The Capper-Volstead Act was drafted by Farmers Union leaders who enlisted Senator Capper and Representative Hersman as original sponsors. The bill, renamed the Capper-Volstead bill, cleared both Houses of the Congress in 1920, but died in conference. It was approved again in the 67th Congress and became law in February 1922.

We have recounted this history briefly because these legislative enactments were efforts to somehow redress the competitive imbalance between farmers and the handlers, processors, and distributors of the products of the farm.

On the one hand, were some 6.5 million farm families, functioning in atomistic competition, with no individual family able to have any perceptible impact on markets or prices by its decisions to produce, to market, or not to produce and not to market. On the other hand were the comparatively fewer handlers, processors, and distributors of food and other farm products.

It was because the free market and open competition did not function effectively for the farmer, the consumer, or for society generally, that enabling legislation for farm cooperatives was approved by the Congress, that various federal regulatory agencies were given the responsibility of supervising transportation, marketing and other services.

The intent of federal regulation was not always to impose competitive conditions since in some instances competition would have been duplicative, costly, and wasteful.

Agriculture was one of the fields in which society found the results of free markets and open competition unacceptable. The farm cooperative structure, the federal farm credit programs, and the early farm programs were efforts to modify and regulate the market mechanism so that it would yield results compatible with the well-being of society.

What we are pointing up here is that agriculture is fundamentally different than other industry.

If you ask us the extent to which competition should be substituted for federal intervention or direct regulation in agriculture, our answer would have to be that to attempt to do so would be a step backwards.

For all the progress that has been made in the past 40 or 50 years, farmers still have a relatively weak position as against that of the buyers, processors, and distributors of their products.

In the accompanying EXHIBIT I, is shown the cooperative and other firm share of farm product marketing and input purchases.

In EXHIBIT II, we show the sales and assets of the four largest cooperative firms and the four largest non-cooperative firms in sales of grain, milk and products, fruits and vegetables, and poultry and eggs.

In EXHIBIT III, we show the four largest cooperative and four largest non-cooperative firms in sales of farm supplies and inputs to farmers for feed, fertilizer, and petroleum products.

In EXHIBIT IV, we show the gain in cooperative share in selected product marketings and input purchases, comparing the years 1950 and 1975. In feed, poultry and eggs, and fruits and vegetables, the share is substantially unchanged in the 25-year period. There has been some gain in the share in dairy and grain, but it should be pointed out that this is principally at the first sales from the hands of farmers and that the cooperative share declines in the processing, distributive, and export sectors.

There has been some gain in the cooperative share in petroleum products and commercial fertilizer; however, part of this gain is attributable to abandonment of some of the farm markets by proprietary suppliers since 1973.

To put this market share into perspective, it must be understood that the 75 percent initial market share of the cooperatives in dairying products represents the activity of some 630 separate companies, rather than the volume of a few highly-concentrated firms.

In fertilizer, the 40 percent cooperative share is dispersed among some 3,800 separate firms.

Although there has been some advance in the cooperative share since 1950 and since 1970, the share of the four largest cooperative handlers has not advanced as rapidly in the same time as the share of the four largest non-cooperative handlers.

The point is that we have not reached a situation in which the public interest requires that the cooperative share be reduced, but, in fact, further growth will still be essential in the years ahead.

The maintenance of an adequate supply of reasonably-priced food and farm products will require a stronger cooperative presence in marketing and export of farm products, a significantly stronger program of federal farm price and income stabilization, and an expansion of federal marketing order and agreement programs, and an improvement of farm collective bargaining authority.

The bill before this committee today is an amendment to the Clayton Act of 1914. As you know, Section 6 of that Act declares:

"Nothing contained in the antitrust laws shall be
construed to forbid the existence and operation
of labor, agricultural or horticultural associa-
tions, instituted for the purposes of mutual help,
and not having capital stock or conducted for
profit, or to forbid or restrain individual
members of such organizations from lawfully
carrying out the legitimate objects thereof; nor
shall such organization, or the members thereof,
be held or construed to be illegal combinations
or conspiracies in restraint of trade, under the
antitrust laws."

We are convinced, therefore, because of the fundamentally different nature of agriculture, and because the stance of farmers as against the marketing system will need to be strengthened, S. 382 should contain an exclusion for agriculture.

We propose that an item "d" be added to Section 3, to read as follows:

"(d) Provided, however, that Section 3 shall not

be applicable to the Department of Agricul-
ture in any programs or activities which
deal with the on-farm production of crops,
livestock, or poultry; the initial sale of
such products by producers or their coopera-
tives; federal farm stabilization, price
support, procurement, loan, and payment
programs; acreage allotment, marketing quota,
and set-aside programs; federal marketing
orders and agreements; international commod-
ity agreements; cooperative pool commodity
loans; national or international farm commod-
ity reserves or buffer stocks; export or
import policies regarding farm and food
commodities; and bargaining between farm
producers and handlers."

Such an amendment is essential because, frankly, it would not be practicable or workable to require the Secretary of Agriculture to make the judgments suggested in Section 3 on every decision which he makes relating to the farm programs, marketing orders, bargaining activities, cooperative pool plans, export-import policies, etc., etc.

To require such decisions and judgments on the part of the Secretary of Agriculture would run counter to the mandate Congress has given him and reiterated from time to time to take actions to assure parity prices and income to agriculture.

Whether or not Section 3 would require him to file "Competitive Impact Statements" every time he makes a policy decision, the exercise would be a pointless and counterproductive one.

For the independent regulatory agencies enumerated in Section 8 (c), we believe that S. 382 would introduce a helpful standard for establishing a balanced perspective between regulatory and pro-competitive strategies.

In our view, practically all of the high prices in the industrial sector are high because someone who has the power to do it has set them high, and they go on rising because someone has the power to raise them.

Some kind of direct public intervention is needed to curb unjustifiably high prices in the industrial and service sectors of the economy. Positive and deliberate action will be needed to make either regulation or competition do the job. The antitrust standards suggested in S. 382 may well help choose the most effective course.

The National Farmers Union policy statement for 1978 expressed concern about the dominance of the food distribution system by chain stores and processors.

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The policy statement noted that "concentration of ownership of the nation's resources and wealth both vertically and horizontally threatens family agriculture, small business, and ultimately consumers."

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In the section on energy policy, Farmers Union members urged support of "antitrust action to increase competition in the private sector of energy industries where combinations result in unwarranted charges to consumers.