Why Are They Attacking Capper Volstead? Phil Kenkel Bill Fitzwater Cooperative Chair

Why Are They Attacking Capper Volstead?
Phil Kenkel
Bill Fitzwater Cooperative Chair
Last fall cooperatives were in the news as health insurance cooperatives were proposed as a
component of health care reform. Most news analysts seemed to be vaguely in favor of the
cooperative concept but concluded that health insurance cooperatives would be too small to
provide any meaningful competition with huge health insurance corporations. In light of that
recent debate it is somewhat ironic that the Capper Volstead Act is under attack from the
Department of Justice and the Obama administration. A common theme in the “re-examining
Capper Volstead” argument is that cooperatives have grown beyond what was imagined when
the Act was established.
Despite the fact that most cooperatives are much smaller than their suppliers or buyers, the
“bigger is bad” theme is currently popular. Big banks are often viewed as triggering the financial
crisis. Attacking large firms and proposing anti-trust action is always politically popular.
Cooperative’s, like other firms, seek efficient structures which often involve growth or the
formation of alliances. Unfortunately, the efficiency gains are somewhat invisible to members
and the general public while any reduction in firms appears to be a loss of competition. Dairy
cooperatives in the Northeast have been very effective in merging milk hauling operations and
reducing milk hauling costs. Unfortunately, some farmers (who ultimately pay the freight)
bemoan the loss of multiple milk trucks and perceive a less competitive price.
The general public’s view on cooperatives and agriculture in general seems to be stuck in the
1930’s. The average American would support a group of small farmers but is suspicious of any
organization described as an agribusiness. Regardless of the perceptions behind the attack on
Capper Volstead the threat is real. Without Capper Volstead, farmer co-ops could not exist, and
any two farmers coming together to talk about improved marketing would face harsh civil and
criminal antitrust penalties. While NCFC and regional cooperatives can play a role, the most
effective response is likely to come from grass-roots input. Local cooperatives need to share their
stories on how they benefit farmer owners and their rural communities. Examples of the
disparity between cooperatives and their suppliers and/or buyers and examples of scale
efficiencies are likely to be particularly effective. The first of the Department of Justice
workshops is scheduled for March 12 in Ankeny Iowa. It is described to consider “issues facing
crop farmers including seed technology, vertical integration, market transparency and buyer
power”. Cooperatives are in the best interest of farmers and consumers. We need to share that
story with our elected officials and the public.