Monday, December 6, 2010

Regulators Look at Farming Landscape

DECEMBER 6, 2010
THE WEEK AHEAD
By IAN BERRY,  Wall Street Journal


Food prices are back on the march, and the powerful U.S. farm lobby faces a day of reckoning on Wednesday as the Obama administration wraps up a yearlong study into competition and consolidation in the agricultural sector.
The Departments of Justice and Agriculture are holding their fifth and final workshop to review the competitive landscape in food production and livestock rearing after a unique collaboration that has left some of the industry's largest players looking nervously over their shoulders.
Ellen Weinstein
Monsanto Co. is already embroiled in a Justice Department investigation into alleged anticompetitive practices linked to the sale and distribution of genetically modified seeds that dominate U.S. farming. Dean Foods Inc., the country's largest milk producer, has also seen antitrust officials move to block a small acquisition.
Lawmakers already have had to wrestle with external forces on the sector, such as the rise of speculative funds that critics contend have inflated prices. The latest run-up in commodity prices has also reawakened the long-running food-versus-fuel debate as Congress decides whether to renew subsidies to the ethanol industry.
This week's workshop will seek to unravel the impact of the supply chains that stretch from the field to the retailer and assess whether consumers and producers are getting a raw deal from the industry's existing structure.
U.S. Attorney General Eric Holder, Agriculture Secretary Tom Vilsack and Christine Varney, the Justice Department's antitrust chief, are scheduled to participate Wednesday.
The two agencies announced in August 2009 that they were targeting the agricultural sector, triggering a series of joint agency workshops around the country examining competition, pricing and industry structure in seeds, dairy, livestock and poultry. The events prompted often heated exchanges between farmers and representatives of Big Ag.
The final workshop will include a closer look at margins throughout the industry, including the difference between what consumers pay at the grocery store for milk, beef and poultry, and what farmers receive.
As the final workshop, it will also wrap in themes from earlier events. Smaller farming operations say consolidation has given them little bargaining power as they buy seed or sell their livestock or milk. With feed prices well above historic levels, dairy, livestock and poultry farmers in particular are under pressure.
Write to Ian Berry at ian.berry@dowjones.com

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