Litigation, Our Best Hope

Written on:July 3, 2012
 
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At the 2009 OCM Annual Conference in St. Louis, Philip J. Weiser, Deputy Assistant Attorney General, Antitrust Division, U.S. Department of Justice (USDOJ) announced an unprecedented governmental initiative to bring competition and fair play to agricultural markets. For the first time in history, there was to be a joint and coordinated effort by USDOJ and U. S. Department of Agriculture (USDA) to enforce antitrust laws and restore competition and fairness to the agricultural marketplace. Weiser announced plans for a series of workshops that would shed light on the situation and provide a basis for enforcement action.

J. Dudley Butler, newly appointed Administrator of the Grain Inspection and Packers and Stockyards Administration (GIPSA) also presented at the event and detailed plans for reinvigorating the Packers and Stockyards Act of 1921 through rulemaking.

There was considerable enthusiasm among attending independent farmers and ranchers that something would finally be done about the abuse of market power by sellers of their inputs and buyers of their production.

True to Phil Weiser’s announcement, five workshops were conducted in 2010. Both Secretary of Agriculture Tom Vilsack and Attorney General Eric Holder attended all five of the workshops. Each made remarks expressing their awareness and concern regarding the consequences of dysfunctional markets:

Secretary Vilsack: “Producers need to know there is an open, competitive market for their product.”

U.S. Attorney General Eric Holder: “We enforce anti-trust laws. We are the voice for competition to make sure competition is not stifled.”

With two cabinet members, and the Administrator of GIPSA attending these meetings, the administration’s commitment to market reform seemed assured. Regrettably, this was not the case. The expectations and hopes for reform of a broken marketplace were not realized:

  • Christine Varney, Philip Weiser and J. Dudley Butler left their posts.
  • Essentially none of the campaign promises regarding agriculture and rural America materialized.
  • The proposed GIPSA Rule that would have put teeth back in the Packers and Stockyards Act of 1921 (PSA) fell victim to congressional chicanery.
  • A congress, swayed by big agribusiness campaign funds, demonstrated its disdain for market reform
  • The regulatory agencies (USDA, USDOJ, FTC) showed no appetite for antitrust enforcement or reining in the market power abusers.

A recent report by the USDOJ regarding the workshops shows they clearly understood the situation. Excerpts from the report state:

“In 2010, the Antitrust Division (the Division) of the U.S. Department of Justice (DOJ) and the U.S. Department of Agriculture (USDA) hosted a series of workshops exploring competition in the agricultural sector. As then Assistant Attorney General (AAG) Christine Varney observed in inaugural remarks, agriculture is an essential part of the American economy and well functioning agricultural markets are not only a matter of economic efficiency, but a matter of national security and public health.”

“A clear lesson of the workshops, though, is that antitrust enforcement has a crucial role to play in fostering a healthy and competitive agriculture sector.”

Tens of millions of dollars were brought to bear against proposed GIPSA Rule and other reforms. They had their effect! Much of this money came from family farmers and ranchers via the several commodity checkoff programs.

It is against this backdrop that OCM decided to pursue litigation as our best option. This approach is in keeping with a resolution at the August 26, 1998 founding meeting; “BE IT RESOLVED: that the OCM will actively pursue legal action in support of its goals.”

Several meetings and conference calls have been conducted with the half dozen attorneys involved in this new alliance. The clear consensus was that stemming the flow of money from the commodity promotion programs to entities such as National Cattlemen’s Beef Association (NCBA), National Pork Producers Council (NPPC) and U. S. Farmers and Ranchers Alliance (USFRA) must be the first order of business.

There is abundant evidence that there is rampant misuse of commodity promotion funds. Producers are compelled to pay into these programs and then funds are diverted to foster policies and actions contrary to their interests.

A recent USDA Inspector General Audit of the USDA Agricultural Marketing Service (AMS), which is charged with supervising the 18 programs, found that AMS had totally failed in its duty to properly oversee the programs and assure their integrity.

Prospects for legislative or enforcement remedy are bleak. So OCM is launching a litigation initiative as the best method of addressing the situation. We are putting together an impressive litigation team and a broad alliance. We ask that you join us in this effort. This will be the centerpiece of our hard-hitting conference in Kansas City, August 10th at the Airport Residence Inn. Independence for our farmers and ranchers and our national food security is in jeopardy.

If you believe family agriculture should survive the onslaught of concentration and vertical integration, please come to Kansas City on August 10th and be a part of turning back those who would impose the industrial model for agriculture on this country.


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