Capper-Volstead Act under fire after 90 years

09/07/2012 09:14:00 AM
Christopher Ondeck and Elisa Kantor

It also allows growers to band together and handle more of their own processing and marketing, so that growers can capture the profits from processing that would otherwise go to non-growers.

Without cooperatives, some growers would be unable to bring their products to market because they cannot process, market or sell products on their own.

Further, they may be unable to bargain for a fair price, as growers can be at a unique disadvantage because of the vagaries of weather, other acts of nature, and market conditions beyond their control.

Cooperatives help solve many of these problems by enabling growers to band together, pool their capital, and operate as a single entity with the strength of numbers.

The new and uncertain legal landscape of government investigations and civil lawsuits against cooperatives and their members raises questions long thought to be settled.

Who exactly is protected under the Capper-Volstead Act?

What activities does the act permit a cooperative to engage in?

Can a cooperative’s members jeopardize that cooperative’s antitrust immunity and incur liability for other members?

What are the legal risks that individual members face in being part of a cooperative?

The current reality of growers and their cooperatives is troubling. Now they worry whether the statutory foundation upon which they have based their business models will be uprooted.

Agricultural cooperatives wonder whether this heightened scrutiny will reduce the competitiveness of U.S. growers who operate using the cooperative model, both domestically and abroad.

Industry advocates, including national associations for cooperatives and growers, are engaged in vigorous defense of the Capper-Volstead Act.

The outcome of their efforts, and of the government investigations and private lawsuits, will determine whether the act will continue to empower a vibrant cooperative sector in U.S. agriculture for another 90 years.

Christopher Ondeck is a partner in the Washington, D.C., office of Crowell & Moring LLP and serves as vice chairman of the firm’s Antitrust Group. Elisa Kantor is an associate in the group and also works in the Washington, D.C., office.

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