Wisconsin Ag Connection - Kohl Wants Answers on High Food Prices

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Kohl Wants Answers on High Food Prices
Wisconsin Ag Connection - 05/08/2008

During a Senate hearing on agriculture competition and a proposed large-scale meatpacking industry merger, U.S. Senator Herb Kohl called for the U.S. Government Accountability Office to investigate whether unabated agricultural consolidation has led to anticompetitive business practices and higher food prices for consumers. Kohl, who chairs the Senate Antitrust, Competition Policy and Consumer Rights Subcommittee, called the hearing to examine JBS Swift's plans to acquire two other meatpacking firms--a transaction that would reduce the number of major competitors in this industry from five to three.

Kohl urged the Department of Justice to closely scrutinize the proposed JBS Swift acquisitions' effects on both family farmers and consumers, saying that 'this deal will give the remaining beef processors enormous buying power.'

"With little choice to whom to sell their cattle, ranchers will increasingly be left in a 'take it or leave it' position," Kohl said during his testimony. "And we should be equally concerned with effects on millions of beef consumers across the country in this era of rising food prices. Will only three major national sellers of beef be enough to ensure a competitive market for supermarkets, small grocery stores, and restaurants? Or will consumers need to go on a diet while the giant meatpacking firms grow fatter and fatter?"

The nation's fundamental antitrust law was passed over a hundred years ago in large part as a response to the consolidation in the meatpacking industry. If approved, the JBS Swift acquisitions will increase the market share of the top four firms to 91-percent. JBS Swift will also acquire Five Rivers, the nation's largest feedlot marketing two million cattle annually This threatens to give JBS Swift a very strong lever over the nation's cattle supply, while leaving independent ranchers with little bargaining power.

Kohl said he plans to initiate a GAO investigation of the impact of consolidation in agriculture on food prices paid by consumers.

Also on Wednesday, Kohl announced that $1.245 billion in international food aid was included in the Senate Appropriation Committee's final version of the emergency supplemental spending bill. Under 'Food for Peace,' the nation's foremost food aid program, the Senate measure recommends an additional $850 million for FY2008 and an additional $395 million for FY2009.

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