Statement of Sen. Patrick Leahy Senate Agriculture Committee Hearing On "Consolidation and anti-trust issues in agricultural business"

July 27, 1999

Mr. Chairman: As a member of this committee and the Judiciary Committee, I appreciate you holding this hearing. The agricultural movement in the late 1800s played a pivotal role in the passage of the Sherman Antitrust Act and, later, passage of the Clayton Act.

A major alliance between Populists and Democrats formed around the so-called Omaha Platform, which criticized the fact that: "The fruits of the toil of millions are boldly stolen to build up colossal fortunes for a few." Some might say this statement applies today to the salaries that many CEOs receive -- in contrast to the thousands and thousands of farmers in dire straits.

In the late 1800s, American Sugar controlled 85 percent of America's sugar refining and Standard Oil controlled 90 percent of the nation's oil production. There were Cotton-Oil Trusts, Sugar Trusts, Linseed Oil Trusts -- even a Whiskey Trust. But the only thing you could really trust was that the rich were getting richer.

The history of the farmers' movement is mostly about the unequal power balance between farmers and those "middlemen" who buy products from farmers for processing, transport or resale.

It is an unfortunate irony that as agribusinesses now enjoy record profits -- as they become more vertically integrated -- agricultural producers are suffering severe economic depression with no end in sight.

Antitrust laws do not adequately address these concerns, especially the huge divide between the bargaining power of individual farmers and the corporate buyers of their products. This is not the fault of the Justice Department. Our antitrust laws need to be changed.

In certain limited areas, such as telephone company mergers or radio station acquisitions, Congress has required that antitrust enforcers look at more than a pure antitrust analysis. Under current law, each individual farmer is "fungible" -- it does not matter if a particular farmer keeps farming as long as there are lots of producers. I do not think farmers in Vermont -- and I suspect that most around this table do not think farmers in their states -- are "fungible" commodities.

Judge Learned Hand perhaps put it best in the Alcoa case: "it is possible, because of its indirect social or moral effect, to prefer a system of small producers, each dependent for his success upon his own skill and character, to one in which the great mass of those engaged must accept the direction of a few."

For this reason I believe that Congress should look at enhancing competition in rural America by seeking to increase the bargaining power of family-sized farmers and ranchers and by giving the Secretary of Agriculture more power to quickly act against unfair, unjust or deceptive business practices by agricultural processors.

I want to mention one Vermont concern. The Vermont Sunday Rutland Herald/Times Argus ran a distressing story about the Suiza Food Corporation. The article explains how Suiza "is on a national buying binge and now controls 70 percent of the fluid milk processing and distribution in New England . . ." with its joint venture with Dairy Farmers of America. I know the Justice Department was recently worried about potential higher prices for milk sold to school districts in Kentucky because of a proposed Suiza acquisition. I am getting very nervous about these continuous acquisitions by Suiza and I will have some questions for General Klein on this matter.