[Congressional Record Volume 147, Number 16 (Tuesday, February 6, 2001)]
[Senate]
[Pages S1060-S1061]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
RURAL AMERICA NEEDS COMPETITION
Mr. JOHNSON. Mr. President, on Monday, January 22, introduced S. 142,
the Rural America Needs Competition to Help Every Rancher Act,
legislation to prohibit meatpackers from owning livestock prior to
slaughter. My bill enjoys bipartisan support from Republican Senators
Chuck Grassley of Iowa and Craig Thomas of Wyoming. Senator Tom Daschle
cosponsored my bill, as well. We believe this proposal will help
restore a competitive bidding process to the cash slaughter-livestock
marketplace by strengthening the Packers and Stockyards Act of 1921.
The growing, unabated trend of agribusiness consolidation and
concentration--a problem really sweeping across this entire nation--is
one of the prime concerns of South Dakota family farmers and ranchers.
However, concern about meatpacker concentration is not new in the
United States. Newspaper cartoons in the 1880s depicted companies that
forced the pooling of livestock prior to any purchase agreement as
counterproductive ``beef trusts,'' engaging in discriminatory 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.
As a result, the FTC released a report in 1919 stating that the ``Big
5'' meatpackers at that time (Armour, Swift, Morris, Wilson, and
Cudahy) dominated the market with ``monopolistic 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. These findings 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. Subsequently, Congress enacted
the Packers and Stockyards Act of 1921 which prohibited meatpackers
from engaging in unfair, discriminatory, and deceptive pricing
practices.
Unfortunately--veiled behind what some mistakenly describe as
inevitability--the meatpacking industry is once again crusading to take
free enterprise and market access away from independent livestock
producers. On January 1, 2001, Tyson Foods declared its intention to
acquire IBP, and the Justice Department recently accepted Tyson's
assertion that the deal poses no antitrust violation. I am very
disappointed with the Justice Department's decision, and believe their
inaction on this matter makes it imperative for Congress to act.
I recently met with executives of Tyson and IBP to discuss the
ramifications of this merger. The CEO of Tyson made a provocative
promise that Tyson will not replicate its current practice of owning
livestock--they now own swine and poultry--after buying IBP.
Essentially, Tyson alleges they will not own cattle before slaughter.
Yet, it has been reported that Tyson would only make that promise for
ten years into the future, and the company has declined to comment on
what purchasing practices a merged Tyson-IBP would utilize after that
time.
While this may be a short-term panacea to satisfy Federal agencies
and elected officials, livestock producers--particularly cattle
ranchers--are in business for the long-term. Ten years can go by awful
quickly in the cattle business. Moreover, I believe--as do most South
Dakotans--that doing and saying are two very different things. Indeed,
Lee Swenson, President of the National Farmers Union, has called upon
Tyson to issue a written commitment to the Securities and Exchange
Commission that Tyson won't go into the cattle owning business.
Consequently, my bill to forbid packer ownership of livestock
restores healthy competition to the cash marketplace and ensures that
Tyson and other vertical integrators won't engage in packer ownership.
Agricultural concentration is not inevitable, it is sweeping the rural
landscape because of the choices we make. Given the Justice
Department's reluctance to address this merger, Congress must take some
responsibility to recommend ways to strengthen our competition and
anti-trust laws. I believe S. 142 is one step Congress can take.
Last year, several major farm organizations endorsed my bipartisan
effort to prohibit meatpackers from owning livestock prior to
slaughter. I would like to thank them for their support. These
grassroots groups include the
[[Page S1061]]
National Farmers Union, South Dakota Farmers Union, the South Dakota
Cattlemens Association, the Iowa Pork Producers Association, Illinois
Farm Bureau, the Center for Rural Affairs, the Organization for
Competitive Markets, and the Ranchers--Cattlemens Action Legal Fund, R-
CALF.
The members of these organizations believe that packer ownership and
captive supply arrangements by meatpackers result in less competition
for all sellers in the market, even though producers or feeders who
have these arrangements often enter into them voluntarily. As a
consequence of having slaughter livestock supplies locked up through
captive supplies, meatpackers do not have to bid competitively for all
of their slaughter needs. This may depress the marketplace and restrict
access to producers and feeders without the arrangements. Packer
ownership of livestock increases the likelihood of price manipulation
in the marketplace. When packers own livestock, they have the ability
to push forward or hold back captive supplies in response to market
price. My bipartisan legislation is one way to achieve a more
competitive bidding process in the cash market.
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 free-enterprise family farm and
ranch agriculture that has served our country so well.
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