Summary

Pursuant to a congressional request, GAO provided information on the limited antitrust exemption provided to agricultural cooperatives under the Capper-Volstead Act, particularly as it pertains to the dairy industry.

GAO found that: (1) technological advances have improved dairy operations and expanded dairy farmers' marketing opportunities since enactment of the act; (2) federal milk price intervention through a dairy price support program and a milk marketing order program reduced dairy farmers' risks; (3) many dairy herds remain relatively small, thereby limiting individual dairy farmers' bargaining strength; (4) the declining number of fluid milk processing plants has resulted in increased concentration of dairy farms over the past 60 years, and dairy cooperatives have played an increasingly important role in the milk industry; (5) the number of dairy cooperatives decreased from 2,458 in 1930 to 287 in 1988, in part due to mergers and consolidations; (6) although the percentage of marketing orders with over-order payments has been increasing over time, cross-sectional analyses suggested no significant relationship between cooperative market power and over-order payments; and (7) while legislation required that cooperatives not abuse their antitrust exemption, the Department of Agriculture (USDA) conducted limited oversight of cooperatives.