[Congressional Record Volume 153, Number 29 (Thursday, February 15, 2007)]
[Senate]
[Pages S2052-S2053]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKlN (for himself, Mr. Enzi, Mr. Feingold, Mr. Thomas, 
        Mr. Dorgan, Mr. Baucus, and Mrs. McCaskill):
  S. 622. A bill to enhance fair and open competition in the production 
and sale of agricultural commodities; to the Committee on Agriculture, 
Nutrition, and Forestry.
  Mr. HARKIN. Mr. President, today I am introducing the ``Competitive 
and Fair Agricultural Markets Act of 2007.'' Cosponsors joining me in 
introducing this legislation are: Senators Enzi, Feingold, Thomas, 
Dorgan, Baucus and  McCaskill. This legislation seeks to level the 
playing field for agricultural producers by strengthening and 
clarifying the Packers and Stockyards Act of 1921 and the Agricultural 
Fair Practices Act of 1967 and strengthening enforcement of both laws 
by USDA. I intend to use this legislation as the basis for developing a 
proposed competition title in the new farm bill this year.
  Consolidation is happening in all sectors of agriculture and having a 
negative effect on producers and consumers across the Nation. 
Consolidation in itself is not a violation of the Packers and 
Stockyards Act, but when some entities become larger and more powerful 
that makes enforcement of the Packers and Stockyards Act absolutely 
critical for independent livestock and poultry

[[Page S2053]]

producers. The statistics speak for themselves. For example, today, 
only four firms control 84 percent of the procurement of cattle and 64 
percent of the procurement of hogs. Economists have stated that when 
four firms control over 40 percent of the industry, marketplace 
competitiveness begins to decline. Taken together with fewer buyers of 
livestock, highly integrated firms can exert tremendous power over the 
industry.
  The Grain Inspection, Packers and Stockyards Administration, GIPSA, 
at USDA has the responsibility to enforce the Packers and Stockyards 
Act. This Act is critical, and protects livestock producers from 
unfair, unjustly discriminatory and anti-competitive practices in the 
marketplace. For years I have had my doubts about whether USDA was 
serious about enforcing the Packers and Stockyards Act. In 2005, I 
requested an audit by USDA's Inspector General to investigate USDA's 
oversight, and enforcement of the law. Last year, the Inspector General 
confirmed the concerns I had and uncovered even more systemic problems. 
The report described widespread inaction, management of the agency 
actively blocking employees from conducting investigations into anti-
competitive behavior and a scheme to cover up the lack of enforcement 
by inflating the reported number of investigations conducted.
  That is why today, the legislation I introduce will reorganize the 
structure in how USDA enforces the Packers and Stockyards Act and 
create an office of special counsel on competition matters. The special 
counsel would be appointed by the President with advice and consent 
from the U.S. Senate. Some would argue that Senate advice and consent 
is not needed. However, for over five years, GIPSA failed to move 
competition investigations forward and no one above the level of deputy 
administrator at GIPSA seemed to have any idea that any problems were 
going on, despite the fact I was sending letters to the Secretary of 
Agriculture pointing out that USDA was failing to enforce the law.
  In the past year, GIPSA has worked in good faith to improve its 
enforcement activities. However, GIPSA only investigates potential 
violations of the law, they do not litigate and follow-through with the 
investigation to the end. Litigating cases is reserved only for USDA's 
Office of General Counsel, OGC, unless they refer it to the Department 
of Justice.
  USDA's Office of General Counsel has not been active on cases 
involving anti-competitive practices in recent years since GIPSA was 
not referring cases to them. To be sure, only two cases involving anti-
competitive practices were referred to OGC in 5 years. But there are 
concerns that OGC is not as committed to enforcing competition 
investigations as they should be. This lack of commitment was clearly 
evident last year in testimony provided by OGC Assistant General 
Counsel in the Trade Practices Division at a hearing by the Senate 
Committee on Agriculture, Nutrition, and Forestry.

  Concerns about OGC's attitude toward enforcing the Packers and 
Stockyards Act are not new. USDA's Inspector General stated in its 1997 
audit that Packers and Stockyards program officials were concerned that 
OGC did not want to litigate competition cases ``because they are 
complicated and time consuming'' and OGC had ``limited expertise'' with 
them. In 2000, the Government Accountability Office found 
``disagreements'' between OGC and GIPSA regarding the interpretation of 
the Act's competition provisions. By combining investigation and 
prosecution activities into the proposed special counsel office, 
designated to handle competition issues, it reduces the ability for 
investigations to be batted back and forth within USDA.
  This legislation also makes many important clarifications to the 
Packers and Stockyards Act. The Packers and Stockyards Act prohibits 
unfair, unjustly discriminatory and anti-competitive practices, but 
some courts have ruled that producers need to prove an impact on 
competition in the market in order to prevail in such cases involving 
unfair or deceptive practices. For example, the United States Eleventh 
Circuit Court of Appeals ruled that a poultry grower operation failed 
to prove how its case involving an unfair termination of its contract 
adversely affected competition. The court indicated that the grower had 
to prove that their unfair treatment affected competition in the 
relevant market. That is very difficult to prove and was never the 
intent of the Packers and Stockyards Act.
  This legislation also modifies the Packers and Stockyards Act so that 
poultry growers have the same enforcement protections by USDA as 
livestock. Currently, it is unlawful for a livestock packer or live 
poultry dealer to engage in any unfair, unjustly discriminatory or 
deceptive practice, but USDA does not have the authority to enforce 
violations because the enforcement section of the law is absent of any 
reference to poultry. This important statutory change is long overdue. 
In addition, to better reflect the integrated nature of the poultry 
industry, this legislation also ensures that protections under the law 
extend to all poultry growers, such as breeder hen and pullet 
operations, not just those who raise broilers.
  The Agricultural Fair Practices Act of 1967 was passed by Congress to 
ensure that producers are allowed to join together as an association to 
strengthen their position in the marketplace without being 
discriminated against by handlers. Unfortunately, this act was passed 
with a clause that essentially abolishes the actual intent of the law. 
The act states that ``nothing in this Act shall prevent handlers and 
producers from selecting their customers'' and it also states that it 
does not ``require a handler to deal with an association of 
producers.'' This clause in effect allows handlers to think of any 
reason possible to not do business with certain producers, as long as 
the stated reason is not because they belong to an association.
  I propose to expand the Agricultural Fair Practices Act to provide 
new needed protections for agricultural contracts. As I have mentioned 
earlier, consolidation in all sectors of agriculture is reducing the 
number of buyers of commodities and for the very few who are left, many 
require contracts to conduct business. With so few buyers, it increases 
the chances that some firms will force unfair contracts upon producers. 
As a result, some producers have little or no choice but to contract 
with a firm with questionable practices or face leaving the industry 
they have known for their whole lives.
  This amendment to the Agricultural Fair Practices Act requires that 
the contract spell out in clear language what is required by the 
producer. This legislation prohibits confidentiality clauses, ensuring 
producers the ability to share the contract with family members or a 
lawyer to help them make an informed decision on whether or not to sign 
it. This legislation also prevents companies from prematurely 
terminating contracts without notice when producers have made large 
capital investments as a condition of signing the contract. And it only 
allows mandatory arbitration after a dispute arises and both parties 
agree to it in writing. Producers should not be forced to sign 
contracts with arbitration clauses thereby preventing them from seeking 
legal remedy in the courts.
  Mr. President, producers deserve to have a fair and evenhanded market 
in which to conduct business. This legislation won't be able to turn 
back the clock, but it will strengthen laws and enforcement of them so 
that markets operate more fairly.
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