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Farm Policy Home | About FarmPolicy.Com | About Keith Good

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Posted By Keith Good On March 15, 2010

USDA-DOJ Ag Competition Workshop; Climate Change; Trade; Budget-Crop Insurance; and Animal Agriculture


USDA-DOJ Ag Competition Workshop

William Neuman reported on Friday at The New York Times Online that, “The attorney general, Eric H. Holder Jr., traveled to the heart of Midwestern farm country on Friday to declare that the Obama administration was serious about rooting out anticompetitive practices in agriculture.

“‘Is today’s agricultural industry suffering from a lack of free and fair competition in the marketplace? That’s the central question,’ Mr. Holder said.

“He spoke at an unusual public meeting called to discuss the concerns of some farmers and ranchers that a few large companies had come to dominate many agricultural markets, controlling the seed that farmers plant and the milk they sell and the livestock ranchers raise.”


The Times article added that, “Mr. Holder and the agriculture secretary, Tom Vilsack, who co-hosted the event, said their agencies would work together on antitrust enforcement.

“‘You will see an historic era of enforcement that will almost inevitably grow from the partnership that we have established,’ Mr. Holder said later in a session with reporters.”

(Note: An update posted at Brownfield on Friday by Ken Anderson contained several audio clips from the USDA- DOJ meeting, including clips from Sec. Vilsack, AG Holder, Christine Varney, the head of DOJ Antitrust Division, and Iowa GOP Sen. Chuck Grassley. Other clips from participants were also included.)

Scott Kilman reported on Friday at The Wall Street Journal Online that, “Attorney General Eric Holder raised expectations among farmers that the Obama administration will crack down on concentration within agriculture, an industry where the processing of meat, milk and seed are dominated by handfuls of companies.

“Speaking to a packed auditorium holding hundreds of farmers on the campus of a community college here [Ankeny, Iowa], Mr. Holder said he expects ‘concrete action’ to come out of the unprecedented series of public meetingsthat the Justice Department and Agriculture Department started Friday on competition issues in agriculture. ‘We are looking for balance,’ he said.”

The Journal article noted that, “Mr. Holder, who campaigned in Iowa during Mr. Obama’s presidential campaign, said that one issue being looked at by the Justice Department is how companies are using patents. The comment throws a spotlight on Monsanto Co., the St. Louis crop biotechnology giant that has at least one of its patented genes in 90% of the soybeans grown in the U.S. and about 80% of U.S. corn.

“Monsanto broadly licenses seed companies to use its genes, which give crops the ability to tolerate exposure to herbicide and to make natural insecticides. But Monsanto’s arch-rival DuPont Co., owner of seed company Pioneer Hi-Bred, is complaining in a federal courthouse that Monsanto uses seed licenses to suppress competition. Farmers, meanwhile, are upset about rapidly rising prices of seed containing Monsanto genes.”

DTN Ag Policy Editor Chris Clayton reported on Friday that, “[S]peaking to reporters, Holder said the Department of Justice is ‘active right now’ in working on antitrust investigations in agriculture, citing a case brought against dairy processor Dean Foods to stop the purchase of more processing facilities in the upper Midwest. Still, Holder said, the department doesn’t have an agenda working on agricultural issues. ‘We’re not looking to hurt anybody here, and we don’t come into this with preconceived notions.’

“Secretary of Agriculture Tom Vilsack cautioned against ‘predetermining’ what should come out of the workshops, but he added that they will help shape USDA’s regulatory process on the Packers and Stockyards Act as well as help lay out issues as debate begins on the 2012 farm bill.”

Mr. Clayton indicated that, “When asked by reporters about the Justice Department’s investigation into Monsanto Co., Antitrust Division Chief Christine Varney said the department is not discussing aspects of the case other than to simply acknowledge that such a probe is occurring. ‘I don’t want to link investigations we undertake with the workshops,’ Varney said.

“When it comes to the overall seed industry, Varney said the department is examining possible anticompetitive practices and whether anyone would be abusing patents on biotechnology.”

Bloomberg writer Jack Kaskey reported on Friday that, “Holder and Agriculture Secretary Tom Vilsack spoke today in Ankeny, Iowa, at the first of five workshops on competition and regulation in the agriculture industry. Holder said they have already received 15,000 comments on the subject.”

The Bloomberg article explained that, “Consolidation in meat, packing and seed markets have lowered food prices while pressuring growers and threatening the life of rural economies, Vilsack said. Companies that abuse their dominant market position to hurt competition will face Justice Department action, said Christine Varney, head of the antitrust division.

“‘Big is not illegal,’ Varney told reporters outside the workshop, when asked whether the administration plans to break up large companies. ‘We are not looking to restructure the economy. We are looking to enforce the law wherever the facts take us.’”

The AP reported on Friday that, “Holder and Vilsack said it’s not clear what actions ultimately will result from the five hearings, which will examine competition in the dairy, seed, meatpacking and crop production.

“But they said it won’t just be a series of lawsuits. They’re looking at developing broad policies that would ensure big companies don’t have too much sway over prices they pay farmers or charge consumers.

“‘This is not just about farmers and ranchers,’ Vilsack said. ‘It’s really about the survival of rural America. We’ve seen a significant decline in the number of farmers and ranchers and that translates into a significant decline in the number of people living in rural America.’

“The hearings play to a long-brewing sense of powerlessness and frustration in small towns that was on display Thursday night at a farmer’s rally near the site of Friday’s hearing. More than 200 people packed a small ballroom and chanted: ‘Bust up big ag’ as speakers took to the podium and told stories.”

Dan Looker reported at Agriculture Online on Saturday that, “Chuck Conner usually seems unflappable. As Deputy Ag Secretary in the Bush Administration he coolly answered just about any question members of Congress’s ag committees threw at him during the writing of the 2008 Farm Bill.

“But these days, as CEO of the National Council of Farmer Cooperatives, Conner is worried. He was in Iowa just before the joint USDA-Department of Justice Hearing on competition Friday, waiting to see whether the new emphasis on competition would turn toward co-ops.

“Farmers have a unique exemption from antitrust laws, the Capper-Volstead Act of 1922. It prevents individual farmers from being sued under the Sherman Antitrust Act if they get together through a co-op to buy fertilizer or sell ethanol.”

The article noted that, “Conner said last week that his group has held several meetings with Varney to try to explain the value of co-ops to farmers and the nation.

“‘Without that exemption, really, co-ops couldn’t exist,’ Conner said. ‘Without co-ops, there are a lot of producers out there who would have a hard time competing in today’s marketplace.’”

And the Agriculture Online article indicated that, “Privately, some farm group lobbyists wonder whether a politically divided Congress already busy with health care and other issues is likely to reopen an obscure agricultural law that’s almost 90 years old.

“Conner concedes that it may not be likely, but the political climate is already encouraging more private litigation challenging the antitrust immunity of co-ops, he said. Meanwhile, the National Council of Farmer Cooperatives will be telling its story of the economic value of co-ops to the public, and taking nothing for granted in Washington.”


Climate Change

With respect to climate change issues, Ben Geman reported late last week at The Hill’s Energy and Environment Blog that, “Sen. Lisa Murkowski (R-Alaska) has put her proposal to nullify EPA’s power to regulate greenhouse gases on hold while she watches the progress of Sen. Jay Rockefeller’s (D-W.Va.) less aggressive plan to do the same thing.”

The Hill update noted that, “‘At this point in time we are kind of on hold,’ she told reporters this morning. Murkowski doesn’t think a two-year pause is sufficient but nonetheless has signaled support for Rockefeller’s effort.

“‘I am going to look and see if he’s working to advance that,’ Murkowski said. ‘We’ll see if he’s serious about moving this.’”

Meanwhile, the AP reported on Friday that, “Sen. John Kerry, hoping to win over wavering senators, said he is pushing environmental reforms to create jobs and spark energy independence, with climate benefits along ‘for the ride.’

“In an interview with The Associated Press, the Massachusetts Democrat said legislation he’s crafting with Sens. Lindsey Graham, R-S.C., and Joe Lieberman, I-Conn., will differ from a House-passed bill that embraces a so-called ‘cap and trade’ approach to reduce pollution blamed for global warming.

“‘It will be a very different mix of a bill from where we were at the end of the House effort,’ Kerry said. ‘It will be simpler, and hopefully, capable of attracting support.’”

The AP article stated that, “By pushing for alternative sources of energy such as wind, solar and nuclear power, the bill could create more than a million jobs while reducing pollution and cleaning up the air, Kerry said in the Thursday interview.

“‘It’s primarily a jobs bill, and an energy independence bill and a pollution reduction-health-clean air bill,’ Kerry said. ‘Climate sort of follows. It’s on for the ride.’”

“Kerry said he, Graham and Lieberman want to be responsive to Rockefeller and other senators who have questions about the bill. Kerry has met with more than 50 senators in recent months to discuss the bill and address individual concerns.”



Brad Swenson reported on Friday at The Bemidji Pioneer Online (Minn.) that, “Increased sales of U.S. food and commodity exports to Cuba would be allowed under a bill introduced Thursday by U.S. Sen. Amy Klobuchar, DFL-Minn.

“The Travel Restriction Reform and Export Enhancement Act, introduced by Klobuchar and Sen. Mike Enzi, R-Wyo., is the companion bill to one introduced last month by U.S. Rep. Collin Peterson, DFL-7th District.

“‘American famers can greatly benefit from access to new markets in Cuba at a time when our economy needs it most,’ said Klobuchar Thursday. ‘This bill will create jobs by promoting U.S. agriculture exports. In addition, Cubans and Americans will be able to engage in open communication, an important step toward improving relations between our two nations.’”

In related developments, a news release from Friday stated that, “U.S. Senator Blanche Lincoln, D-Ark., Chairman of the Senate Agriculture, Nutrition and Forestry Committee, yesterday said relaxing restrictions on agricultural trade with Cuba is key to creating jobs and expanding exports from the U.S. agricultural sector.

“In a letter to Senate Finance Committee Chairman Max Baucus, D-Mont., Lincoln, along with Sen. Maria Cantwell, D-Wash., urged Baucus to take up the Promoting American Agricultural and Medical Exports to Cuba Act of 2009 as quickly as possible. Both Lincoln and Cantwell are co-sponsors of the legislation, and members of the Finance Committee.”

Meanwhile, Jim Landers reported yesterday at The Dallas Morning News Online that, “After a year of trade sanctions that U.S. companies complain are draining away cash and jobs, the long battle over whether Mexico’s trucks should be allowed on U.S. highways rolls on.

“Mexico is doing the sanctioning. But the battlefield is in Congress, between allies of the Teamsters union who say Mexican trucks are not safe and business supporters who say safety concerns are a canard for protecting U.S. truckers from competition.

“Congress is deadlocked on trade matters, even as Brazil, in a cotton-growing dispute, threatens to join Mexico in retaliating for a U.S. refusal to live up to trade agreements.”

Yesterday’s article noted that, “Obama administration officials say they’re working in Congress to find a deal that would open the border and lift Mexican tariffs totaling $2.4 billion a year. The Brazilian dispute over U.S. subsidies to cotton growers involves tariffs of $591 million but could also jeopardize some U.S. patents and other intellectual property.

“‘We have heard from American exporters,’ U.S. Trade Representative Ron Kirk said Tuesday. ‘We understand the sense of urgency. We will work as quickly as we can to see if we can’t come up with an acceptable solution.’

“Transportation Secretary Ray LaHood has assured exporters that he’s hopeful a deal can be reached soon. But he said the same thing a year ago.”

For more background on the Mexico truck dispute and its impact on agriculture, see this update from last March.

Meanwhile, a Dow Jones news article from Friday (article posted at DTN, link requires subscription) reported that, “Brazil and the United States are likely to agree on a negotiated solution to a prickly case involving U.S. subsidies to cotton growers, avoiding Brazilian trade and intellectual property retaliation, a top Brazilian official said Friday.

“‘I believe negotiations will be successful,’ said National Security Adviser Marco Aurelio Garcia. ‘Retaliation serves no one’s interests.’”


Budget – Crop Insurance

Friday’s Kiplinger Agriculture Letter noted in part that, “Rep. Collin Peterson (D-MN) is bent on moving the ’12 farm bill swiftly. The House Ag Com. chairman drove the ’08 farm bill at a similar fast pace. He’ll begin hearings in April, hold regional ones this summer and draft a bill this fall.

“Peterson thinks timing is key to favorable funding. Next year, lawmakers face major budget slashing. The chairman aims to finish at least the House legislation this year, in hopes of locking in farm payment levels before the budget deficit brawl comes along. The problem is, the Senate, as always, is likely to drag out the process.”

Recall that President Obama’s FY 2011 agricultural budget proposal seeks “to limit farm subsidy payments to wealthy farmers by reducing the cap on direct payments by 25 percent and reducing the Adjusted Gross Income (AGI) payment eligibility limits for farm and non-farm income by $250,000 over three years.”

The executive branch proposal also includes proposed reductions in the Federal Crop Insurance Program “through the SRA [Standard Reinsurance Agreement] renegotiation process.”

Tim Carpenter reported on Friday at The Topeka Capital-Journal Online that, “Kansas Republican Sen. Pat Roberts said the Obama administration should put the brakes on attempts to dramatically reduce federal funding and impose new regulations for production agriculture.

“Roberts said the U.S. Department of Agriculture’s budget for crop insurance programs would be cut $6.9 billion.

“‘This is unacceptable and jeopardizes the viability of the program,’ the senator said in a statement.”

Meanwhile, Philip Brasher reported yesterday at The Des Moines Register Online that, “Farmers are accustomed to being targeted for their federal subsidies. Now, their insurance agents are taking their turn in the bull’s-eye.

“The Obama administration says the commissions agents receive for selling federally subsidized crop insurance are excessive and threaten the financial health of the companies the agents represent.

“The Agriculture Department, which spent nearly $8 billion on the insurance system in 2009, is proposing to cap the agent commissions as part of a plan to cut $6.4 billion from the program over the next 10 years.”

The Register article noted that, “Agriculture Secretary Tom Vilsack told a Senate committee recently that the policies ‘are not all that difficult to sell,’ given that farmers’ lenders now require them to have it.

“Insurance agents say that Vilsack’s claim is unfair and that the cuts will fall especially hard on Iowa. They argue that agents compete to take away business from one another and that the crop policies require more work than auto and property coverage.

“‘It’s very evident he’s never sold one,’ said Jerry Mease, who has been an agent in Winterset for 40 years.”

The article added that, “‘It’s probably the most labor-intensive product that an independent agent would sell,’ said Hans Boehm, an agent in Boone. An agent might talk to an auto policy holder once a year but must talk to farmer clients at least three times annually to go over rates and policy options and to file reports on plantings and crop yields, he said.”


Animal Agriculture

The Los Angeles Times editorial board indicated on Saturday that, “Year after year, legislation intended to preserve the effectiveness of available antibiotics by limiting their use in livestock is shot down. The latest bills introduced in both houses of Congress have been stalled for close to a year.

“Banning the use of antibiotics in perfectly healthy animals has always been the right thing to do for the health of the American public. Overuse of antibiotics, whether in animals or humans, renders them less effective because it leads to the development of resistant bacteria.”

The opinion item stated that, “Last summer, Joshua Sharfstein, deputy commissioner of the U.S. Food and Drug Administration, told Congress that the practice of administering antibiotics to healthy farm animals had to stop. And the U.S. Department of Agriculture has thrown cold water on the cost argument, reporting that, except in the case of very young pigs, the cost of the antibiotics to the agricultural industry outstripped the financial benefits.

“But these agencies’ ability to change the outmoded, expensive and harmful farm practice is limited. There’s always something urgent, like healthcare, dominating the congressional agenda. It’s time to realize that protecting the usefulness of antibiotics is a pressing health matter as well.”

Keith Good