Guest Opinion: 100 year ago, Capper-Volstead Act cleared the way for farmer cooperatives
The Capper-Volstead Act provided limited antitrust immunity to farm co-ops and enabled farmers to come together and collectively set a price for their production.
February of 2022 marks the 100th anniversary of the Capper-Volstead Act. This is one of the most important agricultural laws ever passed for farmers.
Capper-Volstead gave agricultural producers the right to collectively bargain their production with other producers. This is commonplace today, but it was innovative and very much needed in 1922. Prior to Capper-Volstead’s passage, producers attempting to join together for the purpose of pricing their commodities could have civil penalties brought against them.
The sponsors of this act were Sen. Arthur Capper, R-Kan., and Rep. Andrew Volstead, R-Minn. They both wanted farmers to enjoy the same rights which businesses were using to gain wealth. Rep. Volstead pointed out when discussing the bill that businessmen could combine by putting their money into corporations, but it was impractical for farmers to combine their farms into a similar corporate form. Volstead also said the bill would enable farmers to take advantage of the form of organization that was used by business concerns.
The Capper-Volstead Act relieved farmers of the Sherman Antitrust Act of 1890. This is the law which Theodore Roosevelt used to break up Standard Oil and other monopolies. The Sherman Antitrust Act was amended in 1914 by the Clayton Act. The Clayton Act authorized labor unions to collectively bargain for better wages and working conditions while sanctioning the establishment of agricultural co-ops. This was the first time collective bargaining was mentioned in U.S. law. Prior to that time, co-ops were allowed, but they were being challenged in court under the Sherman Antitrust Act. However, there were still inconsistencies in the Clayton Act which led to court cases involving co-ops.
The Capper-Volstead Act was introduced to aid farmers, while once and for all legalizing who could be exempt from previous antitrust legislation. Capper-Volstead benefitted farmers in two ways. One, it provided limited antitrust immunity to farm co-ops. And two, it enabled farmers to come together and collectively set a price for their production. Without Capper-Volstead, farmers would be in violation of the Sherman Antitrust Act. Capper-Volstead established rules for a co-op to be exempt from antitrust laws. This meant that all voting members must have production; a co-op must have a one-member, one-vote rule or limit amounts of dividends paid to 8%; and more than half of the production that was collectively bargained must come from members themselves.
My wife, Wendy and I operate a cow/calf ranch in Montana. Capper-Volstead is why I have a larger market presence by being a member of National Farmers Organization. We generally have one load of mixed calves to sell every fall. Because of Capper-Volstead, we have the ability to sell our calves and cull cows with our friends and neighbors. In other words, marketing together.
We put our calves in with a block of other producers and sell 10 loads, not just our load alone. We are able to combine our block of calves with another National Farmers block about 30 miles away in order to create a block of about 20 loads. This is an example of how we use collective bargaining. I know without Capper-Volstead, Wendy and I would be forced to take our cattle to the sales ring. We would be at the mercy of a few buyers on that particular day. Instead, we can forward contract our calves and culls with our neighbors to capture the most profit we can.
BRUCE SHULTZ is vice president of the National Farmers Organization. He and his wife Wendy operate a cow/calf ranch in Raynesford, Montana.