BUILDING A MORE
JUST FRAMEWORK
Reauthorization of the
Farm Bill presents an
opportunity to reshape
our broken agricultural
policies. Now is the time
to build a more just
framework that better
serves rural communities
and small and moderate-
size family farms in the
U.S., promotes good
stewardship of the land,
overcomes hunger
domestically and abroad,
and helps vulnerable
farmers and their families
in developing countries.
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Call for a Competition Title in the Farm Bill
When farm commodity programs were first authorized in the early 1930s, most of the nation's 6.8 million farms were small and diversified, certainly compared to today. The federal government under the Roosevelt Administration considered it critical to address the severe economic problems faced by America’s farming communities; a quarter of the U.S. population resided on farms at that time. By stabilizing the agricultural sector through guaranteed farm prices and income payments to producers, government policymakers believed this would ensure an abundant supply of food at reasonable prices.
Since then, farming has changed significantly. Most commercial agriculture is now confined to fewer, larger, and more specialized operations. Most of today’s two million or so farms are mainly part-time, where many farm families rely on off-farm sources for most of their income. More disturbingly, the economic health of farmers has become increasingly tied to the needs of processors and marketers, and to global markets. However, government support programs still retain many features from the 1930s. When directed by Congress, the Congressional Research Service looks into these concerns. They have found that while subsequent Farm Bill legislation has evolved overtime in response to changes occurring in agriculture and the economy, at issue is whether such policy has evolved quickly enough or in the most appropriate ways.
In many rural communities, research studies routinely show that there are only a few corporate buyers, or even just one, for a given agricultural commodity, especially in the livestock and poultry sectors. Ranchers and growers also are witnessing the use of unfair production and marketing contracts which prohibit them from using legal measures to increase their bargaining power.
The concentrated power of processing firms increases their ability to unfairly manipulate markets effectively – eliminating free market competition to the detriment of family farmers and consumers. This control eliminates market transparency and creates an environment where many farmers and ranchers face price discrimination as a result.
Congress should not let another farm bill go by without addressing its legislative responsibilities for the Packers and Stockyards Act and Agricultural Fair Practices Act. A critical role of government is to facilitate properly operating markets and ensure balance in the economic relationships among farmers, ranchers, consumers and food companies.
Congress has a choice: Our representatives can choose to champion a strong, comprehensive Competition Title and begin to return fairness to agricultural markets. Or they can stand by and watch the balance of control tip further toward agribusiness corporations.
Citizens must ask: Who do we want controlling our food supply? The choice between a few multinational corporations reaping all the profits or a multitude of family farmers and ranchers thriving throughout the countryside seems evident.
Provisions for a Competition Title
Limit Meat Packer Control and
Manipulation of Livestock Markets
1. Captive Supply Reform Act: When meat packers base the price they pay for contracted cattle on a cash market they manipulate, they can depress prices and shut small and independent producers out of markets. The Captive Supply Reform Act would require that packers offer contracts with a firm base price in an open, transparent manner.
2. Prohibition on Packer-Owned Livestock: Meat packers use packer-owned livestock as a tool to freeze independent producers out of the markets and lower farm gate prices to ranchers. A prohibition on packers owning livestock would address this problem of "captive supply". This provision would increase market access for independent producers.
Ensure Fairness in Agricultural Contracts and Markets
3. Fairness Standards for Agricultural Contracts: This provision would set minimum standards for contract fairness in agriculture, including clear disclosure of risks, prohibition of confidentiality clauses, prohibition of binding arbitration and a ban on unfair trade practices.
4. Clarification of "Undue Preferences" in the Packers and Stockyards Act (P&SA): This would help clarify and strengthen prior legislation stating preferential pricing (different prices to different producers) is justified only for real differences in product value, acquisition and transaction costs.
5. Closing Poultry loopholes in P&SA: This would clarify USDA’s authority over poultry operations (including broilers, pullets or breeding hens).
6. Bargaining rights for contract farmers: This provision would close loopholes in the Agricultural Fair Practices Act, which requires processors to bargain in good faith with producer organizations, and allowing growers to join associations without fear of retaliation by producers.
Assure Adequate Market Information
and Transparency
7. Livestock Mandatory Price Reporting: This price reporting law requires packers, processors, and importers to provide price, contracting, supply and demand information to USDA. Bureaucratic inertia has blocked effective enforcement.
8. Mandatory Country-of-Origin labeling (COOL): In the 2002 Farm Bill, Country-of-Origin labeling for beef, lamb, fresh fruits, fish and shellfish was passed. Mandatory labeling for fish was implemented in 2005, but implementation for other commodities has been stymied by meatpackers and retailers. Congress should fully fund and implement this program.
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