This first in a series of two blog posts was written by OEFFA policy intern, Eliza VanNess, a second year law student at the Ohio State University.
On July 9th, President Biden signed an Executive Order (EO) on Promoting Competition in the American Economy, which covers a variety of industries including the agricultural sector. The Order identifies consolidation as a threat to the survival of small family farms and proposes a number of antitrust measures to bolster support for these farmers.
This EO is the latest in a long tradition of antitrust regulations spurred on by the agricultural industry. The most sweeping regulation was the Packers and Stockyards Act (PSA), enacted in 1921. At the time, the industry was controlled by only five large meatpacking companies, who together were engaging in anti-competitive practices such as restricting the flow of food and controlling prices to manipulate the market. The PSA was passed to clamp down on these activities, to ensure fair business practices and competitive markets. The PSA,enforced by the U.S. Department of Agriculture, USDA, still provides these protections today,
While the Packers and Stockyards Act was an important measure in providing antitrust protections in agriculture, it proved insufficient in addressing such a broad problem. Biden’s July EO seeks to beef up the PSA, to protect small farmers trying to compete with ever-growing agribusinesses.
The July EO seeks to address the following crucial issues:
1. Reducing the burden on litigants suing under the Packers and Stockyards Act
In order to sue under the Packers and Stockyards Act, courts in the past have required that litigants prove not just that a practice has harmed them personally, but that the practice has resulted in industry-wide harm. This is a difficult standard to prove, and the requirement has made it difficult for individual farmers to take advantage of the Act’s antitrust power. The new EO clarifies that proving industry-wide harm is not necessary to establish a violation of the Act, increasing the usefulness of the law to farmers.
2. Bolstering antitrust protections for poultry farmers
Chicken farmers are often subject to the costs of contract farming, in which contractors or dealers have inordinate control over the factors that determine how much the farmers are paid, while leaving the farmers to assume the risks of factors over which they have little control and require the highest cost investments. The EO seeks to clamp down on this system, “prohibiting unfair business practices related to grower ranking systems.”
3. Providing anti-retaliation protections
Farmers who’ve spoken up about exploitation at the hands of their contractors have too often experienced retaliation, placing farmers in the unfortunate position of choosing to stay silent about unfair business practices and facing potentially ruinous financial punishment. The EO instructs the Secretary of Agriculture to adopt anti-retaliation protections “so that farmers may assert their rights without fear of retribution.”
4. Clarifying food labels and ensuring access to markets
The EO bolsters food labeling, mandating labels that allow consumers to choose products made in the U.S. The Order instructs agencies to consider implementing a “Product of USA” voluntary label for meat products. The Order also instructs the Secretary of Agriculture to submit a plan to the White House Competition Council, outlining measures to promote competition in agriculture, as well as to support value-added agriculture and alternative food distribution systems. The Order suggests increasing price transparency in agriculture markets, increasing transparency to allow consumers to choose products that support fair treatment of farmers, and creating model contracts to help farmers negotiate fairer deals as measures the Secretary can include in the plan.
5. Protecting competition in seed markets
Finally, the EO identifies patent-protected seeds as a potential danger for competition in agriculture. These seeds cause tension between the Packers and Stockyards Act, aimed at increasing competition in agriculture, and the Patent Act, aimed at protecting intellectual property. Patent-protected seeds challenge regulators to protect them as intellectual property, while still ensuring fair competition in the agricultural industry. To figure out how to rise to this challenge, the Order instructs agencies to submit a report to the White House Competition Council, laying out the potential problems. Biden’s Executive Order is sweeping in scope, aimed at addressing a host of long-standing problems in the agricultural industry. However, the Order only provides instructions for agencies, who are ultimately charged with implementing the policies and rule makings proposed by the administration. Only time will tell how well these agencies implement the ambitious policies outlined in the Order.