[Congressional Record Volume 146, Number 29 (Wednesday, March 15, 2000)]
[House]
[Pages H1070-H1072]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1900
                       AGRIBUSINESS CONSOLIDATION

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 6, 1999, the lovely gentlewoman from Idaho (Mrs. Chenoweth-
Hage) is recognized for 60 minutes as the designee of the majority 
leader.
  Mrs. CHENOWETH-HAGE. Mr. Speaker, I begin my remarks tonight with the 
words from one of our Nation's greatest orators, Daniel Webster. This 
great Senator eloquently sums up the mission of agriculture for this 
Nation in a rally cry, and that rally cry is placed, Mr. Speaker, right 
above the Speaker's head in this very Chamber. That rally cry says, 
``Let us develop the resources of our land, call forth its powers, 
build up its institutions, promote all its great interests and see

[[Page H1071]]

 whether we also in our day and generation may not perform something 
worthy to be remembered.''
  Mr. Speaker, this foundational principle largely responsible for 
bringing the prosperity to this Nation is now being threatened. In 
fact, the market power struggle between corporate giants and helpless 
farm families is divesting rural America, especially when consumers are 
buying record amounts of food at record high prices while our family 
farm producers are going broke.
  Mr. Speaker, few of us realize that approximately four big companies 
control most of the processing and distribution of all of the beef, 
pork, chicken and grain in this United States. Even further, on the 
distribution and retail side, there are only a handful of companies 
that control the United States grocery industry. Well, what has 
happened is that today these giant concentrated companies, with their 
economic market power, have usurped the farmers' and ranchers' share of 
the retail dollar, draining the lifeblood from the family farm and 
threatening our safe, sustainable and dependable American food supply. 
That is unacceptable.
  I have to say, Mr. Speaker, I really appreciate the Albertsons 
Grocery Company that is headquartered in my district because they have 
realized the unrest that is growing with the American people in this 
concentration issue, and I am very pleased that they are now labeling 
their meat in most of their meat counters as to where the meat has been 
grown and processed, and my hat is off to a company that I am very, 
very proud of.
  In the livestock industry, for instance, four meat packers control 
over 80 percent of the beef market and are using captive supplies and 
abusive market power to drive down the prices paid to producers. 
Specifically, our family farmers and small cattle producers are 
providing approximately 88 percent of the total investment it takes to 
put a steak on the consumer's plate but at the same time packers' and 
distributors' costs are making up the additional 12 percent of the 
remaining investment.
  Now, unfortunately, while these big packers and retailers overpower 
the industry, cattle producers and consumers are losing big time every 
day on price, quality, consistency and food safety. The current 
situation in the cattle market is analogous to economic theories 
presented by the Nobel Prize winning economist Frederick August von 
Hayek over 50 years ago. Mr. Hayek points out that market capitalism is 
strongest when resource owners who are close to the economic 
circumstances of time and place.
  When they are the ones that make the economic decisions, such a 
market structure results in the most efficient use of resources and 
competitive market.
  On the other hand, Hayek demonstrates that the concentration of 
economic decision-making in the hands of a relatively small number of 
individuals is extremely harmful and counterintuitive to the 
capitalistic principles that have built this great Nation. It does not 
matter whether those individuals are government bureaucrats in a 
Soviet-styled Communist regime or are corporate executives in large 
companies. We must not let American agriculture fall into this trap. 
This concentration of power creates a cartel that is monopolistic by 
nature and rewards power and greed. This must stop, Mr. Speaker.

  This phenomenon was confirmed by a study by Auburn professor and 
agricultural economist C. Robert Taylor, and the study reports that, 
and I quote, ``The increasing gap between retail food prices and farm 
prices in the 1990s is due largely to exploitation of market power and 
not to extra services provided by the processors and retailers.''
  Mr. Speaker, I would like to point out this graph that I have here. 
As we can see, the red is the retail price and the green is the farm 
price. We see retail price leveled off at a very high mark while farm 
prices are taking a precipitous drop.
  As we can see clearly in this chart, while the price of meat in the 
supermarket continues to climb, the price paid to producers continues 
to decline dramatically. This portion in the middle of the chart 
represents the inequitable market power that is growing that is gained 
by the retail industry.
  Now, another glaring example is evidenced in the hog sector of our 
economy, Mr. Speaker. In 1999, Smithfield, the number three hog 
producer, bought out the number two producer, Carroll Foods. This 
catapulted them into the top spot ahead of Wendell Murphy. Then in 
September of 1999, Smithfield, the world's largest pork producer, 
announced intentions to purchase Murphy Family Farms, the new number 
two hog producer.
  Well, this gives them 660,000 sows or one-eighth of the total 
breeding herd in this country. Imagine owning one out of every eight 
sows in an industry where only a few short years ago no single entity 
had even 1 percent of the market.
  Mr. Speaker, the raw, robber baron, market power does not just stop 
here. In grain crop production we have gone from 80 individual 
companies selling seed down to 10, from 80 to 10, and out of these 10 
players left, 3 of those 10 sell 75 percent of the seed in this 
country. With this high level of concentration among seed companies, we 
see great efforts to seize control of the entire process.
  We might logically ask if anyone is aware of this trend besides the 
small producers who are being run out of business? Yes, Mr. Speaker, 
many people are aware. In fact, in 1997, the National Commission on 
Small Farms appointed by Agriculture Secretary Dan Glickman recommended 
actions for the U.S. Department of Agriculture to ensure the future for 
family farming and ranching. Unfortunately, after assessing USDA's 
responsive actions, an overwhelming majority of members who served on 
the Commission recently gave the USDA a ``D'' for implementing its 
recommendations to ensure fair market access for family farmers; not a 
good record for this administration; a failing grade, Mr. Speaker, and 
a failure to protect the livelihoods of these American farmers.
  The Commission's major finding was that the erosion of the family 
farm in agriculture was not the result of inevitable market forces but 
of a bias at USDA towards, quote, large scale enterprises.
  Now, despite the Commission's recommendations, I am sorry to report 
the USDA is continuing to allow the American producer to be exploited 
by an agribusiness monopoly.
  Mr. Speaker, as a result, in my State, farmers and ranchers are on 
their knees. Our American food producers in rural communities are being 
destroyed while the processing and distribution conglomerates are 
gorging on unprecedented profits.

  Let us not forget our responsibility to protect the American farmers 
and ranchers. As Thomas Jefferson said, and I quote from Jefferson, 
``Those who labor in the earth are the chosen people of God, if ever he 
had a chosen people, whose breasts he has made his peculiar deposit for 
substantial and genuine virtue. It is the focus in which he keeps alive 
that fire, which otherwise might escape from the face of the earth. 
Corruption of morals in the mass of cultivators is a phenomenon of 
which no age nor nation has furnished an example. It is the mark set on 
those, who, not looking up to heaven, to their own soil and industry, 
as does the husbandman, for their subsistence, depend for it on 
casualties and caprice of customers.''
  How can we have a fair marketing system when these conglomerates make 
record profits and my agricultural constituents in Idaho and those in 
America are being run out of business? How can that happen?
  To complicate matters even further, listen to what Mr. Drabenstott, 
vice president of the Kansas City Federal Reserve, said before the 
House Committee on Agriculture in February 1999, and I quote from his 
testimony, ``As supply chains become more dominant in their structure, 
farmers face a simple test; build new relationships or be left out of 
the game. The emergence of bigger players means producers must be more 
nimble and savvy in adjusting to the market realities.''
  Mr. Speaker, this shocking statement suggests that Mr. Drabenstott 
would like to see the American food producers subjugated to the status 
of serf. Under this scenario, the big corporate agricultural giants 
would severely hamper the farmer's ability to earn a fair return for 
their product as

[[Page H1072]]

they are forced to get in line in the chain supply, a growing food for 
a narrowing market. Even further, it will erode the independence of 
farmers by shifting major decision making to a handful of corporate 
firms and executives. America is a great Nation because we were built 
on a strong moral threshold. That is to say, in part we have strongly 
encouraged small businessmen to freely enter the fair market system.
  Unfortunately, the corporate conglomerates now stand between hundreds 
of thousands of producers and millions of consumers as they manipulate 
the markets to their own advantage. This is seriously handicapping our 
farmers and ranchers and consumers also, Mr. Speaker.
  We all know that big agribusiness, like ConAgra, Cargill and IBP, 
need American producers more than farmers and ranchers need big 
agribusiness. So, again, remember we know from history that 
concentration of economic decision making in a small number of hands is 
the least productive and the least beneficial system. Ultimately, it 
only serves as the road to serfdom for American farmers.
  Take, for instance, Communism. It took what Karl Marx called, quote, 
the means of production, and consolidated it into one giant entity, the 
government. That is what Communism did. It gave a small group of people 
control over the farms, the factories and even the roads and rivers. 
Yes, that is precisely what is happening here today, except that it is 
the corporate monopoly that is gaining a stranglehold on the means of 
production.
  To make matters worse, the Federal Government is giving its winking 
approval. This is brutally wrong and against American principles and 
public policy that we have historically been able to rely on.
  Mr. Speaker, the time has now come for the Clinton administration to 
use the powers at its disposal under the Packers and Stockyards Act of 
1921 to provide a fair beef marketplace. The measure was enacted to 
prevent these kinds of anticompetitive practices by the big corporate 
giants. Undoubtedly, there is something wrong when the conglomerates 
are allowed to operate in blatant violation of Federal laws.

                              {time}  1915

  In fact, meat packers today look right into our eyes with a straight 
face, when their monopolistic practices remain unchecked by existing 
law, but they go ahead and deny that they are even regulated. This is a 
mockery of our existing laws and the justice system that we are 
supposed to be able to rely on.
  I believe in a fair and competitive marketplace. However, I am very 
concerned that the individual agricultural producers have been 
overwhelmed by threats of predatory pricing. The time has come to 
restore the market balance between small producers and big 
agribusiness.
  To help in this, legislative measures such as H.R. 1144, the Country 
of Origin Meat Labeling Act of 1999, which I introduced, complete price 
reporting, as well as other measures addressing anti-competitive 
practices by the meat packers, will give hope and encouragement to 
American producers and security to American consumers, because with 
this act coming into law, American consumers will know the country of 
origin which the meat came from.
  Let me conclude by pointing out that the very powerful words of 
Theodore Roosevelt still ring true. President Roosevelt states in his 
March 4, 1905, inaugural address, ``Never before have men tried so vast 
and formidable of an experiment as that of administering the affairs of 
a continent under the forms of a Democratic republic. The conditions 
which have told our marvelous material well-being, which have developed 
to a very high degree our energy, self-reliance and individual 
initiative, have also brought the care and anxiety inseparable from the 
accumulation of great wealth in these industries.''
  Mr. Speaker, these are important words.

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