Analysis: Federal Courts Allow Corporations to Tear Apart the Family Farm

Presidential candidates have some good plans for revitalizing rural America. But unless we restructure the Supreme Court, those proposals won’t get far.

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EDITOR’S NOTE: This article is adapted from “The Supreme Court Has Undermined Iowa’s Small Farms and Rural Communities,” a report issued by Take Back the Court, which advocates expanding the number of justices on the Supreme Court.

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Throughout the U.S., the disappearance of family farms has been associated with the loss of jobs, retail shops, and even schools, because larger farms tend not to reinvest profits locally, unlike the small farms they replace. As a result, agricultural consolidation has had a disastrous impact on rural communities. While the total income of U.S. farms in 2017 exceeded $400 billion, the average income for a farm has decreased since 2012 to only $43,053.

Farmers are well aware that technological advances, agricultural consolidation, and government policy have led to the collapse of their farms and their communities. …  While these factors are widely understood, there has been less attention to the role that federal courts, including the Supreme Court, have played in rural America’s demise. … Courts have effectively dismantled the most significant protections that Congress enacted to protect small farmers. And with the evisceration of those protections, large corporations have seized monopoly control over agricultural markets and then used their market power to ruin small farms. 

In 1921, for example, Congress passed the Packers and Stockyards Act (PSA), an antitrust law designed to protect small farms and rural communities by promoting competition in agricultural industries and preventing unfair and deceptive trade practices. Congress passed the PSA in direct response to a disturbing level of consolidation in the meat packing industry, and the law worked well for half a century. Beginning in the 1970s and continuing to this day, however, the Supreme Court and lower federal courts have weakened its enforcement by siding with corporate interests over local farmers. Predictably, corporate consolidation followed the weakening of the law. 

[The] courts have not only upheld anticompetitive integration in the meatpacking industry, but have also dismantled the protections afforded to small farmers by the PSA. Three factors, in particular, warrant consideration. First, the PSA was intended to prohibit a monopoly in the meatpacking industry, but courts have held that corporate consolidation is not a violation of the PSA. Second, the clear language of the Act’s broad prohibitions has been reinterpreted by courts to apply only to clearly egregious cases, thus allowing systemic yet subtle anticompetitive behavior to flourish. Finally, courts have failed to properly apply the PSA to contracts between small farmers and large corporations, even when contractual terms expressly violate the Act. Many small farmers have challenged the dismantling of the PSA, but the Supreme Court has, without exception, denied them a hearing, thus ignoring the ways that lower federal courts have reshaped the law to favor agribusiness at the expense of local farms. The decisions of the Supreme Court and lower federal courts have resulted in the consolidation of agricultural industries, leaving small farms and rural communities unprotected from hardship. …

Several presidential candidates have proposed rural revitalization plans, all of which rightly focus on the monopoly control of large agribusiness corporations over agricultural markets. Joe Biden, for example, proposes strengthening the enforcement of existing antitrust laws. Pete Buttigieg proposes to modify existing antitrust enforcement by expanding the threshold for merger reporting requirements. Amy Klobuchar advocates legislating a new legal standard that would shift the burden to corporations seeking to merge by requiring them to show that their proposed integration would not reduce competition. Bernie Sanders and Elizabeth Warren propose to reverse mergers of agricultural corporations, break up highly consolidated industries including meatpacking, and impose a moratorium on future mergers of large agricultural companies. 

While the candidates’ proposals include many thoughtful provisions, and while rural revitalization is badly needed, none of the plans is likely to survive judicial review, because all rely on federal courts—including the Supreme Court—to allow federal agencies to enforce deconsolidation. Unfortunately, however, there are at least four reasons to expect the Supreme Court to decline to permit rural revitalization plans to operate as intended. …

Unfortunately, however, the Supreme Court is unlikely to allow the next administration to repair the damage it has helped produce in rural America, in that the Court will probably strike down rural revitalization plans proposed by presidential candidates. Consistent with its 73-0 record of voting in the direction favored by GOP donors in split-decision cases since 2005, and with its tradition of rulings favoring large corporate interests in antitrust cases, the Supreme Court is unlikely to allow for the revitalization of local communities or small farms. Structural reform of the Court may be the only option for preventing the judiciary from wreaking additional havoc in rural America. 

Patty Judge was Iowa lieutenant governor and Iowa secretary of agriculture and serves currently as co-chair of Focus On Rural America. Aaron Belkin is director of Take Back the Court.

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