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991139 No Clinton Backing For Bill to Stop Farm Mergers

November 15, 1999

Washington - The Clinton administration is concerned about family farmers being squeezed by growing concentration in the grain and livestock industries, but has not endorsed legislation calling for a temporary ban on mergers, Agriculture Secretary Dan Glickman said.

The senate is expected to debate the issue this week, when Sen. Paul Wellstone offers legislation that would declare an 18-month moratorium on agribusiness mergers worth more than $10 million.

The Minnesota Democrat's proposal will be in the form of an amendment attached to the bankruptcy reform bill before the Senate, but the legislation is viewed as unlikely to pass.

“The administration has not taken a formal position on the amendment,” Glickman told reporters. “I think the Justice Department has stated that they believe they have the legal tools in hand to deal with problems.”

Antitrust issues in farm country will also be examined by the powerful Senate Judiciary Committee.

Sen. Orrin Hatch, a Utah Republican, who heads the Senate Judiciary panel, said it would hold hearings on farm antitrust concerns after Congress returns from its winter break.

The panel has held recent hearings on competition in the telecommunications, on-line and other industries.

“I want to work with the entire spectrum of the food industry to explore the extent to which consolidation within the industry is to blame for losses to family farmers,” Hatch said in a statement.

“There appears to be a trend within the processing industry which may contribute to the difficulties our farmers have faced in recent years,” he added.

The rapid pace of acquisitions by Cargill Inc, Smithfield Foods (NYSE:SFD - news) and other agribusiness companies worries farm groups who say fewer buyers of corn, wheat, soybeans, pigs and cattle mean growers do not get a fair price.

Prices have also been hurt by a sharp decline in overseas demand for U.S. farm goods due to the economic slump in Asia and rising competition from Latin American exporters.

By some measures, American farmers are receiving about 36% less for their products than they did 15 years ago.

Several food industry groups, including the American Meat Institute and the Grocery Manufacturers of America, contend that any attempt to stop mergers would hurt the overall U.S. farm economy.

“In today's competitive business world, there truly is strength in numbers,” the groups said in a letter to senators. “If Congress imposes a moratorium on this trend, it effectively ties the hands of U.S. producers and processors, preventing them from forging the creative alliances necessary to compete with foreign interests.”

House and Senate agriculture panels have already held hearings on the issue.

Sen. Charles Grassley, an Iowa Republican who sits on the Senate Judiciary and Agriculture panels, asked the General Accounting Office to review how vigorously the U.S. Agriculture Department enforces a 1921 law prohibiting unfair business activities involving livestock.

President Bill Clinton said last week that he favored a thorough examination of the issue of agribusiness concentration, saying antitrust regulators should move against any acquisitions that were illegal.

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