Tuesday, August 14, 2012

Lawyer has become rural America's 'new antitrust cop,' filing suit against agribusiness concentration

Kansas City lawyer Dan Owen, left, could have a major impact on the agriculture business if the antitrust suits he's filed are successful. Bill Bishop of the Daily Yonder reports two suits are "aimed at both the economics and politics of the food industry." A potential third suit would "challenge the way meat packers are buying live cattle at auction."

The Obama administration appeared ready to challenge the increasing centralization and concentrated of agricultural production by large companies with industrial-style farms,  announcing it would conduct a "wide-ranging investigation" to see if it violated antitrust laws. Hearings were conducted and speeches made, but nothing of substance ever happened, Bishop reports. Activists turned to the private sector for help, and no one, Bishop writes, "has taken up the cause more fervently than Owen." He has become "the new antitrust cop on the beat in the food business."

His first suit seeks to keep money collected through the beef checkoff program from going to the National Cattlemen's Beef Association. For 26 years, the Department of Agriculture has collected $1 per head of cattle sold for a fund to promote beef industry, and almost all of the $1.6 billion collected has gone to the NCBA, which Owen claims has violated the terms of the  program.

The second suit concerns price fixing in the fertilizer business, particularly among potash producers. Five companies control 70 percent of the world's potash supply, and prices have increased to $1,000 a ton from $140. Owen's suit claims potash companies "conspired to close mining operations in order to manipulate supplies and prices," Bishop reports.

Bishop reported last week that the USDA issued a report concluding that "there are so few cattle sold at auction that there was no way to determine a fair price for beef." Most cattle raisers were selling according to a formula created by meat packers, which left prices up to large companies. "The report says, to us, that cattle raisers no longer have power in the markets. ... Instead of a competitive market, there is a 'dictatorship,'" Bishop wrote.

Owen said he's started investigating the way livestock is purchased. He received complaints from cattle raisers who said they were receiving only one bid at auction, Bishop reports, and Owen said he's investigating "whether packers are avoiding bidding against each other by divvying up feed lots." He's discovered a study in Utah that concluded half of all feedlots sold to one buyer, and is continuing to investigate. (Read more)

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