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Remarks As Prepared for Delivery: Agriculture Secretary Vilsack on Final USDA-DOJ Competition Workshop
WASHINGTON, December 8, 2010 – Agriculture Secretary Vilsack today spoke at the Final USDA-DOJ Competition workshop.
See below for Secretary Vilsack’s Remarks as prepared for delivery:
I want to welcome everyone to the fifth and final joint competition workshop between the Department of Agriculture and the Department of Justice.
Today, we will focus more generally on a number of issues. We will explore and better understand how livestock and other agricultural commodities move through the system, and the dynamics and challenges within each segment of the food marketing chain. We will explore margins in the livestock, poultry and dairy industries. And lastly, we will focus on the potential implications of consolidation in the retailing sector.
These workshops have been very beneficial to help us understand the issues that are of most concern and deserve closer attention.
The issue of agricultural competition is complex. The ever-changing nature of the sector suggests the need to ask questions and shed light on issues that frankly have not seen light in many years.
President Obama provided clear direction that government should be open and transparent and that is what these workshops are designed to do. We want to have a public dialogue on these issues.
We have held workshops around the country to explore the appropriate role for antitrust or regulatory enforcement in the agricultural industry. In March, we held a workshop on seed concentration and hog market issues in Ankeny, Iowa. In May, we gathered in Normal, Alabama, to discuss poultry issues. In June, we discussed dairy issues in Madison, Wisconsin. And in August, we explored competition in livestock markets in Fort Collins, Colorado.
In these workshops, and in my travels across the country, a number of themes have emerged: Producers want to have or maintain marketing options, they want transparency, they want access to markets, they have fewer buyers with whom to do business with, they struggle with debt and face challenges accessing capital, and last, they just want to be treated fairly and be respected.
But most importantly, they all care about the future of agriculture and want it to succeed, which is why we have seen such overwhelming response and attendance at these workshops.
I am optimistic about the future of agriculture and I think our best days are yet ahead. For this to happen, we need to ask the right questions and not ignore warning signs.
And there are warning signs that we should consider.
America’s mid-sized farms are barely profitable, and not always profitable enough to sustain a family.
At the Iowa workshop, Jim Foster, a pork producer from Missouri summarized his concerns:
He said: “My concern is not for me, but for my kids and grandkids, make sure they can pursue the American dream as my wife and I have.”
He compared what he saw driving down the rural roads of Iowa and Missouri in the 1960s to today, and this is what he said:
“I saw home-built hog shelters on lots of rolling hills [with] sows with new litters. I saw barns across Iowa with concrete pads out front with 50-100 calves on feed. I saw veterinarians at work with their catch chute, feed trucks delivering feed, implement dealers delivering a new manure spreader or a feed grinder.”
Today he sees “very little human activity around what was once a thriving economic model.”
I realize agriculture can’t be exactly like it was 40 years ago, but warning signs shouldn’t be ignored either.
In the past 40 years, the United States has lost 800,000 farmers and ranchers. And our remaining farmers are aging. From 2002 to 2007, the average age of a farmer increased from age 55 to 57. And the number of farmers aged 75 years or older increased by 20 percent over the same period. Meanwhile, the number of operators under 25 years of age decreased by 30 percent.
More than half of rural counties are losing population.
At today’s workshop we will ask more questions. We will explore more into margins, and why the retail value to producers is shifting away from them and what that all means. In 2009, a hog producer received 24.5 percent of the retail value of a hog---and it was over double this percentage in 1980 (50 percent). Last year, 13.6 percent went to the packer, and 61.9 percent to the retailer.
A cattle producer gets 42.5 percent of the retail value of a steer in 2009, which compares to 62 percent in 1980. Last year, 8.5 percent went to the packer, and 49 percent to the retailer.
Today we will also explore what effects, if any, retail consolidation has on the marketplace across all marketing sectors. And there are warning signs to pay attention to there too.
The four largest retailers accounted for 37% of U.S. grocery store sales in 2009, compared to 34% in 2004, 28% in 1999, and 17% in 1994. And we know that concentration can be much higher in certain regions.
There can usually be an explanation at some aspects of these complex issues, but we must also ask, if everything is fine, why don’t we see young people getting into agriculture, why are people leaving rural counties?
At USDA, we take these warning signs seriously, and have taken a number of steps to assist producers and rural communities.
USDA and the Department of Justice have established the Agriculture Competition Joint Task Force to explore new opportunities for harnessing each other’s expertise and improving enforcement of laws designed to protect producers.
In particular, USDA and the Department of Justice have established a new process to handle complaints for unfair and deceptive practices in the poultry industry to allow more effective and timely resolution of these cases, something that we feel will further facilitate addressing concerns we heard at the Alabama workshop.
Enforcement of the Packers and Stockyards Act was mentioned many times at the workshops. And in the past few years, the President has increased GIPSA’s budget to improve enforcement over unfair and deceptive practices in the marketplace. The Department is hiring new attorneys and field investigators to handle complex competition investigations and other violations.
USDA’s Grain Inspection, Packers and Stockyards Administration (GIPSA) published a proposed rule last summer for fairness in the marketing of livestock and poultry. We know it has sparked considerable interest and discussion. Now that we have the public comments, some of which we heard at the Colorado workshop, we will begin the process of incorporating these comments and drafting a rule that will be workable, feasible and commonsense.
In January, we put into a effect a final rule to establish basic fairness for poultry contracts, and in particular, to ensure that producers no longer have their contracts arbitrarily cancelled without notice. This resolved a problem that had concerned poultry farmers for many years – and was praised at the workshop in Alabama.
I am looking forward to the findings and recommendations of the Dairy Industry Advisory Committee that I appointed to review the issues of milk price volatility and dairy farmer profitability, issues that were very important to participants at the workshop in Wisconsin. The full committee report will be delivered next year.
In the meantime, we issued $270 million in payments under the Dairy Economic Loss Assistance Program, $930 million under the Milk Income Loss Contract program and acquired 114 million pounds of cheese.
And the USDA has worked hard in these tricky times to support agricultural producers of every size and type:
We are helping American producers by promoting exports abroad, and by supporting domestic local and regional food systems;
We are working to help producers with access to markets and rural communities – with investments into rural broadband access;
We are promoting the use of agricultural products and waste for use in production of renewable energy in communities across the country;
And we are helping farmers and landowners capitalize on new income opportunities from ecosystems markets that reward them for taking care of the environment.
So as you can see, we have been busy in addressing challenges that exist in agriculture, and recognize there are some that would like us to do more, and some that would like us to do less. We want to focus on doing what is right, and these workshops will further inform our work we do every day.
It is our hope, that the dialogue that we have started extend beyond this last workshop and continue around the kitchen tables, in coffee shops, at academic institutions all across the country. Government may not have all the solutions to these problems, but together we can continue exploring ways to address challenges that exist.
Again, I thank you all for attending; I thank the panelists for their willingness to participate in this workshop. And I thank the panelists and all the public that have attended and participated in these workshops since last March. I also want to again thank all the institutions around the country that were kind enough to allow us to use their facilities to hold these workshops.
And now it is my distinct pleasure to introduce the Attorney General of the United States, Eric Holder and welcome him to the U.S. Department of Agriculture. He is a welcome face here at USDA, and I imagine the first Attorney General to be at USDA to discuss issues of competition in this type of forum.
During his impressive career, General Holder has served in private practice, as U.S. Attorney for the District of Columbia, as an Associate Judge of the Superior Court of the District of Columbia, and as the Deputy Attorney General. He has worked to investigate and prosecute official corruption on the local, state and federal levels. And he is fully invested in strong enforcement of our nation’s anti-trust laws to advance the interests of justice on behalf of the American people.
Please join me in welcoming the Attorney General, Mr. Eric Holder.
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