[Congressional Record (Bound Edition), Volume 147 (2001), Part 1]
[Senate]
[Pages 1357-1358]
[From the U.S. Government Publishing Office, www.gpo.gov]



                    RURAL AMERICA NEEDS COMPETITION

  Mr. JOHNSON. Mr. President, on Monday, January 22, I 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

[[Page 1358]]

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 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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