Capper-Volstead under assault

Written by Bill Streeter on .

U.S. Department of Justice scrutinizes settled cooperative law

The head of the U.S. Justice Antitrust Division in sworn congressional testimony stated that Capper-Volstead needs to be investigated and possibly revoked. That absolutely defies belief. The Capper-Volstead Act, if you’ll recall, is the 1922 legislation that lets farmers join together to process and market products without running afoul of antitrust laws. Capper-Volstead is the backbone legislation supporting cooperatives. No Capper-Volstead, no cooperatives.

In practice, the act gives producers and the cooperatives they form limited antitrust immunity to collectively process, prepare for market, handle and sell their products. It also permits them to have marketing agencies in common. In other words, Capper-Volstead bestows the same rights on groups of farmers that individual corporations have traditionally enjoyed.

Capper-Volstead simply gives farmers and ranchers the ability to act as a single entity in order to more effectively streamline their operations. It allows farmers and ranchers to conduct business without fear of being prosecuted as individuals who are colluding to set prices and control markets. So, of course, a number of modern politicians want to end it.

Never before in the history of the act has it been under the intense scrutiny it faces today. That’s a drawback of our increasingly urban society. And that’s why it’s contingent upon all of us in agriculture to sell modern agriculture to our city relatives. They have no clue. All of us in agriculture face a very real risk of this Congress and this Administration disrupting today’s efficient operation of agricultural cooperatives and frustrating farmers in their attempts to streamline agricultural production.

Farmer cooperatives came into being more than 100 years ago because individual farmers were too small and too numerous to deal effectively with larger agribusinesses in the supply, processing and marketing sectors of agriculture.

In those 100 years, farmer cooperatives have proven themselves effective in allowing individuals to enjoy the buying power of many and the competitive prices that brings. That buying power is seen in every input necessary for modern farming operations, including credit.

What’s more, profits earned by the cooperative are returned to members. That money boosts income and provides capital for farming operations. In addition, the money also benefits the farmer’s local community through direct purchases and through strengthening the tax base.

That’s real rural development in a nutshell. Over that same period of time, U.S. agricultural productivity has increased more than 250 percent. Any way you look at it, cooperatives have played a major role in that productivity increase. Distressingly, this Administration’s attack is under the guise of antitrust enforcement.

If farmers and ranchers working jointly to collect and market their output looks like antitrust activities, then we’re in more trouble in this country than I’ve ever imagined. In the almost 90 years since Capper-Volstead’s passage, numerous courts have consistently upheld its validity.

At MFA, we depend on the National Council of Farmer Cooperatives to represent us in this matter. According to NCFC, “repealing the act would be economically devastating and would create tremendous uncertainty for farmers and their cooperatives, employees, suppliers, lenders and customers, as well as rural communities. Loss of Capper-Volstead would result in less rather than more competition.”

So what’s behind this unprecedented focus on Capper-Volstead? I don’t have a good answer. No one knows for certain. What is known is that Capper-Volstead is frequently referred to as the Magna Carta of farmer cooperatives.

Without Capper-Volstead, farmer cooperatives would cease to exist, and the farmers and communities they serve would suffer irreparable harm. The Department of Justice is holding hearings on this very issue right now in several locations around the country. These hearings are questioning the very foundation of farmer cooperatives. It’s not a good sign.

Folks, the National Council of Farmer Cooperatives represents nearly 3,000 local farmer cooperatives across the United States.
Bottom line: farmer cooperatives allow individual farmers the ability to own and lead organizations that are essential for continued competitiveness in both domestic and international markets.

Now we just need someone to talk some sense to today’s crop of political leaders.

Bill Streeter is president and CEO of MFA Incorporated.


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