Johnson introduces legislation calling for fairer farm markets by David Lias Sen. Tim Johnson is hoping that recent action in the U.S. Senate will help stem the current tide of bad economic news that has been hitting South Dakota agriculture producers hard in the last year.
�You only have to drive around on the township roads in Clay County to appreciate what has happened in the last number of years with the continued demise of the family farm,� Johnson said during a recent visit to Vermillion. �What really concerns me most though is that independent producers seem to have less and less leverage in terms of getting a good price for their product, whether it be grain, corn or livestock.�
Johnson noted the recent proposed merger of Smithfield Farms with Murphy Farms and with Tyson Foods.
�This merger will mean that Smithfield will control 800,000 sows. Their need to go to the open market to buy hogs from independent livestock producers is much diminished,� Johnson said. �It concerns me that independent producers have fewer and fewer places to sell their product, so they wind up taking bottom dollar for their livestock and the same thing happens with their grain.�
Johnson is hoping legislation introduced in the Senate can help preserve a fairer market system for livestock producers.
�I think the free enterprise economic system is the best system in the world, but it only works if there is competition, so among other things I have been working on putting together legislation that would prohibit packing companies from owning and raising their own livestock,� he said. �It would prohibit that kind of vertical integration. I don�t want to see livestock producers turned into low wage employees on their own land.�
Johnson introduced bipartisan legislation Oct. 15 that would prohibit meatpackers from owning livestock. Johnson said the RANCHER Act (Rural America Needs Competition to Help Every Rancher) is designed to reestablish a free, fair and competitive market for independent livestock producers. The bill�s original co-sponsors include Sen. Bob Kerry (D-NE), Sen. Charles Grassley (R-IA) and Sen. Craig Thompson (R-WY).
Johnson said the bill would strengthen and amend Section 202 of the Packers and Stockyards Act of 1921 by prohibiting meatpackers from owning livestock prior to purchase for slaughter. The legislation will provide exceptions for farmers and ranchers who own and process livestock in a producer owned and controlled cooperative.
�Make no mistake, the very fabric and nature of our rural communities will be forever changed by the corporate takeover of agriculture if Congress remains on the sidelines. Unfortunately, we continue to allow some in the meatpacking industry to dangerously choke off market access for family farmers and ranchers turning free enterprise upside down,� he said.
Johnson said packer ownership of livestock increases the likelihood of price manipulation in the marketplace.
�As a result of having slaughter livestock supplies locked up through captive supplies, meatpackers do not have to bid competitively for all of their slaughter needs,� he said. �Just as producers demanded action in 1921, they are again demanding that Congress support free enterprise over monopoly.
�Current anti-trust law fails to address the concerns of livestock producers in the marketplace,� Johnson added. �Instead, the livestock market creates an imbalance in bargaining power between huge meatpackers and independent livestock sellers.�
The RANCHER Act is retroactive, requiring meatpackers to divest of ownership interests in livestock, and directly takes on the potential Smithfield deals. The act:
? Prohibits meatpackers from owning, feeding or keeping livestock for slaughter. It allows packers to obtain livestock within 14 days of slaughter to provide them a window in which to have a reasonable �supply� on hand in order to operate their plants. The bill includes language preventing an easy paper shuffle where individuals or corporation �alter egos� associated with a meatpacker are allowed to own livestock.
? Exempts cooperatives that are owned and controlled by livestock producers. The bill states the ownership prohibition will not apply to a cooperative if the majority of the ownership interest in the co-op is held by co-op members that own livestock and provide those slaughter livestock to the co-op.
? Requires retroactive divestiture of ownership interests in livestock. Pork packers will be permitted an 18 month phase out period in which to divest of its ownership of hogs.
Johnson admitted that he and other sponsors of the legislation might face an uphill battle.
�Obviously, the packing industry will fight us tooth and nail on this, and there are those who just philosophically don�t think the government should step in,� he said. �But I think we�ve got to lay down a marker at least, and let people know where we stand. Maybe we will be able to get it passed, if not this year, at some other time.
�I think we�ve got to send a message that we are very concerned about the continued concentration that is going on, the diminished competition and the rock bottom prices for agricultural prices that are a consequence of that,� he added.
He doesn�t view the attempt to slow or stop vertical integration in the livestock packing industry as a partisan political issue.
�I think it�s a matter of wanting to sustain a viable, free enterprise economy, and that only happens if there is competition,� Johnson said. �If only a handful of packers can call all of the shots and virtually own the production of livestock, that bodes very badly for the type of economy that we will have in South Dakota and the rest of the country.�