Agriculture Policy & Farm Bill Briefing Book
Congressional Research Service

Redistributed as a service of the National Library for the Environment

Structural Change, Concentration, and Market Power

Jerry Heykoop and Alex Segarra

Recent low farm prices have generated renewed congressional interest in the structure and business methods of agriculture, which are undergoing increasingly rapid change. Farming, food processing, and food retailing are concentrating into fewer and larger operations. Ownership or tight control of more than one phase of production and marketing by a single firm (known as vertical integration or coordination) is more common. Agricultural support industries such as seed, chemical, transportation, and biotechnology companies are rapidly consolidating, too.

Debate revolves around the impacts -- both negative or positive -- of such changes on farm prices, on the traditional system of smaller-sized, independent, family-based agriculture, and on rural communities. Also at issue are implications for consumers, and for trade in a global economy. Inherent in these questions is the role government should play in monitoring and regulating agricultural markets. Policy makers are examining whether current laws for ensuring competition and antitrust are still appropriate -- and are properly enforced -- as well as whether new policy approaches might be considered.

In Congress

Such issues were debated extensively in the 106th Congress, where numerous hearings were held and several bills introduced. Examples of such proposals included: giving the U.S. Department of Agriculture more authority to review and challenge agricultural mergers; prohibiting certain business practices deemed to be anti-competitive; imposing a moratorium on large mergers between agribusiness firms; and banning large meat companies from owning the animals they slaughter. Although no major legislation was passed, several lawmakers have signaled their intention to revisit the issue in the 107th Congress - when an anticipated comprehensive farm bill to replace the expiring 1996 law will be considered.

In the 107th Congress, two bills have been introduced (as of mid-February) dealing with agricultural concentration/antitrust matters: S. 20 by Senator Daschle includes provisions aimed at protecting farmers in contract disputes, and tightening USDA oversight of mergers in the food processing industry. S. 282 by Senators Harkin and Lugar would establish in the Antitrust Division of the Department of Justice a position with responsibility for agriculture antitrust matters.

CRS Products

CRS Report RS20562(pdf), Merger and Antitrust Issues in Agriculture.
CRS Report 95-116, General Overview of United States Antitrust Law.
CRS Report RS20241(pdf), Monopoly and Monopolization - Fundamental but Separate Concepts in U.S. Antitrust Law.

Page last updated February 21, 2001.

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