July 5, 2007

Dear Congressperson or Senator

Subject:  Please support competition reform in agricultural markets.

The 2007 Farm Bill discussion provides the venue for policy development concerning competition reform in agricultural markets.  Concentration in agricultural processing firms has clearly reduced the number of competitors in the industry.  Reports of ineffective enforcement (OIG on GIPSA) and confusing court rulings indicate the need for legislative clarification of these laws and regulations.

Several legislative proposals have been submitted to address competition issues.  Unfortunately, opponents to that legislation have blown the intent out of proportion.  By labeling such reform as anti-competitive or “big government” they deny the crucial role government plays in maintaining competition in our capitalistic economy.  The following points are offered in clarification of this effort.

• This is not anti-competitive legislation.  Quite to the contrary it will create more competitive bidding transactions.  Contractual agreements will be available to more producers and priced in markets with many participants (like the futures market).
• Alternative Marketing Agreements (AMA’s) were not developed to improve beef quality.  The first and still largest agreements were made to secure supply and decrease competitive bidding.  Niche products that require unique production investments and marketing programs have had and will continue to require “reasonable” differences in pricing and availability to producers.
• The most successful branded program, Certified Angus Beef, is a market driven program available to any producer.
• Any market driven, consumer focused program can provide producer incentives added on to a competitively negotiated base price.
• Price risk is best handled through the Futures Market.  This regulated marketplace represents many buyers and sellers establishing price on a daily basis.
• Keeping as many efficient production units operating, as is possible, enhances the economic health of our rural communities.  Current anti-competitive AMA’s that reduce market access and limit competitive bidding are limiting the survival of an economically efficient, dispersed production system.

Please see to it that government fulfills its necessary role in a capitalistic society and maintains a competitive marketplace.

Sincerely,