Ag Processor Concentration
Drawing State, Federal Fire

WASHINGTON —(AP)— Lawmakers hoping to halt the number of big company mergers in agriculture plan to make their case to Attorney General Janet Reno.

Reno agreed to meet with senators this week, said Sen. Kent Conrad, D-N.D. Conrad is one of a group of lawmakers who have been urging the Justice Department to investigate concentration in agriculture.

``The farmer share has dropped precipitously,'' Conrad told a Senate Agriculture Committee hearing on industry consolidation last week. ``Concentration has consequences.''

One after another, lawmakers expressed the same concern: Too much consolidation may spell the end of the small family farmer.

``We are losing family farmers at a record pace,'' said Sen. Byron Dorgan, D-N.D., who has called for a moratorium on approving any new agribusiness mergers or acquisitions.

Added Sen. Charles Grassley, R-Iowa: ``Agriculture benefits from the resulting efficiencies. But how big is too big?''

Concerns about concentration have risen since Cargill Inc. of Minneapolis, the nation's No. 1 grain company, announced plans to buy the worldwide operations of second-ranked Continental Grain Co.

The proposed merger comes at a time when low prices have swept both livestock and commodities markets. Many lawmakers worry that the Cargill-Continental deal, which is being reviewed by Justice, will further depress prices for farmers.

As of 1997, the four largest packing firms accounted for 80 percent of cattle slaughter, 54 percent of hog slaughter, and 70 percent of sheep slaughter, USDA chief economist Keith Collins told senators.

With grain, market shares of the four largest exporting firms ranged from 47 percent for wheat to almost 70 percent for corn. In storage, Collins said, the four largest firms accounted for almost 27 percent of total elevator capacity.

Still, industry representatives rejected arguments that they were squeezing out small farmers.

``Cargill and Continental did not cause or even contribute to low farm prices,'' said Frank Sims, president of Cargill's North American Grain Division. ``We believe this acquisition should be analyzed on its own merits, not as an accessory to tough times on the farm.''

Sims said the combination of Cargill's 243 U.S. grain facilities with Continental's 83 U.S. grain facilities would make up only six percent of total commercial storage space.

``Our combined business should handle about 10 to 13 percent of the U.S. grain moving to markets,'' Sims said.

USDA officials, however, have expressed concern that the combined companies could stifle or drive out competition in some local markets and at key distribution points, as well as control a significant amount of exports.

Concerns about packer concentration were also the order of the day Saturday in Sioux City, Iowa.

With renewed calls for investigations into meatpackers' influence on livestock pricing through their buying practices, state and federal lawmakers encouraged producers to continue to take a stand for their livelihoods.

``The Cargills of the world and the Hormels of this world have the power, but we are on the side of right,'' U.S. Sen. Paul Wellstone, D-Minn., told the cheering crowd of more than 600 livestock producers, grain farmers and elected officials at the Four State Farm Price Crisis Forum.

State legislators from Minnesota, Iowa, Nebraska and South Dakota organized the rally, and the speakers asked farmers to present a united front to their Legislatures and Congress on the issues they say threaten the very existence of family farming.

Speaker after speaker garnered a standing ovation for demanding the federal government enforce anti-trust regulations against concentrated corporate agribusiness and require meatpackers to report on a daily basis the price they pay for all the livestock they buy, not just the 10 percent bought on the open market.

``We need to put the same urgency behind saving American farmers as we do other nations when they get in financial trouble,'' said U.S. Sen. Bob Kerrey, D-Neb. ``We've got to save the independent producer who doesn't want to be an employee of Cargill. I think we've got a fighting chance to get it done.''

Kerrey spoke over a speakerphone while meeting with farmers in Columbus, Neb.

``You've got to make people understand. This recession is coming to a theater near you,'' Kerrey said.

However Eric Tabor of the Iowa Attorney General's office told the producers that the courts have ``made anti-trust suits very difficult. We need specific evidence. We need your help on that,'' he said.

Jay Johnson spoke for the U.S. Department of Agriculture about the Packers and Stockyards anti-trust act of 1921, which still applies. He explained that the courts have said the Secretary of Agriculture does not have the power to mandate price reporting and urged them to make their legislation specific.

``I don't think you want the courts deciding what it means later,'' he said.

About 30 speakers energized the crowd in the second such rally aimed to draw attention to record-low pork prices. Some Midwestern farmers have chosen to give their herds away instead of accepting prices that would not allow them to break even.

``Once you tear family agriculture up by its roots, you can't legislate it back,'' said U.S. Sen. Tim Johnson, D-S.D.

Johnson's home state legislature has a bill before it that would require South Dakota meatpackers to post the prices they have paid each day.

Although some members of the state Senate Agriculture Committee said they doubt such a measure will do much good, all but one of them voted to send the legislation to the full Senate for further debate.

Legislators were told that the livestock industry is in dire straits, and South Dakota should be the first state to enact a law forcing meatpackers to disclose the prices they pay for animals purchased on contract and from others.

``This will help restore competition ... in the marketplace,'' said Jerry Biedenfeld of the South Dakota Livestock Auction Markets Association, accurately predicting that meatpackers would oppose the bill.

``They make more money not reporting prices than by reporting prices,'' Biedenfeld said. ``Producers are tired of the market being manipulated. Mandatory price reporting will remove the tool that packers use to limit highs and lower the lows in the market.''

If farmers and ranchers cannot learn the prices that meatpackers are paying for animals purchased through contracts, it is difficult to make good marketing decisions, said Jerry Petik, a rancher from Meadow. South Dakotans can raise livestock as cheaply as large feeders, but the state's farmers cannot compete if meatpackers pay some people more money for contract sales, he said.

``We cannot beat them in the marketplace if they are at a different price structure than we are,'' Petik said. ``We have no knowledge as independent producers what the true value of our product is.''

Jeremiah Murphy, a lobbyist for the John Morrell meat plant at Sioux Falls, said it would do little good if South Dakota is the only state that requires meatpackers to report their prices.

``If reporting is to be done, it should be done on a national basis,'' he said. ``And if it's to be done, it should be done on a confidential basis.''

Meatpackers that have to report prices while others do not would be at a disadvantage to their competitors, Murphy said.

``Confidentiality goes two ways,'' he said.

Morrell butchers hogs, and hog prices dropped as low as nine cents a pound last month because of an oversupply. But Murphy reminded the crowd that hogs were selling for 60 cents a pound just two years ago when a packing plant at Huron had to fold because of high prices and inability to get enough hogs.

``It's a supply problem today,'' he said. ``We're awash in hogs.''

Sen. Frank Kloucek, D-Scotland, prime sponsor of the meatpacker legislation, said similar bills will be introduced in Minnesota, Iowa and Nebraska.