Attorney General John Suthers would like to see Colorado’s antitrust law changed to allow his office to challenge mergers that may harm Colorado’s citizens and markets, a Suthers’ spokesman recently told the Colorado Independent.
During an Aug. 27 Department of Justice and United States Department of Agriculture workshop on competition in the livestock industry, Suthers said that though Colorado has been aggressive in its pursuit of anti-trust regulations, those actions have been regulated by a Colorado law that compels the state to follow the federal government’s lead if it has reviewed a case.
“We have a Colorado Antitrust Act of 1992 that forbids the monopolization and attempts to monopolize bid rigging and mergers to lessen competition,” Suthers said. However, he noted his office can do little if a federal agency declines to challenge the merger.
“Our office cannot challenge any merger or acquisition that has been reviewed by any federal agency under section 7A of the Clayton Act where the federal agency declined to challenge the merger. That was put into law in 1992.”
Mike Saccone, spokesman for Suthers, said though Suthers understands the reasoning behind the 1992 antitrust rules was to assuage business concerns over the cost and time related to a two-tiered regulatory structure, if a legislator wanted to propose a bill to change Colorado’s law, Suthers’ office would testify and likely support such legislation.
USDA officials say that as a result of the consolidation throughout the agriculture industry, small farms are fading away. The Colorado Independent’s sister site, The Iowa Independent, reported , “there were more than 660,000 hog farms in 1980, but only 71,000 exist today. In the cattle industry, there were 1.6 million farms in 1980, but only about 950,000 exist today. In addition, hog producers received 50 percent of the retail value of a hog in 1980, but only received 24.5 percent in 2009. Cattlemen, who received 62 percent of retail steer value in 1980, received slightly more than 42 percent of value in 2009.”
Suthers said at the event last month that he had joined with a number of states to fight off the JBS buyout of National Beef packing, a merger he said his office found would have caused considerable reduction in prices paid to livestock farmers as a result of consolidation.
“I have to say that virtually all of the concerns that have been expressed to our office about the agricultural industry in Colorado have revolved around consolidation,” Suthers said. “Just to be precise, in the high plains, we believe that that merger would have put over 85 percent of packer capacity in the hands of three survivors: JBS, Tyson and Cargill.”
Suthers said that such consolidation would have forced ranchers to sell livestock at lower prices and that the savings would not have been passed on to consumers. With only three major packing companies, retail could be compelled to pay higher prices.
Chris Peterson, a hog farmer and current president of Iowa Farmers Union, said that he doesn’t sell a single hog to packers because he has gotten screwed over too many times.
“Packers routinely pay 5 to 6 cents per pound in volume based premiums to the larger producers simply because they are large,” Peterson said, adding that 6 cents could mean the difference of $50,000 or more for some farms.
“We don’t need the whole slice of pie; we just need fairness and equality.”
Farmers in favor of the new Grain Inspection, Packers and Stockyards Adminstration (GIPSA) rules say they have lost the ability to competitively bid with larger feedlots and producers who times make long-term agreements with large packing plants. They say deals conducted privately or between packers have reduced the price of an animal on the auction block.
Other’s, including the National Cattlemen’s Beef Association and larger beef packing companies, oppose the rules. They say that removing captive supply and contracts would simply force packing companies to give the average price for an animal to ranchers.
Cattlemen, some who said they were risking their ability to sell to large packing companies by being at last month’s event, said Packers and Stockyards Act has almost never been enforced.
Former state legislator Kathleen Kelley, a rancher, teacher and advocate for independent ranchers, said that she was happy with the new GIPSA rules, but said giving teeth to Colorado’s anti-trust laws would go a huge way in ensuring market access to small livestock producers across the state.