Cargill-Continental Grain Pact
Drawing Attention In Congress

WASHINGTON —(AP)— The new chairman of the House Agriculture Committee says he wants to know how a proposed merger of the nation's two biggest grain exporters and other agribusiness acquisitions are affecting farmers and ranchers.

While he doesn't believe such mergers are "inherently bad," Rep. Larry Combest, R-Texas, said last week he "wants to make sure that there is not such a concentration that the farmers' ability to have a fair and adequate market is impacted." The committee will hold hearings on the issue after he takes over the panel next year.

Minneapolis-based Cargill Inc.'s plan to buy the worldwide grain operations of Continental Grain Co. has raised antitrust concerns because the two combined control roughly 20 percent of U.S. crop exports.

Many producers already were blaming low livestock prices on previous mergers in the meatpacking industry. Eighty percent of all beef processing is controlled by three multinational corporations.

The chairman of the Senate Agriculture Committee, Richard Lugar, has no plans to hold hearings.

The Cargill-Continental deal will be reviewed either by the Justice Department or the Federal Trade Commission for its impact on farm trade.

Cargill would acquire New York-based Continental's grain storage, transportation, export and trading operations in North America, Europe, Latin America and Asia. Cargill officials say the merger would lower transportation costs.

Earlier this year, Monsanto Co. announced it planned to buy Cargill's seed operations, adding to its earlier purchases of leading seed companies DeKalb Genetics Corp. and Delta and Pine Co.

The National Farmers Union, which has close ties with the Clinton administration, and several senators, primarily Democrats, have raised concerns about the Cargill-Continental deal. Sen. Paul Wellstone, D-Minn., expressed his opposition in letters to the FTC and Justice Department on Tuesday.

"I can't easily think of another industry where there is as much concentrated economic and political power as in the agribusiness and food industry already, to the detriment of both farmers and consumers," he said.

Agriculture Secretary Dan Glickman said he has a "general concern" about consolidation in agribusiness. "I don't want to prejudge this particular acquisition other than it should be thoroughly reviewed by antitrust regulators," he told reporters.

Combest is not the only Republican concerned about the merger. Rep. John Thune, R-S.D., backs his call for hearings.

It's an important issue in terms of market access, Thune said. "It may be that our concerns will be null and void, but I think it is something all of us need to be concerned about. It's an important issue in an agricultural state like South Dakota," he said.

An agriculture industry trend toward concentration is not positive, he said. "But at the same time, I don't want to condemn this so-called merger until we hear more about it. I have questions that need to be answered and details I want to hear about it."

Growing corporate domination in the pork industry might be part of the reason hog prices that have dropped more than 50 percent since last year, Thune added. Cargill, of Minneapolis, is the nation's fourth-largest pork producer and third-largest beef packer.

"Certainly, in the case of the cattle industry, there's concern when you have a few companies that control most of the slaughter," Thune said. "Those who have a captive supply and their own production have a tremendous market leverage. This could be true, as well, with hogs.

"These are legitimate questions that need to be answered. You can't argue the fact that when you have that kind of concentration, there is certainly the temptation there to try to mess with prices."

Congress has a legitimate role to look into the possibility that ag companies are consolidating their power and their ability to control market access, the South Dakotan said.

"Some would argue, and I think it is an accurate argument, that these are more legal issues than they are political issues. But ultimately Congress is in a position to address legal issues, too, if laws need to be changed," Thune said.