The untold story of how the administration tried to stand up to big agricultural companies on behalf of independent farmers, and lost.
In early December, the USDA published four watered-down revisions and updates to the Packers and Stockyards Act. The only full-fledged rule to come into effect prohibits mandatory arbitration clauses in poultry farmers’ contracts—vindication for many, including Tom Green and his wife, Ruth, but hardly a sweeping victory. The other three revisions are vague “guidelines” for the USDA. None of them explicitly prohibit arbitrary and exploitative conduct by the processing companies under the notorious tournament system.
In January 2012, Butler resigned from the USDA. Then in May, the DOJ quietly published a report summarizing the five nationwide hearings conducted in 2010. The report detailed both a lack of competition in the industry and abusive behavior. It went on to claim that the DOJ couldn’t act to address these wrongs because, no matter how outrageous the conduct of the processing companies, their actions did not amount to “harm to competition” as defined by the current antitrust framework.
Administration officials who took part in the hearings say two factors thwarted their attempts to protect farmers from exploitation by processing companies. One was a deliberately obstructionist Republican-controlled House set on derailing countless reforms, not only in agriculture, and on protecting big industry from any tightening of regulation.
The other factor the administration blames is the weakened state of America’s antitrust laws. In the past, antitrust law was used to promote competition and to protect citizens from concentrated economic power. But today, enforcers say they are handicapped even when confronting markets that are no longer competitive. “However desirable, today’s antitrust laws do not permit courts or enforcers to engineer an optimal market structure,” the DOJ wrote in its recent report on the 2010 agriculture hearings. Far-reaching actions—like the Wilson administration’s challenge of the meatpacking industry ninety years ago—are, they say, simply unimaginable under today’s narrow antitrust framework.
Varney, who has since left the DOJ for private practice, says that the Justice Department pushed the law as much as it could under her tenure. “If you overreach in the courts you will lose, and the very behaviors you are calling illegal will be validated by the court,” she said. “This is not about a fear of taking risks or a fear of losing. It’s a fear of setting the producers back.”
One wonders, though, whether the administration’s actions—taken as a whole—did not set the farmers back as much as would a loss in court. By documenting the big processing companies’ exploitation of independent farmers, then failing to stop that exploitation and retreating in almost complete silence before entirely predictable resistance from the industry, the administration, for all intents, ended up implicitly condoning these injustices. The message to the processing companies is, after all, absolutely clear: you are free to continue to act as you will.
It is no stretch to assume that, from the perspective of the White House, the choice to abandon an apparently failed effort to protect independent farmers from such abuses may have seemed politically pragmatic. But over the longer term, it may prove to have been a strategic political failure. By raising the hopes and championing the interests of independent farmers against agribusiness, the administration effectively reached out to the millions of rural voters who don’t normally vote Democratic but whose ardent desire to reestablish open and fair markets for their products and labor often trumps any traditional party allegiance. Instead of translating that newfound trust into political capital, the administration squandered whatever goodwill it had begun to earn. Worse, the administration’s silent retreat amounts to a form of moral failure. Having amply documented the outrageous abuse of fellow citizens, it decided it was not worth expending more political capital to right this wrong.
The message to the farmers, it seems, is also clear. “A lot of farmers have gone pretty quiet around here,” Staples said, “from being scared.”
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