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000927 Study: USDA Unable to Prevent Antitrust Practices

September 23, 2000

Washington - The U.S. Agriculture Department is incapable of halting anti- competitive practices among huge agribusinesses, leaving independent cattle and hog producers financially vulnerable to unfair market prices, a congressional study found.

The report, prepared by the General Accounting Office (GAO), said the USDA agency responsible for monitoring U.S. cattle and hog industries and ensuring fair competition lacks the experience and resources to investigate complex antitrust violations.

The agency, the Grain Inspection, Packers and Stockyards Administration (GIPSA), has been criticised repeatedly by some farm groups for failing to ensure small farmers get fair prices for their cattle and pigs.

“GIPSA is better positioned for performing economic analyses prove that anti-competitive practices have occurred,” the GAO report said.

From Oct. 1, 1997 through Dec. 31, 1999, GIPSA investigated a total of 74 allegations of anti-competitive activity involving cattle and hogs. The study said GIPSA identified only five alleged antitrust violations.

The GAO blamed the USDA for not having its attorneys more involved in the investigative process, and leaving most of the work to its economists.

“We are recommending that USDA improve its capability to investigate allegations of anti-competitive practices by having integrated teams of attorneys and economists perform GIPSA's investigative work,” the report said.


Farm state lawmakers blasted the USDA saying the report was evidence of the department's failure to protect family farmers amid growing concentration in the industry.

“While USDA has acknowledged the need to make changes in the past, the agency has never gotten the job done,” said Sen. Charles Grassley, an Iowa Republican who last year requested the study be conducted.

Grassley introduced a bill on Thursday that would require USDA to implement the study's recommendations within one year. However, the bill has virtually no chance of becoming law soon because less than two weeks remain in the current congressional work session.

USDA officials acknowledge the agency has some problems to fix, but says the department has been aggressive in taking the necessary steps to ensure fair competition, including formalising attorneys' involvement in GIPSA investigations and establishing mandatory livestock price reporting.

“But we are always looking to do more and are seriously looking at the GAO's recommendations,” said USDA spokeswoman Susan McAvoy.

The department has previously complained to Congress that it lacks the authority to take tougher actions against agribusiness concentration.

Earlier this year, lawmakers tried unsuccessfully to pass legislation that would expand USDA authority to take tougher action when anti-competitive practices in the agriculture industry are found.

Farm groups have complained that a series of big mergers during the past two years, including Cargill Inc.'s purchase of the grain unit of its biggest rival, Continental Grain, has hurt growers.

“This report moves in a generally positive direction in defining how GIPSA needs to concentrate on not only markets, but competition as well,” said Steve Cohen, spokesman for the National Pork Producers Council.

IBP Inc , ConAgra Inc , Cargill's Excel unit and Farmland National Beef control about 80% of the U.S. beef market. The same companies, plus Smithfield Foods Inc , control more than half of the pork market.


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