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Capper-Volstead Act

Issue Briefs

NCFC Position: 

NCFC is the industry leader in support of the protections afforded by the Capper-Volstead Act’s limited antitrust immunity for farmers and their cooperatives.  Such protections are essential to maintaining and promoting the economic well-being of farmers, ensuring access to competitive markets and helping capitalize on market opportunities.

Action: 

NCFC urges Congress and the Administration to support and maintain the crucial protections provided by the Capper-Volstead Act.  Without those protections, many farmer cooperatives would cease to exist and the farmers and communities they serve would suffer irreparable harm.

Current Status:

The Capper-Volstead Act and farmer cooperatives are under threat in ongoing civil suits involving potato, dairy, mushroom and egg cooperatives.  The Department of Justice has said enforcement may be stepped up, or the Department may recommend a legislative change to Capper-Volstead, depending on the outcomes of these cases.  In each case, plaintiffs seek to diminish the ability of farmer cooperatives to manage the delivery of their products.  Also at issue is the ability of farmers and their cooperatives to vertically integrate the production of a product – a vital aspect of modern agriculture. 

The outcome of these costly lawsuits may be economically devastating and could create tremendous uncertainty for farmers and their cooperatives, employees, suppliers, lenders and customers, as well as for rural communities.  Diminishment of the limited immunity provided under the Act would result in less rather than more competition by removing farmers’ ability to have some market power in an economy dominated by large companies. 

Background:

Congress passed the Capper-Volstead Act in 1922, giving farmers and ranchers the legal right to join together in cooperative associations.  The Capper-Volstead Act gives agricultural producer organizations limited antitrust immunity “in collectively processing, preparing for market, handling, and marketing” their products and permits such organizations to have “marketing agencies in common.”  The protections provided by the Capper-Volstead Act are essential to the economic well-being of farmers in today’s economy, and without them farmers could be subject to criminal antitrust violations.  Without the Capper-Volstead Act, family farmers would not be able to compete due to their lack of bargaining power in dealing with relatively few, large buyers, and would lack the ability to integrate into agricultural processing to compete with those entities.

As a protection against potential monopolistic activity, the Act gives the Secretary of Agriculture authority to prevent cooperatives from using their market power to unduly enhance the price of the products they market.

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