Signs of Life at the Department of Agriculture?
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Signs of Life at the Department of Agriculture?
Tom Vilsack was a bad Secretary of Agriculture under Obama. He's gotten better under Biden.
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When Joe Biden appointed his friend and former Iowa Governor Tom Vilsack to be the Secretary of Agriculture, a lot of anti-monopolists qly seethed. This was his second time at the USDA, since he had also run the department under Obama. And when Vilsack was the Secretary of Agriculture back then, he did not, to say the least, fight against consolidation. And in many ways, the bureaucracy at the USDA is still deeply hostile. For instance, their top sugar economist Barbara Fesco just sabotaged a merger case from the Antitrust Division.
But in other ways, Vilsack has sort of begun turning around the USDA. Today, Ag Department is undertaking two initiatives. The first is to offer $15 million to state attorneys general to address agricultural consolidation. While that amount of money won’t change everything, most state AG offices have one or two lawyers working on antitrust and competition. So even a little money goes a long way.
In addition, the USDA has put forward new rules under a special antitrust law for agriculture, known as the Packers and Stockyards Act. These rules bar packers from discriminating against livestock and poultry growers, retaliating against them, or deceiving them. The rules will be finalized in the next four to six months, and then farmers can use them in court. The Packers and Stockyards Act is a dusty law that isn’t used much, but it is potentially very powerful. So we’ll see how this change goes.
Why is Vilsack changing his tune on concentration? It’s not that he is an anti-monopolist, but that he is largely a political creature, and understands that concentration is now a potent policy area. In some ways, how USDA is changing is a perfect experiment on how much intellectual change matters. We literally have the same guy running the same department under two different administrations. The signs aren’t great, but at least there are signs.
Signs of Life at the Department of Agriculture?
Hey Matt - tangentially related to the piece above, a good article in the WSJ today about falling lumber prices. I thought this quote at the bottom of the article hit home on how sawmills have consolidated and now have pricing power and can coordinate contracting supply quickly as prices drop. That's collusion if I've ever seen it:
"The consolidation of North America’s sawmills by a few big firms, such as Canfor and West Fraser Timber Co., has hastened the speed at which production is choked back in response to falling prices and should buoy prices, said Håkan Ekström of Wood Resources International LLC.
“Markets are a little more controlled with fewer mill owners,” he said. “When there were more owners, everyone waited for someone else to slow down.”"
What i like about this article is the insight that even a "political creature" like Vilsack can be motivated to fight concentration in industry..... IT shows there is hope.