Small Farmers Are Unaware of the Main Source of Their Economic Problems: Price Discrimination - and What to Do About It

Initial Publication: 9/6/99; Last Update: 9/6/99

My name is Carl Person, and I am an antitrust attorney for small businesses (and if you have any question, you should give me a call at 212-307-4444 or send me a fax, to 212-307-0247; e-mail is much slower for me, but I'll give you my e-mail address anyway, which is:

I have been thinking about the problems of small farmers and whether or not my experience with federal the Robinson-Patman Act, which prohibits price discrimination, might be of some use to small farmers.

I have named this website FarmGate to reflect that the misfortune of the small farmers may be no more than the federal government's failure to enforce the Robinson-Patman Act, thereby letting the farming combines take over by letting the small farms be put out business instead of taking action to enforce the Robinson-Patman Act which mandates equal per-unit pricing of commodities and other goods sold at about the same time to competitors, regardless of volume.

Most of what is in my Robinson-Patman Act website (called RPA Mall) is relevant to interested small farmers, and most of the other articles listed in this FarmGate website are found in RPA Mall. So remember, you will usually need to hit the back button to return to this FarmGate website.

Small farmers and their businesses have been decimated over the past years through a variety of market and political problems, and nobody seems to grasp one good way for many small farmers to recover their losses, and then some!

The loss of farms through foreclosure occurs for the most part due to farming losses, which prevent the farmer from making enough on farming operations to pay the mortgage and avoid foreclosure.

For example, farming-related purchases for a year of an assumed $200,000 could easily have involved overcharges of 25%, or $50,000, which $50,000 loss was the probable reason for losing the farm through foreclosure.

The bank may or may not be a major contributor to the problem (through the lenders' liability legal doctrine). But this article and website is not delving into that issue.

Instead, this article and FarmGate website will discuss how, it appears to the author of this article and website (my name is Carl Person, an antitrust attorney for plaintiffs), the business losses occurred, and what farmers can do today to recover some or all of those losses, with trebled damages.

It is an assumption, for the reader to confirm or reject according to your own knowledge and experience, that the sale of a farm's output in the market place provides small farmers with approximately the same price per unit of output (such as per head, per bushel) as received by the farming combines. If this assumption is incorrect, then the conclusions within this article have to be offset by the difference, which means that there would be less recovery, if any, for the small farmers.

Anyway, it seems from my limited research into the problem, that the farmer pays more per unit for his farming purchases than the farming combines, especially as to these most important purchases: vehicles, farming implements, fertilizer, seed, pesticides, grain and fuel.

Farming combines obviously pay less per unit because that is the way business works in America today; virtually no manufacturer, wholesaler or supplier is selling to competing businesses at the same price per unit, even though the Robinson-Patman Act (and the laws in some states, such as California, but not in New York or Georgia, for example) require sellers to sell to competing businesses at the same price per unit, unless the difference is cost justified, or to meet competition.

These defenses are discussed in other parts of this mall (which will take you to articles in RPAMall). They generally do not apply because the amount of the discrimination is far more than any theoretical cost justification which the seller might be able to prove; consequently, they generally do not try to prove cost justification as a defense at all.

By reason of all of these excess charges for your most important farming purchases, you probably were unable to be profitable when you sold your output in the open market, unlike the large farming combines, who make enough from the open market (with their lower farming costs) to be profitable, while watching their small farm competitors drop out of business, and lose the farm.

The Robinson-Patman Act enables a farmer (or other injured person, such as the town itself for tax losses, possibly) to recover three times the amount of economic damages suffered by the farmer during the 4-year period preceding the filing of the Robinson-Patman Act lawsuit in federal court.

This is the remedy which farmers (as well as millions of non-farming businesspersons in the U.S.) never have used or even thought of. See the recent book HARVEST OF RAGE, Why Oklahoma City Is Only the Beginning", by Joel Dyer, published in 1997 by Westview Press, a Division of ParperCollins Publishers, which completely overlooks the Robinson-Patman Act problems, and ever-so-slightly touches upon the U.S. Government's failure to enforce the nation's antitrust laws (see pp. 118, 122-123 and 251).

Anyway, these are some of my thoughts on the subject. I see no reason why legitimate RPA claims of a prospective small-farmer plaintiff should not be commenced. The 9000-x-1-day's-damages rule 9000 x 1 Day's Damages Rule is a very good reason for a small-farmer (disfavored-purchaser) victim to bring suit, and for an attorney to maintain the action on a contingent-fee basis to a major extent, at least.

Also, you should read How to Calculate Your RPA Damages (and don't forget to hit the back button to get back into the FarmGate website).

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Copyright © 1999 by Carl E. Person