1999)]
[Senate]
[Pages S12696-S12697]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JOHNSON (for himself, Mr. Kerrey, Mr. Grassley, and Mr. 
        Thomas):
  S. 1738. A bill to amend the Packers and Stockyards Act, 1921, to 
make it unlawful for a packer to own, feed, or control livestock 
intended for slaughter; to the Committee on Agriculture, Nutrition, and 
Forestry.


                        THE RANCHER ACT OF 1999

 Mr. JOHNSON. Mr President, I rise before you today to 
introduce legislation on behalf of Senators Bob Kerrey, Charles 
Grassley, Craig Thomas, and myself. The RANCHER Act (Rural America 
Needs Competition to Help Every Rancher) is designed to reestablish a 
free, fair, and competitive market for independent livestock producers.
  South Dakota family farmers and ranchers indicate to me that one of 
the most critical problems in agriculture today is the growing, 
unabated trend of agribusiness consolidation and concentration. Too 
often today, elected leaders overlook agricultural concentration with 
rhetoric and empty promises. But talk doesn't provide any assurance to 
a cow-calf producer in South Dakota worried about what he or she will 
sell feeder calves for this fall. Talk doesn't minimize the worries of 
a diversified farmer looking for competitive markets in which to sell 
his or her grain. And talk surely doesn't assure any feeder of 
livestock that he or she will have a fair opportunity to sell slaughter 
livestock in this concentrated market.
  This bipartisan legislation would strengthen and amend Section 202 of 
the Packers and Stockyards Act of 1921 by prohibiting meatpackers from 
owning livestock prior to purchase for slaughter. It does provide 
exceptions for farmers and ranchers who own and process livestock in a 
producer owned and controlled cooperative.
  Mr. President, concern over meatpacker concentration is not new in 
the United States. Cartoons in the 1880s negatively depicted companies 
that pooled livestock together for sale as ``beef trusts'' engaging in 
monopolistic pricing behavior. In 1917 President Woodrow Wilson 
directed the Federal Trade Commission (FTC) to investigate meatpackers 
to determine if they were leveraging too much power over the 
marketplace.
  The FTC released a report in 1919 stating that the ``Big 5'' 
meatpackers (Armour, Swift, Morris, Wilson, and Cudahy) dominated with 
``monopolistic

[[Page S12697]]

control of the American meat industry''. The FTC also found these 
meatpackers owned stockyards, rail car lines, cold storage plants, and 
other essential facilities for distributing food. This led to the 
Packers Consent Decree of 1920 which prohibited the Big 5 packers from 
engaging in retail sales of meat and forced them to divest of ownership 
interests in stockyards and rail lines. Then, Congress enacted the 
Packers and Stockyards Act of 1921 that--among other things--prohibited 
meatpackers from engaging in unfair, discriminatory, or deceptive 
pricing practices.
  Unfortunately, we have allowed some in the meatpacking industry to 
once again dangerously choke free enterprise and market access. As in 
the past, producers again look to their elected leaders to take action. 
That is why I have introduced legislation in Congress to combat 
meatpacker concentration in livestock markets. My legislation will 
prohibit meatpackers from owning livestock for slaughter.
  Within the last few weeks, we've heard from pork conglomerates 
Smithfield Foods, Murphy Farms, and Tyson Foods regarding Smithfield's 
intention to own all the hogs currently held by both Murphy and Tyson. 
If these deals are to go through, around 800,000 sows could be owned 
and controlled by Smithfield. Ask any pork producer, a breeding stock 
herd of this size could enable Smithfield to totally dominate the hog 
industry.
  In response, we could seek a Department of Justice investigation of 
this deal, but it is clear to me that current anti-trust law may be 
simply too weak to stop a marriage of this nature. Some may believe we 
need trust busters with true grit in the Justice or Agriculture 
Departments to keep these deals from happening, but my experience in 
Congress tells me if we wait for this type of action, we won't have an 
independent farmer or rancher left--anywhere.
  Mr. President, current anti-trust laws have failed to address 
concerns of livestock producers in the marketplace. Moreover, growing 
packer concentration creates an imbalance in bargaining power between a 
few meatpackers who buy livestock and several producers who sell 
livestock. The relative lack of buyers means the buying side of the 
market has much more power than the selling side. Envision an 
hourglass: it is wide at both ends and very narrow in the middle. The 
two wide ends aptly represent agricultural producers and consumers. The 
narrow middle of the hourglass is the number of processors and 
meatpackers that buy livestock from farmers and ranchers and then sell 
food to consumers. A decision on the part of one meatpacker may have a 
substantial effect on the marketplace. For instance, when Smithfield 
shut down the pork plant in Huron--formerly owned by American Foods 
Group--pork producers in South Dakota were left with merely a single 
market for their slaughter hogs in the state. Alternatively, a decision 
on the part of a livestock producer seller has little if any effect at 
all on price. What does this mean? It means the marketplace is not 
competitive.
  Some so called experts'' in the industry claim that concentration 
leads to cheap prices for consumers. These experts believe 
concentration is simply unstoppable, and better yet, they point to the 
vertically integrated poultry industry as a successful guide or model 
for cattle and pork producers. They gloss over the real effects of 
concentration by touting economies of scale and productive efficiency.
  Apologists for the corporate conglomerates can criticize my efforts 
to keep meatpackers from owning livestock if they want, but given a 
choice, I will side with a broad base of family farmers and ranchers 
over conglomerate agriculture any day. It boils down to whether we want 
independent producers in agriculture, or if we will yield to 
concentration and see farmers and ranchers become low wage employees on 
their own land.
  Ultimately, if we continue to stand idle and watch control of the 
world's food supply fall into the hands of the few, consumers will be 
the real losers in terms of both retail cost and food safety.
  So today, almost a century after President Teddy Roosevelt used a big 
stick to give livestock producers a square deal, we again face a choice 
between corporate takeover of agriculture and a fight for free 
enterprise. I proudly cast my lot with the free enterprise family farm 
and ranch agriculture that has served our country so well.
 Mr. THOMAS. Mr. President, it gives me great pleasure to join 
my colleagues Senator Johnson, Senator Grassley and Senator Kerrey in 
introducing the ``Rural America Needs Competition to Help Every Rancher 
Act of 1999'' (RANCHER).
  Additional regulation of meat packing companies has become necessary 
because of a loophole my colleagues and I have long been concerned 
about: the Packers and Stockyards Act of 1921 does not clearly and 
definitively address meat packers owning livestock for slaughter. This 
legislation will prohibit meat packing companies from owning and 
feeding livestock, with the exception of producer-owned cooperatives 
defined by the majority of ownership interest in the cooperative being 
held by co-cop members that own, feed, or control livestock and provide 
those livestock to the co-op. An exemption for cooperatives is included 
as recognition and reward to those producers who have invested the 
resources necessary to enhance their market edge.
  In placing a prohibition on meat packing companies, our efforts today 
will be branded as anti-competitive and in support of ``big 
government,'' versus the ``free market.'' However, our intentions are 
precisely the opposite--we are introducing this legislation with goal 
of restoring competition to our livestock markets. In fact, this 
legislation is long overdue. In recent years, livestock markets have 
become increasingly more concentrated, leaving individual producers 
with fewer options for selling their products.
  According to the U.S. Department of Agriculture (USDA), the four top 
meat packing firms control roughly 80 percent of today's slaughter 
market, while less than 20 years ago, the top four firms controlled 
only 36 percent of the market. Over the last year we have watched the 
on-farm price of commodities plummet, while at the same time, retail 
prices have remained constant or even increased. The problem of price 
disparity, I believe is in part, attributable to growing market 
concentration. Since it is evident that market concentration exists, 
this legislation is a first step in working to restore fair market 
prices to our producers.
  Mr. President, I am proud to cosponsor this legislation--it is an 
admirable initiative that seeks to strengthen financial solvency for 
our family producers. I hope our colleagues in the Senate will 
recognize the benefits this effort will generate for producers and 
rural communities across the United States and will join us in 
restoring true market competition.
                                 ______