PUBLIC WORKSHOPS EXPLORING COMPETITION IN AGRICULTURE ppt

The Honorable Ron Sparks, Commissioner of Agriculture, State of Alabama.. be here at Alabama A&M University andappreciate all of the folks that are heretoday.I want to welcome everyone t

PUBLIC WORKSHOPS EXPLORING COMPETITION IN

AGRICULTURE

Poultry Workshop

May 21, 20109:12 a.m

Alabama A&M UniversityKnight Reception Center

Normal, Alabama

The Honorable Tom Vilsack, Secretary

of the Agriculture, U S Department ofAgriculture

ROUNDTABLE DISCUSSION AND PRESENTATION OF ISSUES:

The Honorable Eric Holder, AttorneyGeneral, U S Department of Justice

The Honorable Tom Vilsack, Secretary

of Agriculture, U S Department ofAgriculture

The Honorable Christine Varney,Assistant Attorney General for Antitrust,

U S Department of Justice

The Honorable Artur Davis,Congressman, U S House of

Representatives

The Honorable Ron Sparks, Commissioner

of Agriculture, State of Alabama

ROUNDTABLE DISCUSSION ON POULTRY PRODUCER CONCERNS:

The Honorable Tom Vilsack, Secretary

of Agriculture, U S Department ofAgriculture

Gary Alexander, Producer, Westminster,South Carolina

Kay Doby, Former Producer, Cameron,North Carolina

Benny Bishop, Peco Foods, Tuscaloosa,Alabama.

Max Carnes, Producer, Baldwin,Georgia

Michael R Dicks, Watkins Chair,International Trade and Development,Oklahoma State University

John Ingrum, Forest, Mississippi

Cindy Johnson, Attorney, Cohutta,

Agriculture, Auburn University.

Mike Weaver, Producer and President ofContract Poultry Growers Association of theVirginias, Fort Seybert, West, Virginia

ADDITIONAL PUBLIC TESTIMONY.

John Ferrell, Deputy Under Secretaryfor Marketing and Regulatory Programs,

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be here at Alabama A&M University andappreciate all of the folks that are heretoday.

I want to welcome everyone tothis joint competition workshop between theDepartment of Agriculture and the

Department of Justice It's an historicopportunity for us to listen and to learn

Congressman, good to see you

I want to thank the folks atAlabama A&M University for allowing us touse this facility and everyone who hasprovided assistance to us

I also want to recognize severalmembers of the United Food and CommercialWorkers, as well as those from the retail,wholesale and department store unions thatare joining us today

In March we held a workshop ongeneral farmer issues in Ankeny, Iowa.

Today we're focusing oncompetition and contracting practices inthe broiler industry, as well as the

relationship between producers andcompanies

On June 25th we will hold aworkshop on dairy in Madison, Wisconsin

We will evaluate the competition onlivestock markets on August 27th in FortCollins, Colorado And we'll discussmargins on December 8th in Washington, D.C

President Obama has providedclear direction that his government should

be open and transparent And that's what

he hope these workshops are designed to do

We seriously want public dialogue on thesevery complex issues

As I travel as Secretary ofAgriculture across the country I hear avery consistent theme: Farmers and

ranchers and producers are worried aboutwhether there's a future for themselves andtheir children in agriculture And we knowhaving a viable market largely determines

if such a future will exist

Farmers have the right to know iftheir markets are fair, competitive andtransparent, especially if they're going tomake a significant investment to allow them

to get in or to stay in agriculture

At the same time, consumersacross the country have the right to know

if the food products they're buying aresafe and are fairly priced at the grocerystore

At the Iowa workshop we discussed

Today we evaluate the poultryindustry, and, specifically, the broilerportion of the industry.

As those in the audience probablywell know in the 1950's and '60's the

poultry industry underwent one of thelargest transformations of any sector inagriculture through consolidation andvertical integration

Poultry production is verticallyintegrated The company owns the birds,the feed, medications, veterinary services,whereas the growers take on the capital

cost of building the facilities, helping topay the fuel costs and caring for the birds

to market weight

Most production is supplied

chickens slaughtered Today it's roughly57% And now it's not uncommon for a

grower to have to do business with only onecompany in their area Also been

increasing controversies between poultrygrowers and processors, specifically

relating to the length of contracts andcontract terms

The concentration numbers fail toanswer the basic question, which we want tohear from you today: What is needed to

have a viable, fair and competitivemarketplace?

The issues surrounding thecompetitiveness in agriculture have beendebated for decades And there's no doubtthat they are difficult and complex, which

is why this workshop is important and, webelieve, long overdue

We continue to seek answers and

The USDA and the Department ofJustice have established the AgriculturalCompetition Joint Task Force to exploreopportunities to harness each other'sexpertise and will be developing a newmemorandum of understanding that willoutline our relationship These workshopswill help inform us as we work on this now.

The president's budget in the agarea has increased GIPSA's funding level toimprove enforcement over unfair and

deceptive practices in the marketplace

The Department is using these resources tohire attorneys to handle complex

competition investigations as well as otherviolations

The current budget the Presidenthas proposed to Congress for 2011 alsorequests additional funds to hire legal

We published a final rule inDecember of 2009 to improve fairness incontracting in the poultry industry.

Specifically this final rule ensures thatgrowers are provided a 90-day notice before

a company can terminate their contracts

It also ensures that growers whowere building new poultry houses get to see

a a true written contract on the datethe poultry company provides the poultryhouse specifications, not months later,which could put the grower in a

take-it-or-leave it situation

The final rule also spells outthat the growers have the right to discusstheir contracts with their families, theirlender, their state or federal agencies,their lawyer or other growers that contractwith the same company

We are also in the final

poultry marketplace.

Again, I want to thank you-allfor attending today And I want to thankthe panelists in advance, before my

introductions of them, for theirwillingness to participate in thisworkshop And look forward to hearing whatthey have to say on this very important

in the private practice, as a U S

Attorney for the District of Columbia, as

an Associate Judge of the Superior of theDistrict of Columbia and as a Deputy

Attorney General

On a personal note, I want toindicate the personal attention theAttorney General has paid to theseparticular workshops There are manyplaces that the Attorney General could betoday, but he has dedicated himself tocoming to these workshops as an indication

of his concern and interest

So please welcome join me inwelcoming Attorney General Holder

ATTORNEY GENERAL HOLDER: Thankyou Well, good morning

Thank you, Secretary Vilsack

It's always good to join with you Andit's good to be here and it's also good to

be out of Washington, D C

Christine Varney.

You might hear in me a slight NewYork accent, but it's always great to be inthe beautiful state of Alabama I consideryou all my second home My wife was bornand raised about five hours south of here

in Mobile, Alabama, but this is my firstvisit to to Normal

So I want to thank the city andour host, Alabama A&M, for welcoming ustoday and for hosting what I think is avery important workshop

The discussion that we havegathered to begin reflects, I think, ahistoric collaboration, as SecretaryVilsack said, between the Departments ofJustice and Agriculture and leaders from

across our nation's agricultural industry.

Secretary Vilsack, AssistantAttorney General Varney and I are committed

to improving our understanding of howparticular agricultural markets function.That is why we are here And that's whywe've decided to hold a series of fiveworkshops across the country to hear frompeople, to examine the challenges facingAmerica's farmers, growers and producers

Now, two months ago we kicked offthis workshop series in Secretary Vilsack'shome State of Iowa, I wonder how that

happened, where we focused on the seedindustry That meeting, I think, was agreat success

We received very valuablefeedback from those who attended and fromthose who provided written comments

Now, I fully expect that thisworkshop will be just as useful Not only

do we appreciate your input, quite frankly,

we need your input, we need to hear from

you And today our goal is to develop a

a cle arer picture of wh at competitiveissues participants in the poultry marketare facing, but we need your perspective.Your insights can help us fulfill our

responsibilities to take appropriate action

to enforce the Packers and Stockyard Act

It will also enable us to be more effectiveadvocates for competition, which is

Christine's job

Now, as we begin this importantconversation it is fitting that we'vegathered here at Alabama A&M Thisuniversity has a very long and a verydistinguished tradition of trainingagricultural leaders And today is on thecutting edge of industry and industry

advancements

In fact, as we speak, universitybiotechnologists are making strides in thedevelopment of an allergy free peanut

Now, this is something very important to

me I've got two children who are allergic

to peanuts And if you can pull this off,

I will be able to get peanut buttersandwiches to everybody in my family

But in learning about this, Icouldn't help but think about GeorgeWashington Carver, who spent his careerworking on innovations with peanuts atTuskegee University Doctor Carver oncesaid, and I quote, "New developments arethe products of a creative mind"

Well that is certainly true, but

I believe that new developments, and moreimportantly, progress, are also the product

of collaboration

Now, in coming together today ourhope is that we can move forward in meetingour goals to ensure competition, to ensureopportunity and fairness in our

agricultural markets Secretary Vilsack,Assistant Attorney General Varney and Iunderstand that

As farmers, producers andindustry leaders we understand that you

consolidation in our poultry markets.

Whether you're here to talk about antitrustissues or to raise questions about fair

contracting and business practices, wereally look forward to hearing from each ofyou

Now, with your engagement, Ibelieve that we can move closer toanswering the question that's at the heart

of these workshops The question ofwhether competition in today's agriculturalindustry is as free and is as fair as itshould be

And as we work to answer this andunderstand why a growing number of Americanproducers and farmers find it increasinglydifficult to survive by doing what theyhave been doing for decades, I want toensure each of you that the Obama

Administration is committed to protecting

competition in a very vigorous manner.

This is a top priority for today'sDepartment of Justice

But I recognize that the vigorousenforcement of our antitrust laws, whilecritical, cannot fully address the concerns

of many agricultural industry leaders andstakeholders That's why we're partneringwith the United States Department of

Agriculture to benefit from its deepexpertise in your industry and, hopefully,

to share our expertise on the broaderregulatory issues that are potentially atplay And that's why our agencies launchedthe Agriculture Competition Joint Task

Force that Secretary Vilsack mentioned

That's also why we're engagingdirectly with all of you, to listen, tolearn and to determine the best way toensure fairness and to encourage success

Now, as we evaluate and developpolicy we want to hear from you And Ithink that's something that all of us would

really stress, we want to hear from you.

In fact, when we announced these workshopslast year, we also issued a call for yourcomments and recommendations And, so far,the response has really been tremendous

To date we have received over 15,000comments And I'm grateful that so many ofyou have contributed to this extraordinaryexample of government public engagement atits best

Not only must we keep up thiswork, we have to expand this work Andtogether, I believe, that we can addressthese 21st Century challenges that theagricultural industry now faces Now, I'mcertain that we can honor and preserve yourindustry's essential role in our economy aswell as our culture, our livelihood and ourglobal standing Your participation heregives me great hope about what we can

accomplish together in the days and andmonths ahead Secretary Vilsack and I lookforward to hearing from you and to working

with all of you.

So thank you so much forwelcoming us here today And, as I said,

we look forward to hearing from all of you

SECRETARY VILSACK: General,thank you very much

Let me explain what we're going

to do this morning We are initially going

to have an opportunity to hear fromChristine Varney that the Attorney Generalbriefly introduced

Congressman Artur Davis is herewith us, as well as Commissioner Sparks.We're going to have an opportunity to ask afew questions of this panel

We will break for a short period

of time and reconvene a larger panel ofproducers and growers and have the samekind of question and answer format in themorning session

Then I think we turn it over to to General Varney for the afternoonsession, which will give folks additional

we do want to hear from as many people as

we can

Let me first and foremostintroduce very briefly the three members ofthe first panel And then I will turn tothe Attorney General with a question and toeach of the individual panelists for a

question so that they can make a statement

in response

As the General indicated,Christine Varney was confirmed as anAssistant Attorney General for theAntitrust Division in April of 2009

She has held leadership positions

in both public and private sector From

1998 to 2009 she was a partner in Hogan andHartson, a very significant and prestigiousfirm in Washington, D C., where she served

in a dual capacity as a member of the

at the Federal Trade Commission She wasthe leading official on a wide variety ofInternet and competition issues Prior toher service there she served as an

Assistant to the President and Secretary tothe Cabinet during the Clinton

Administration

She is joined by CongressmanArtur Davis, no stranger to the folks here.The Congressman was reelected in 2008 toserve his fourth term in the U S House ofRepresentatives And he represents the

Seventh Congressional District here inAlabama and serves as a member of the Waysand Means Committee He is a member of theCongressional Black Caucus and resides inBirmingham, Alabama

He was also appointed to thesenior whip team for the Democratic

of Agriculture And most recently served

as the President of the NationalAssociation of State Departments of

Agriculture Commissioner Sparks continues

to serve with that commission on theexecutive committee And that is anopportunity that we look forward to eachmonth to visit from the USDA with the state

ag commissioners and secretaries to makesure that we have a seamless communicationsystem

So these are the three panelists.And I think, General, if I couldstart with you and and give you a chance

to sort of expand a little bit more Iclearly want to thank you for attendingthis workshop and certainly appreciate thecollaboration your Department is providingwith our Department, it's truly historic

As you know, and as the folks inthis room probably know, poultry

enforcement under the Packers andStockyards Act is divided between our twoagencies This makes, I think,

communication and coordination verycritical

Do you have a sense about what wecan do to improve the communication andcoordination with respect to this importantissue?

ATTORNEY GENERAL HOLDER: Well, Icertainly one thing one of the things

we have to do is exactly what we are doingnow, which is to give people an opportunity

to interact with those people likeourselves who have the responsibility forrunning the departments that are have,

as their responsibility, enforcement of

of that act

I think we also have to come upwith ways in which we interact with eachother in ways, frankly, better than we have

in the past I don't think the Department

of Justice, again, quite frankly, has beennearly as active as it needed to be

Agriculture and to establish what, I think,

is in some ways a historic relationshipwith an understanding of the expertise that

we can bring to these questions and with arespect for the deep expertise and

experiences the Department of Agriculturehas in this regard

It seems to me that without all

of the relevant agencies of the executivebranch actually functioning, working working together, speaking with one

another, we're not going to be in aposition to give you all the kind ofservice, frankly, the kind of governmentthat you deserve, the kind of effectiveaction that I think this government iscapable of providing

And, so, that is why we are here,but it is also why when we leave and when

we are back in Washington the communicationbetween our departments will will

I want Dudley Butler Dudley,

do you want to stand up, who is in charge

of that area to be able to answer them Sothat's the man you want to go to

MR BUTLER: Thank you

SECRETARY VILSACK: I don't think

I just did you a favor, Dudley

I want to now turn to CongressmanDavis

Congressman, just from your vastawareness and knowledge as you travel

around in your congressional district inthe state, your thoughts about competition

in the poultry industry and what, perhaps,needs to happen in order to make sure that

everyone is being treated fairly.

CONGRESSMAN DAVIS: Thank you,

And, Mr Attorney General, it'salways good welcome you come back to yourkind of, sort of adopted state

Some of you may remember theAttorney General honored the State ofAlabama in 2009, only few weeks after hisbeing sworn in as the first

African-American Attorney General of theUnited States he came to Selma, Alabama.And he honored history and he honored thewhole state by standing in the pulpit ofBrown's Chapel on Jubilee Sunday

And, Mr Attorney General,

Let me before I answer yourquestion, I want to pay tribute to both ofthese individuals who are seated to my

immediate left because of something the

U S Congress is about to do, but it wouldnot have happened without the leadership ofSecretary Vilsack and Attorney General

Several years ago working withDemocrats and Republicans in Congress wemanaged to reopen the Pigford litigationand we included those provisions in thebipartisan 2008 Farm Bill

of the United States was ready to besettled.

And I'm happy to sit here andreport to you that in Congress' final daysbefore the Memorial Day recess the House ofRepresentatives is poised to pass

legislation that will include a 1.4 billiondollar settlement for Pigford litigants

that would not have happened without thevision of this Attorney General, thisAgriculture Secretary and this President

So please give them a hand for thataccomplishment

Let me go to directly to theSecretary's question

Mr Secretary, the best way I cananswer that question is to share with you abrief anecdote that I recall from my

travels around this state several years

listen I said my piece And then at theend I I took questions, did more

listening than talking

As I was about to leave, and Idid what we politicians are always

reluctant to do and says, is there any oneperson who hasn't had a chance to speak whowants to get in?

There's a gentleman from NorthAlabama who made his way to the microphone

He said, Mr Davis, I'm a poultry farmer.Been a poultry farmer for 33 years

My son is 22 He is graduatingAuburn University A very fine school inEast Alabama, Mr Secretary And he said

my son came to me a few weeks ago and said,

"You know, dad, you've been a poultry for

32 years I have decided that I want to

contacts that you may want to talk to", youknow, as dads and sons kind of always worktogether So I'll put together a list ofcontacts I want you to talk to.

And then he said something thatstunned everybody in the room, he said, "Ihad no intention of calling a single one ofthose contacts on behalf of my son"

Everyone got quiet And he said

I waited, I let several weeks go by and myson came back and said, "Dad, have you

heard from any of those guys, you know,that you said I needed to talk to aboutgetting into the poultry business"?

And this gentleman said to usthat day that he kept giving his son therunaround

The gentleman looked out at all

of us that day, about a hundred and fiftypeople and said, "Mr Davis, I have donethis for 32 years I do not have theconfidence that my son can make it in thepoultry business I know he's smart Iknow he has everything he needs in terms ofwork ethic I know he has the character,

my wife and I taught him that, but I do nothave confidence he can make it in the

family business"

And I remember everyone in thatroom was sitting there wondering have wegotten to a state in farming and

agriculture in the state of Alabama wherewhen a son wants to walk in his father'sfootsteps the son doesn't feel empowered totake his son along that path

We have a lot of poultry farmers

be, but I suspect there are stories likehis in this room.

And I didn't have a chance toquiz him or to cross examine him about why

he didn't have confidence that his soncould make it Maybe it's high energycosts Maybe it's the difficulty ofsustaining a small business because running

a farm is running a small business as all

of you appreciate Maybe it's the lack ofcompetition Maybe it's predatory pricing.Maybe it's predatory relationships betweenproducers and management

I didn't cross examine him onthose things that day, but that man in thatroom communicated a pain in his voice

And all of us who care about thefuture of this state and the future of thisregion have to understand that we cannot

So I'm glad to see the AttorneyGeneral and the Secretary of Agriculturefully engaged in this very unique

partnership because I want men like theindividual who stood up at that meeting to

be able to say, I welcome my son into thepoultry profession I welcome my son intothe family business I'm confident he canmake it I'm confident he can thrive

There's something fundamentallywrong when a father has to say to a son, donot walk the path that I walked

The final comments I'll make, Mr.Secretary We have the outstanding newpresident of this school, Doctor Hugine,who is here today, who's seated on thefirst row We have a pretty good crowd offolk

anyplace in the world right now Some ofy'all got that.

They could be in a number ofplaces in Alabama They could be atAuburn They could be at AUM They couldhave gone to Selma They could have found

an excuse to do this in Birmingham becausethe flights get into Birmingham more easilysometimes

But they're here, Doctor Hugine,

at this school, which has meant so much toNortheast Alabama For anyone who doubtsthat Alabama A&M is 100% on its way, thatAlabama A&M is one of the proudest

institutes in this region, turn around andlook behind you and see what Alabama A&Mcan do Doctor Hugine, it's a tribute toyour leadership that we're today

Thank you so much, ladies and

Commissioner, I want to turn toyou You obviously have your ear to theground with Alabama agriculture and

agriculture generally

And I'm just curious, and I thinkthe General is curious, in knowing yourthoughts about what we can to do to makesure that this playing field is level forthe growers and producers and how can wepotentially strengthen their position sothat this playing field is as level as itcan be so that a father has a chance to say

to his son you can participate in thisbusiness

COMMISSIONER SPARKS: Absolutely.And, Mr Secretary, you're on

your own when you start mentioning football