Wisconsin and Minnesota’s innovative cooperative community needs to be protected by maintaining the Capper Volstead exemption to the Sherman Antitrust Law for agricultural cooperatives as the federal government explores broader changes to our nation’s competition laws.

Farmer cooperatives came into being more than 100 years ago because individual farmers were too small and too numerous to deal effectively with larger agribusinesses.  Farmers joined forces to form cooperative associations to market their products and purchase farm-related supplies and services.  The challenges experienced by farmers 100 years ago exist today, as producers and their cooperatives are selling into markets increasingly dominated by fewer, larger buyers.  Farmer owned and run cooperatives provide options and competition to their larger competitors. The largest cooperative had total revenues of $32 Billion in 2008 compared to Walmart’s $259 Billion. 

Farmer cooperatives play a vital role in agriculture and in the economic and social life of rural communities across our two states.  Cooperatives provide Minnesota and Wisconsin farmers with an advantage in the marketplace in several ways.  By pooling the buying power of hundreds or thousands of individual producers, farmer cooperatives are able to supply their members—at a competitive price—with nearly every input necessary to run a successful farming operation, including access to a dependable source of credit.  In fact, Wisconsin is a national leader in using the cooperative model to offer health insurance to farmers through a health care cooperative owned and governed by farmers.

Farmer cooperatives also market a wide range of agricultural commodities, and many engage in value-added processing to produce products that meet changing consumer demand.  Minnesota and Wisconsin’s dairy cooperatives and ethanol cooperative add value to the raw products produced by Minnesota and Wisconsin farmers.  In addition, many cooperatives are major exporters, allowing individual producers to compete in the global marketplace in a way that would be impossible to replicate as individual producers.   Profits from these activities are returned to the cooperative’s members, helping to boost income from beyond the farm gate and providing additional capital for farming operations.  Farmers’ income then flows through to local communities, aiding the rural economy of our two Upper Midwest states.

Farmer cooperatives are also playing an important role as dairy farmers across Wisconsin and Minnesota face an unprecedented and sustained decline in the price of fluid milk.  Many dairy cooperatives have taken a number of steps—from speeding up milk payments to increasing the amount of profits returned directly to members to provide needed dollars in these hard economic times.  Between our two states, more than 85% of the milk is marketed through a cooperative and over 60% of the cheese is made by a cooperative. 

A renewed focus on antitrust enforcement has resulted in some confusion regarding the antitrust protections provided to farmer cooperatives.  The Capper-Volstead Act gives farmer cooperatives limited antitrust immunity.  To qualify for these limited antitrust protections, farmer cooperatives must meet several requirements. These include that the cooperative’s voting members must be producers, and that the cooperative must choose to either operate on a one member/one vote basis, ormust limit distributions on dividends to eight percent.   Without the limited antitrust immunity provided by the Act, farmers who work together to process and market their products would be subject to criminal prosecution for violation of the Sherman Antitrust Law.

Moreover, as a protection against potential monopolistic activity, the Capper-Volstead 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.