New bill will improve competition and farmer returns in Iowa

US - Mounting concerns about controlling processors, price-manipulation risks, reduced competition and the failure of the US Departement of Agriculture to enforce existing laws has encouraged Iowa State Congressman Leonard Boswell to file a Competitive and Fair Agricultural Markets Act of 2007.
calendar icon 21 May 2007
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The proposed act, H.R. 2135, will improve enforcement of existing laws by designating a special counsel on competition matters whose sole responsibility will be to investigate and prosecute violations on competition issues. The bill also strengthens producer protection by making it easier for them to prove competition-related problems.

It supports legislation brought in buy Iowa Sen. Tom Harkin in February and both have bipartisan support.

Iowa Farmers Union (IFU) is among more than 200 agricultural and trade organisations that believe these measures are critical to the protection of open and fair markets for all livestock producers. It has given Mr Boswell it's full backing.

Reduced options
Options for marketing hogs and cattle have shrunk dramatically in the past 30 years. Iowa is a significant pig producer - leading the US market. It sold 26.7 million pigs in 2002, but the industry has become much more concentrated. USDA census figures show that the number of Iowa farms with pigs has decreased 83 percent since 1987. Instead, pig farms have increased in herd size from an average of 250 head to 1,500 head.

Market concentration has honed pigs into certain areas, such as Hardin and Sioux Counties, each with more than 800,000 pigs. This intensification has raised environmental concerns in these areas and in some cases has divided communities.

In 1987, Iowa had 253 hog-buying stations. In 2005, that number had dwindled to 44. More than half the hogs fed in Iowa now are grown on contract. Many of these farmers are locked into take-it-or-leave-it, non-negotiable production contracts. Many of the contracts include binding arbitration clauses so farmers cannot sue companies that cut off their contracts with no notice. In many regions, there are only a few buyers, or even just one buyer, for livestock.

The IFU believes that independent family-farm agriculture is the safest, most economically and environmentally beneficial means of producing food, fuel and fibre. And protecting markets for independent producers, as well as protecting the rights of contract producers, is vital.

Fair trade requires competition and transparency and this act will help return competition to livestock markets and hopefully improve prices and increase opportunities for livestock farmers. The eventual outcome should be a less concentrated livestock industry and with it fewer environmental issues.

The bill makes the following changes to the Agricultural Fair Practices Act:

  • Prohibits unfair, deceptive, unjustly discriminatory and anti-competitive practices by a person that affects the marketing, receiving, purchasing, sale or contracting of crops.
  • Provides needed contract protections to ensure that a production contract clearly spells out what is required of the producer.
  • Prevents discrimination against producers belonging to an organization or cooperative by removing a disclaimer clause that now allows processors, handlers or contractors to refuse to do business with producers just because they belong to such organizations.
  • Develops rule-making by requiring the secretary of agriculture to write regulations defining the term "unreasonable preference or advantage under the Packers and Stockyards Act".
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