Court Opinion

ID: 9427240
Source: CourtListenerOpinion
Date Created: 2023-08-02 23:20:10.372312+00
Date Added: 2024-06-11T17:18:04.495483
License: Public Domain

Mr. Justice White,
with whom Mr. Justice Stewart joins,
dissenting.
The majority opinion fails to provide a functional definition of what it means to be a farmer within the sense of the Capper-Yolstead Act. We are alternatively told that antitrust protection was not intended for “the full spectrum of the agricultural sector, but, instead . . . only those whose economic position rendered them comparatively helpless,” ante, at 826, and then that certain members of the National Broiler Marketing Association are not entitled, to protection because they are not big enough to own their own breeder flock, hatchery, or grow-out facility, ante, at 827. The rule of the case evidently is that ownership of one of those facilities is somehow requisite in order to be a farmer. But no attempt is made to link that conclusion to the motivating factors behind an antitrust exemption for agriculture.
Historically, perishability of produce forced the farmer to take whatever price he could obtain at the time of the harvest. This one factor, more than any other, underlay the legislative recognition that allowing farmers to combine in marketing cooperatives was necessary for the economic survival of agriculture. “It is folly to suggest to the farmer with a carload of cattle on the market to Take them home’ or to ‘haul back his load of wheat' or other commodity.” 59 Cong. Rec. 7856 (1920) (Cong. Evans).1
*841Even in a reasonably competitive market, physical inability to withhold produce will place a producer at a disadvantage. But the farmer did not face a reasonably competitive market. A theme running through the legislative history almost as persistently as perishability is the farmer’s vulnerability to a small number of middlemen, organized, and capable of driving the price down below the farmer’s cost of production.2 Senator Capper stated a point of view to be found on almost every page of the congressional debate on his bill: “Middlemen who buy farm products act collectively as stockholders in corporations owning the business and through their representatives buy of farmers, and if farmers must continue to sell individually to these large aggregations of men who control the avenues and agencies through and by which farm products reach the consuming market, then farmers must for all time remain at the mercy of the buyers.” 62 Cong. Rec. 2058 (1922).3
*842The aid extended to farmers by the Capper-Volstead Act was of a very special variety. It was not a system of price supports or surplus purchases. The assistance offered farmers by the Capper-Yolstead Act was to allow combination in a way that would otherwise violate the antitrust laws. Such protection was chosen for a specific purpose. A Government price support program could lift price as surely as allowing agricultural cooperatives to operate, if lifting price were the only objective. The specific goal of permitting agricultural organizations was to combat, and even to supplant, purchasers’ organizations facing the farmer.
Economics teaches that the result in such circumstances is “bilateral monopoly” with a potentially beneficial impact on the eventual consumer and a sharing of cartel profits between the organized suppliers and the organized buyers.4 The House Report for this reason concluded that the organization of agricultural cooperatives could actually lead to a lowering of the price paid by consumers,5 if the middleman were elimi*843nated altogether. Senator Norris elaborated that the purpose of the bill was to permit farmers “ ‘to combine with [their] neighbors and cooperate and act as a corporation, following [their] product from the farm as near to the consumer as [they] .can, doing away in the meantime with unnecessary machinery and unnecessary middle men.’ That is all this bill attempts to do.” 62 Cong. Rec. 2257 (1922).
The legislative history thus comports with the economic reality of farming, and provides a consistent rationale for an agricultural antitrust exemption. Farmers were price takers because their goods could not be stored, and because they dealt with a small number of well-organized middlemen.
The nature of agriculture has changed profoundly since the early 1920’s when the Capper-Volstead Act was debated and adopted. The reality of integrated agribusiness admittedly antiquates some of the congressional characterizations of farming. But this Court has interpreted other statutory exemptions in the light of a changing economy,6 and the Court errs in failing to apply the sense and wording of the agriculture exemption because the industry's organization has changed.
The important reasons for granting antitrust immunity to farmers have not changed. Their produce is still, in large part, incapable of being withheld for a higher price. And in this case, that factor is particularly relevant. The overwhelming demand is for fresh, not frozen, 8-to-10-week-old broiler chickens, and integrators must sell their produce within four days of slaughter.7 The result is a buyer’s market. And the *844buyers in this market are few and powerful: “[T]he market for broilers is oligopsonistic, dominated by large retail chains such as A & P, Kroger and Safeway and institutional food outlets such as Kentucky Fried Chicken.” 8 A recurrent pattern of prices below actual cost to the producer has been observed since the start of the current decade.9
All of this makes the present ease a very poor one in which to depart from the wording of the antitrust exemption for farmers. Broiler chickens are agricultural products.10 Integrators produce them. Hence, integrators are “persons engaged in the production of agricultural products.” They own the “crop” from chicks to dressed broilers.11 They are engaged in the production of agricultural products as farmers, within the meaning of 7 U. S. C. § 291 (1976 ed.).
The majority's insistence that Capper-Yolstead protection not be extended unless the broiler producers own a breeder flock, hatchery, or grow-out facility is sought to be explained by the rationale that “[t]he economic role” of a producer who does not own one of these facilities “is indistinguishable from that of [a] processor that enters into a preplanting contract with its supplier . . . .” Ante, at 827-828. Such processors were sought to be included within the Act by Senator Phipps' amendment, which was rejected.
It is inaccurate to equate broiler producers with processors of agricultural commodities, even those with preplanting contracts. Such an equation ignores the important distinction that members of the NBMA are all 'producers of broilers, whereas a mere processor of an agricultural commodity is not a producer. The Act extends protection to “[pjersons engaged in the production of agricultural products as farmers.” *845(Emphasis added.) Opposition to the Phipps amendment was centered on precisely the fact that it would extend protection to those who did not produce agricultural commodities.
A leading critic explained his opposition: “The amendment ... is simply offered for the purpose of giving to a certain class of manufacturers the right to be immune from any prosecution under the Sherman Antitrust Act.... They are not cooperators; they are not producers; it is not an organization composed of producers who incorporate together to handle their own products; that is not it.” 62 Cong. Rec. 2275 (1922) (Sen. Norris). The problem with the proposal, therefore, was not that processing was involved. The statute’s own words are conclusive that the activity of processing by producers was to be exempted from antitrust scrutiny.12 The objection to Senator Phipps’ proposal was that processors who were not also producers were protected.
This hostility to Senator Phipps’ amendment was understandable, given the frequent legislative references to the pernicious effect of middlemen. But NBMA members are not middlemen. Whether or not they own hatcheries or grow-out facilities, they are producers of agricultural commodities.13 *846They enter the production system before the chickens are hatched, and withdraw only at the time the dressed broilers are sold. They own the chickens throughout the raising process. They should be allowed to “folio [w their] product from the farm as near to the consumer as [they] can.”
There is a functional dimension to this dichotomization of producers and processors. It involves the realities of risk-bearing. The Phipps amendment extended protection to manufacturers who paid a price for raw agricultural products that was “controlled by or dependent upon the price received by the manufacturer for the finished commodity by contract entered into before the production of such agricultural product or products.” Id., at 2273. Hence, the risk held in common by the Phipps-type processors and actual producers is only the fluctuation of final market price. All other risks are borne exclusively by the producer, including fluctuating prices for feed and medicine (all of which the producers supply to the grow-out facilities), damage in transit, and risk of death at any point in the growing process. All of these risks are identically suffered by NBMA members, whether or not they own their own breeder flocks, hatcheries, or grow-out facilities, because of the cost-plus nature of the grow-out contracts. The majority unwarrantedly relies upon the fact that the Senate rejected antitrust immunity for Phipps-type processors, who shared only one of these risks, to conclude that parties sharing all these elements of risk should also be denied protection.
There is cause to applaud the majority opinion in some respects: most importantly in its studious avoidance of any embracing of the United States’ point of view. The United States urges that, in determining what subclass of agricultural producers should be considered farmers, attention must focus on ownership of land and husbanding of flocks.
“The integrators are not 'actual farmers’ and do not claim to be so. They do not till the land or husband the flocks. They do not own the land on which the- flocks are raised.” Brief for United States 14.
*847“Petitioner therefore draws no sustenance from the fact that both sharecroppers and the owners of sharecropped land may be 'farmers’: the sharecroppers work the farmland and the owners own it. Integrators do neither.” Id., at 14 n. 28.
Tying antitrust exemption to ownership of land has no legal or economic validity.
Under the United States’ theory, an integrator of the type found unprotected in today’s opinion could achieve antitrust exemption by purchasing the land on which the grow-out facility was maintained (perhaps leasing it back to the independent “grower”). Or he could achieve protection by hiring his grower as an employee, thereby achieving surrogate status for himself as a husbander of flocks. The anomalous aspect of either of these steps is that antitrust protection would thereby be attained by an expansion of the size of an operation — that is entirely the wrong direction, based on the majority’s reading of congressional sentiment (with which I largely concur) that small, nonintegrated farmers were those most to be protected by the Act.14
*848The United States cites 20 instances from the congressional debates assertedly supporting its view that the proper test involves ownership of land or tilling the soil. Brief for United States 13, and nn. 21-27. Without exception, however, those citations refer to landowning or tilling merely in a shorthand way. It was customary throughout this long debate to observe Representatives and Senators filling pages of the Congressional Record with observations on agriculture’s focal role in the American Republic, but one will search in vain for any discussion of why ownership of land was a logical prerequisite to antitrust exemption for a farmer who, in re*849sponse to the strains of price taking, joined an agricultural marketing association.
The cumulative weight of the legislative history is that antitrust protection was needed for the cooperative efforts of ■those unable to combine in corporate form, whose product was thrown on the market in inelastic supply, where it faced an elastic demand. Perishability of agricultural product figured far more realistically than ownership of land as a reason for the inelastic supply of farmers’ produce at market time. And it was that inelastic supply that made farmers so very vulnerable to oligopsonistic demand. Put plainly, farmers had to sell but middlemen did not have to buy.
Antitrust exemption should be extended to agricultural producers who partake in substantially all of the risks of bringing a crop from seed to market, or, in this case, from chick to broiler. This is what it means to be a farmer. This rule would not exempt mere processors of agricultural produce, as the Phipps amendment had sought to do. It does not tie antitrust exemption to the irrelevant criterion of ownership of land, or tilling of the soil. But it does prove faithful, in a way the majority formulation does not, to the economic realities underlying Congress’ concern for agriculture: the perish-ability of product and organization of purchaser that make the individual farmer a price taker.
I respectfully dissent.

 Congressman. Evans was commenting on an earlier version of the bill. “[T]he cooperative association is most helpful and its widest field of operation is in those products which are not sold upon exchanges . . . take the .fruit crop, the apple crop, the potato crop. It must be harvested at a certain time. . . . You can not dump all the production on the country at once and have the farmer receive a good price.” 62 Cong. Rec. 2052 (1922) (Sen. Kellogg). See also Id., at 2263 (Sen. Hitchcock).

 See, e. g., Senator Capper’s speech, id., at 2058, summing up his support for “growers . . . [who were] compelled to dump [their products] on a glutted market at prices below cost of production.”

 “Agriculture sells its product to the highest bidder in a restricted market. It sells in this sort of market at the price fixed by purchasers. . . . There must be given to agriculture some compensatory advantage to offset the present economic advantage which industry holds by reason of the fact that it can write into the selling price which it fixes all cost of production plus a profit.” 59 Cong. Rec. 8022 (1920) (remarks of Cong. Sumners on an earlier version of the bill). “Operating individually, [the farmer] is helpless and falls an easy victim to the organized operators who deal in his output.” Id., at 8025 (remarks of Cong. Hersman on earlier bill). “The farmers are not asking a chance to oppress the public, but insist that they should be given a fair opportunity to meet business conditions as they exist — a condition that is very unfair under the present law. Whenever a farmer seeks to sell his products he meets in the market place the representatives of vast aggregations of organized capital that largely determine the price of his products. Personally he has very little, if anything, to say about the price.” Id., at 8033 (remarks of Cong. Fields on earlier bill). The Congressman stressed that the bill would give *842farmers "protection against the gamblers in agricultural products, who rob the producer with one hand and the consuming public with the other.” Ibid. The farmer “stands defenseless against combinations of corporations. He finds that when he goes out to do business in the world that he has to do business with a combination that represents 40 or 50 or 100,000 individual incorporators, but the farmer is a unit and he can not incorporate.” 61 Cong. Ree. 1040 (1921) (remarks of Cong. Towner on earlier bill). “[I]t is better to have the control of producers extend nearer than now to consumers as against the control of prices by the speculator, who has no concern in the maintenance of stable prices but whose concern is only his immediate profit.” Id., at 1041 (remarks of Cong. Sumners on earlier bill). “[Cooperatives] have tended to prevent much of the gambling in foodstuffs and to eliminate many of the useless middlemen that stand between the producers, the retailers, and the consumers.” H. R. Rep. No. 24, 67th Cong., 1st Sess., 3 (1921).

 See G. Stigler, The Theory of Price 207-208 (3d ed. 1966); M. Friedman, Price Theory 191-192 (1976); G. Becker, Economic Theory 94-95 (1971).

 H. R. Rep. No. 24, supra, n. 3, at 3.

 See, e. g., Connell Constr. Co. v. Plumbers & Steamfitters, 421 U. S. 616 (1975) (labor exemption); Meat Cutters v. Jewel Tea Co., 381 U. S. 676 (1965) (labor exemption); and SEC v. National Securities, Inc., 393 U. S. 453 (1969) (concerning the McCarran-Ferguson Act exemption for insurance).

 Brown, United States v. National Broiler Marketing Association: Will the Chicken Lickin’ Stand?, 56 N. C. L. Rev. 29, 44 (1978).

 Ibid.

 Ibid.

 See ante, at 820 n. 8.

 For most of the NBMA members, of course, ownership starts even earlier with the eggs produced by their own breeder flock.

 The Act explicitly protects farmers who associate for the purpose of "collectively processing, preparing for market, handling, and marketing in interstate and foreign commerce, such products of persons so engaged.” And the produce of a cooperative’s own members need comprise no more than 50% of the total handled by the cooperative; so it was clear that some members could be doing more processing than producing of agricultural commodities. They would still be entitled to protection because what produce they did raise was contributed to the cooperative.

 This fact distinguishes Case-Swayne Co. v. Sunkist Growers, Inc., 389 U. S. 384 (1967). Capper-Volstead Act protection was denied to orange growers cooperatives in that case because they included several “non-producer interests” in the form of orange processors who did not themselves grow any citrus at all. All of the members of NBMA, by contrast, produce broiler chickens. Some contract out various stages of the growing process, but all members own the agricultural product throughout its production, from chick to broiler.

 The concurring opinion insists that the interpretation presented here “would permit the behemoths of agribusiness to form an exempt association ... so long as these concerns are engaged in the production of agriculture.” Ante, at 834-835. If this is a fatal flaw, it is shared equally by the majority opinion, which conditions exempt status on ownership of a breeder flock, hatchery, or grow-out facility. Ante, at 827. For all the majority opinion holds, antitrust exemption would apply to the NBMA if only it purged its membership of those integrators too small to own their own flock, hatchery, or grow-out facility.
In concluding that the possible extension of any antitrust exemption to large concerns was contrary to congressional intent, the concurring opinion has overlooked several explicit references in the legislative history. These passages demonstrate the point impliedly recognized by the majority opinion and this dissent: that one necessary evil of the bill, accepted by its sponsors, was that just as producers could combine and become processors as well as producers, and yet retain their exemption, large food processors *848could, by becoming producers, fall within the protection of the Act for whatever they produced (and up to 50% of the product of others not even eligible for exemption. 7 U. S. C. §291 (third proviso) (1976 ed.)). In light of these explicit passages, the thrust of the concurring opinion’s search of the legislative history is largely blunted.
“The Senator from Ohio [Mr. POMERENE] at the last session of the Senate inquired very pertinently whether that provision would not, for instance, permit Mr. Swift or Mr. Armour, or Mr. Wilson, each of whom, I undertake to say, owns a farm and raises hogs, for instance, to organize under this proposed act and deal in the products of their own farms, and also to buy extensively from other producers. I think that that could be accomplished under the House bill. Recognizing that there is an evil there, and that the act might easily be abused, the Senate bill provides that such organizations cannot deal in products other than those produced by their members to an amount greater than the amount of the products which they get from their members. So that if the three gentlemen to whom I refer should organize an association under this proposed law, they could throw the product of their own farms into the association and could put just so much more into the business, but no more.” 62 Cong. Rec. 2157 (1922) (Sen. Walsh).
“[W]e have not given the farmers the power to organize a complete monopoly. This amendment applies to every association, whether it is a monopoly or an attempt to create a monopoly' or not, for it provides that any association must admit anyone who is qualified. If Mr. Armour should be a farmer he would have to be admitted; if a sugar manufacturer should happen to raise a little sugar he would have to be admitted.” Id,., at 2268 (Sen. Kellogg).