Consolidation in Agriculture, Other Industries Is an Effort to Become More Competitive

Washington, DC - Consolidation is a reaction to competition that is occurring throughout all industries. Efforts to place unique requirements on the agriculture industry are unfair and unjustified, according to Mark Dopp, senior vice president of regulatory affairs and general counsel for the American Meat Institute.

Dopp testified today before Senate Agriculture Appropriations Subcommittee. Dopp said some proposed actions to limit or control agriculture consolidation may actually hurt those they were intended to help.

“Consumers today demand a constant and geographically dispersed supply of consistent quality, low-priced products. This demand has driven consolidation in the retail sector,” Dopp said. “Whether it’s Home Depot for handyman supplies or McDonald’s for Burgers or Safeway for groceries, the American consumer has driven and benefited from this retail consolidation.”

Consolidation in the meat industry has been a reaction to these same marketplace realities, according to Dopp. He pointed out that the investment community generally views mergers and acquisitions as positive developments because they can strengthen businesses, preserve jobs and even keep communities healthy.

“Let’s face it. It is better for a struggling meat packer to merge or be acquired and stay in business than for that company to cease operations and release all of its employees,” he said.

Proposals to allow the U.S. Department of Agriculture to oppose Justice Department pre-merger review options would simply pit one federal agency against another and are contrary to the recommendations of the International Competition Policy Advisory Committee, a group of experts appointed by the Justice Department.

“Such a process … would give USDA access to pre-merger review documents containing extremely sensitive information about the affected companies,” he said. “Sharing such proprietary information with yet another government agency may well jeopardize its confidentiality, damaging the affected companies, their shareholders and investors as well as their suppliers and customers.”

Proposed new requirements for contracts between farms and agribusiness also are problematic, according to Dopp, because contracts provide a degree of stability and security for buyers and sellers. He noted that banks may be more likely to approve loans to farmers who hold contracts for their commodities.

Exports will fuel future growth for the U.S. livestock and meat industry, according to Dopp. “Whether we like it, the long-term viability of the sector depends on our ability to compete in world markets,” he said. “We should remain focused on the fact that we are participating - or attempting to participate - in a global marketplace. Misguided decisions, intended to benefit one segment of the industry, could easily backfire to the detriment of the entire industry if such actions have the ultimate effect of pricing our meat products out of international markets.”

AMI represents the interests of packers and processors of beef, pork, lamb, veal and turkey products and their suppliers throughout North America. Headquartered in Washington, DC, the Institute provides legislative, regulatory and public relations services, conducts scientific and economic research, offers marketing and technical assistance and sponsors education programs.