Repeal of act would threaten ag cooperatives

by Robert C. Andersen, President of the Nebraska Cooperative Council, Lincoln NE

The U.S. Department of Justice (DOJ) and the U.S. Department of Agriculture will be holding joint workshops over the next several months to study antitrust issues in agriculture.  One of the issues publicly raised by DOJ officials is whether the Capper-Volstead Act is still necessary in our agricultural economy.

The Capper-Volstead Act is the fundamental legal foundation of our farmer- and rancher-owned cooperatives in the United States. Capper-Volstead was passed by Congress in 1922 to protect the ability of farmers and ranchers to join together in cooperative business organizations to sell agricultural commodities and purchase agricultural inputs without violating the antitrust provisions of the Sherman Antitrust Act.

A repeal of Capper-Volstead could gravely impact the competitive ability of Nebraska’s farmers and ranchers.

Farmer owned cooperatives have been in existence for more than 100 years in Nebraska.  During this time, much has changed in agriculture. What has not changed is the basic need recognized by the passage of Capper-Volstead: to protect the competitive position of individual farmers and ranchers in the agricultural economy.

Nebraska’s agricultural cooperatives are owned, patronized and governed by the farmers and ranchers who are members of those cooperatives. These cooperatives are not owned by profit-only-oriented investors in distant cities or large multinational agricultural companies. They are owned by the farmers and ranchers who use their services. These local agricultural producers control and govern the cooperatives through boards of directors comprised of and elected by the agricultural producer members.

By working together, the cooperative becomes an extension of each individual member’s farming operation.  This allows farmers to move further up the marketing chain in adding value to the products they produce, as well as helping farmers secure the inputs needed for their farming operations on a competitive basis.

Cooperatives provide a competitive balance for producers who are dealing with private companies or multinational corporations.  An individual farmer is at a distinct disadvantage if attempting to individually market grain nationally or internationally.  Through a cooperative, a number of farmers can jointly own a train-loading facility in order to access competitive national and international grain markets.

Likewise, in the securing of input supplies, cooperatives provide individual farmers and ranchers a more competitive platform by combining their individual purchasing power.  Working through the cooperative, a producer can receive the benefit of access to bulk fertilizer facilities and participate in the savings associated with bulk purchasing and favorable transportation rates.

Nebraska’s farmer- and rancher-owned cooperatives provide considerable benefits to our farm economy:

§          Last year, Nebraska’s farmer-owned cooperatives returned $82.7 million in patronage allocations to their members.  These are allocations of the profits or savings of the cooperative generated by the business done with each member.

§         In addition to the patronage refunds, Nebraska agricultural cooperatives provided $10.8 million in members equity credit redemptions to their farmer and rancher owners and patrons.

§          Last year, agricultural cooperatives in Nebraska invested more than $91 million in new equipment and facilities in Nebraska communities.  The vast majority of these investments are in communities of fewer than 10,000 people.

§         Agricultural cooperatives employ more than 3,900 people statewide with a combined payroll of more than $211 million. This equates to an average salary of more than $54,000 per employee.  In addition to providing goods and services for producers, cooperatives also provide excellent employment opportunities in Nebraska communities.

These statistics clearly demonstrate that agricultural cooperatives are providing value for agricultural producers and are a great success story for the rural economy of our state.   The members of the Nebraska Cooperative Council are proud that agricultural cooperatives are one of the most consistent economic development drivers in rural Nebraska.

The Capper-Volstead Act is as necessary today as ever to protect the important competitive and economic benefits that Nebraska’s farmer- and rancher-owned cooperatives provide to their members and the state’s agricultural economy.  Any effort to repeal the Capper-Volstead Act should be vigorously opposed by those who value the success of Nebraska’s farmers and ranchers in today’s complex and challenging economy.

Originally published in the Omaha World Herald on March 14, 2010