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“AGRIBUSINESS CONSOLIDATION” mentioning the U.S. Dept of Agriculture was published in the House of Representatives section on pages H1070-H1072 on March 15, 2000.
The publication is reproduced in full below:
{time} 1900
AGRIBUSINESS CONSOLIDATION
The SPEAKER pro tempore. Under the Speaker's announced policy of January 6, 1999, the lovely gentlewoman from Idaho (Mrs. Chenoweth-
Hage) is recognized for 60 minutes as the designee of the majority leader.
Mrs. CHENOWETH-HAGE. Mr. Speaker, I begin my remarks tonight with the words from one of our Nation's greatest orators, Daniel Webster. This great Senator eloquently sums up the mission of agriculture for this Nation in a rally cry, and that rally cry is placed, Mr. Speaker, right above the Speaker's head in this very Chamber. That rally cry says,
``Let us develop the resources of our land, call forth its powers, build up its institutions, promote all its great interests and see whether we also in our day and generation may not perform something worthy to be remembered.''
Mr. Speaker, this foundational principle largely responsible for bringing the prosperity to this Nation is now being threatened. In fact, the market power struggle between corporate giants and helpless farm families is divesting rural America, especially when consumers are buying record amounts of food at record high prices while our family farm producers are going broke.
Mr. Speaker, few of us realize that approximately four big companies control most of the processing and distribution of all of the beef, pork, chicken and grain in this United States. Even further, on the distribution and retail side, there are only a handful of companies that control the United States grocery industry. Well, what has happened is that today these giant concentrated companies, with their economic market power, have usurped the farmers' and ranchers' share of the retail dollar, draining the lifeblood from the family farm and threatening our safe, sustainable and dependable American food supply. That is unacceptable.
I have to say, Mr. Speaker, I really appreciate the Albertsons Grocery Company that is headquartered in my district because they have realized the unrest that is growing with the American people in this concentration issue, and I am very pleased that they are now labeling their meat in most of their meat counters as to where the meat has been grown and processed, and my hat is off to a company that I am very, very proud of.
In the livestock industry, for instance, four meat packers control over 80 percent of the beef market and are using captive supplies and abusive market power to drive down the prices paid to producers. Specifically, our family farmers and small cattle producers are providing approximately 88 percent of the total investment it takes to put a steak on the consumer's plate but at the same time packers' and distributors' costs are making up the additional 12 percent of the remaining investment.
Now, unfortunately, while these big packers and retailers overpower the industry, cattle producers and consumers are losing big time every day on price, quality, consistency and food safety. The current situation in the cattle market is analogous to economic theories presented by the Nobel Prize winning economist Frederick August von Hayek over 50 years ago. Mr. Hayek points out that market capitalism is strongest when resource owners who are close to the economic circumstances of time and place.
When they are the ones that make the economic decisions, such a market structure results in the most efficient use of resources and competitive market.
On the other hand, Hayek demonstrates that the concentration of economic decision-making in the hands of a relatively small number of individuals is extremely harmful and counterintuitive to the capitalistic principles that have built this great Nation. It does not matter whether those individuals are government bureaucrats in a Soviet-styled Communist regime or are corporate executives in large companies. We must not let American agriculture fall into this trap. This concentration of power creates a cartel that is monopolistic by nature and rewards power and greed. This must stop, Mr. Speaker.
This phenomenon was confirmed by a study by Auburn professor and agricultural economist C. Robert Taylor, and the study reports that, and I quote, ``The increasing gap between retail food prices and farm prices in the 1990s is due largely to exploitation of market power and not to extra services provided by the processors and retailers.''
Mr. Speaker, I would like to point out this graph that I have here. As we can see, the red is the retail price and the green is the farm price. We see retail price leveled off at a very high mark while farm prices are taking a precipitous drop.
As we can see clearly in this chart, while the price of meat in the supermarket continues to climb, the price paid to producers continues to decline dramatically. This portion in the middle of the chart represents the inequitable market power that is growing that is gained by the retail industry.
Now, another glaring example is evidenced in the hog sector of our economy, Mr. Speaker. In 1999, Smithfield, the number three hog producer, bought out the number two producer, Carroll Foods. This catapulted them into the top spot ahead of Wendell Murphy. Then in September of 1999, Smithfield, the world's largest pork producer, announced intentions to purchase Murphy Family Farms, the new number two hog producer.
Well, this gives them 660,000 sows or one-eighth of the total breeding herd in this country. Imagine owning one out of every eight sows in an industry where only a few short years ago no single entity had even 1 percent of the market.
Mr. Speaker, the raw, robber baron, market power does not just stop here. In grain crop production we have gone from 80 individual companies selling seed down to 10, from 80 to 10, and out of these 10 players left, 3 of those 10 sell 75 percent of the seed in this country. With this high level of concentration among seed companies, we see great efforts to seize control of the entire process.
We might logically ask if anyone is aware of this trend besides the small producers who are being run out of business? Yes, Mr. Speaker, many people are aware. In fact, in 1997, the National Commission on Small Farms appointed by Agriculture Secretary Dan Glickman recommended actions for the U.S. Department of Agriculture to ensure the future for family farming and ranching. Unfortunately, after assessing USDA's responsive actions, an overwhelming majority of members who served on the Commission recently gave the USDA a ``D'' for implementing its recommendations to ensure fair market access for family farmers; not a good record for this administration; a failing grade, Mr. Speaker, and a failure to protect the livelihoods of these American farmers.
The Commission's major finding was that the erosion of the family farm in agriculture was not the result of inevitable market forces but of a bias at USDA towards, quote, large scale enterprises.
Now, despite the Commission's recommendations, I am sorry to report the USDA is continuing to allow the American producer to be exploited by an agribusiness monopoly.
Mr. Speaker, as a result, in my State, farmers and ranchers are on their knees. Our American food producers in rural communities are being destroyed while the processing and distribution conglomerates are gorging on unprecedented profits.
Let us not forget our responsibility to protect the American farmers and ranchers. As Thomas Jefferson said, and I quote from Jefferson,
``Those who labor in the earth are the chosen people of God, if ever he had a chosen people, whose breasts he has made his peculiar deposit for substantial and genuine virtue. It is the focus in which he keeps alive that fire, which otherwise might escape from the face of the earth. Corruption of morals in the mass of cultivators is a phenomenon of which no age nor nation has furnished an example. It is the mark set on those, who, not looking up to heaven, to their own soil and industry, as does the husbandman, for their subsistence, depend for it on casualties and caprice of customers.''
How can we have a fair marketing system when these conglomerates make record profits and my agricultural constituents in Idaho and those in America are being run out of business? How can that happen?
To complicate matters even further, listen to what Mr. Drabenstott, vice president of the Kansas City Federal Reserve, said before the House Committee on Agriculture in February 1999, and I quote from his testimony, ``As supply chains become more dominant in their structure, farmers face a simple test; build new relationships or be left out of the game. The emergence of bigger players means producers must be more nimble and savvy in adjusting to the market realities.''
Mr. Speaker, this shocking statement suggests that Mr. Drabenstott would like to see the American food producers subjugated to the status of serf. Under this scenario, the big corporate agricultural giants would severely hamper the farmer's ability to earn a fair return for their product as they are forced to get in line in the chain supply, a growing food for a narrowing market. Even further, it will erode the independence of farmers by shifting major decision making to a handful of corporate firms and executives. America is a great Nation because we were built on a strong moral threshold. That is to say, in part we have strongly encouraged small businessmen to freely enter the fair market system.
Unfortunately, the corporate conglomerates now stand between hundreds of thousands of producers and millions of consumers as they manipulate the markets to their own advantage. This is seriously handicapping our farmers and ranchers and consumers also, Mr. Speaker.
We all know that big agribusiness, like ConAgra, Cargill and IBP, need American producers more than farmers and ranchers need big agribusiness. So, again, remember we know from history that concentration of economic decision making in a small number of hands is the least productive and the least beneficial system. Ultimately, it only serves as the road to serfdom for American farmers.
Take, for instance, Communism. It took what Karl Marx called, quote, the means of production, and consolidated it into one giant entity, the government. That is what Communism did. It gave a small group of people control over the farms, the factories and even the roads and rivers. Yes, that is precisely what is happening here today, except that it is the corporate monopoly that is gaining a stranglehold on the means of production.
To make matters worse, the Federal Government is giving its winking approval. This is brutally wrong and against American principles and public policy that we have historically been able to rely on.
Mr. Speaker, the time has now come for the Clinton administration to use the powers at its disposal under the Packers and Stockyards Act of 1921 to provide a fair beef marketplace. The measure was enacted to prevent these kinds of anticompetitive practices by the big corporate giants. Undoubtedly, there is something wrong when the conglomerates are allowed to operate in blatant violation of Federal laws.
{time} 1915
In fact, meat packers today look right into our eyes with a straight face, when their monopolistic practices remain unchecked by existing law, but they go ahead and deny that they are even regulated. This is a mockery of our existing laws and the justice system that we are supposed to be able to rely on.
I believe in a fair and competitive marketplace. However, I am very concerned that the individual agricultural producers have been overwhelmed by threats of predatory pricing. The time has come to restore the market balance between small producers and big agribusiness.
To help in this, legislative measures such as H.R. 1144, the Country of Origin Meat Labeling Act of 1999, which I introduced, complete price reporting, as well as other measures addressing anti-competitive practices by the meat packers, will give hope and encouragement to American producers and security to American consumers, because with this act coming into law, American consumers will know the country of origin which the meat came from.
Let me conclude by pointing out that the very powerful words of Theodore Roosevelt still ring true. President Roosevelt states in his March 4, 1905, inaugural address, ``Never before have men tried so vast and formidable of an experiment as that of administering the affairs of a continent under the forms of a Democratic republic. The conditions which have told our marvelous material well-being, which have developed to a very high degree our energy, self-reliance and individual initiative, have also brought the care and anxiety inseparable from the accumulation of great wealth in these industries.''
Mr. Speaker, these are important words.
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