by Roger Allbee

In the early 1900s, Vermont’s dairy farming underwent a critical transformation, shifting from butter and cheese production to fluid milk production in response to urban demand. By 1922, Vermont emerged as a pivotal supplier to the Boston market, proving its indispensable role in the dairy industry.

This transformation brought significant challenges, including demands for fair pricing, escalating shipping costs, and rigorous sanitary regulations. These factors forced the closure of numerous local creameries. With mounting competition from the West, it became essential for farmers to unite and adapt to this evolving agricultural landscape.

During this period, the Grange emerged as a powerful advocate for farmers, championing regulatory reforms and the establishment of cooperatives. The Sherman Antitrust Act of 1890 was a decisive turning point, protecting farmers from monopolistic practices—particularly those related to rail transport.

As the cooperative movement gained momentum, Vermont established a state commissioner of agriculture in 1909, with Orlando Martin leading vital educational initiatives for farmers. The federal extension service played a critical role in bolstering local agricultural support.

E.S. Brigham, the first commissioner, emphasized the critical necessity of cooperation to tackle marketing challenges and advocated for the formation of cooperative organizations to guarantee fair pricing. By the 1920s, a robust network of cooperative creameries flourished, demonstrating the formidable strength of farmer collaboration.

The cooperative movement in the U.S. was inspired by European models, particularly the Rochdale principles. The passage of the Capper-Volstead Act in 1922 solidified the legal framework for cooperatives, providing essential antitrust protections.

As cooperatives thrived in Vermont, regional initiatives like the Eastern States Farmers’ Exchange underscored the urgent need for collective action to address pressing agricultural challenges. George Aiken, Vermont’s governor and later U.S. Senator, emerged as a staunch advocate for the cooperative movement, emphasizing the necessity of unified efforts to confront agricultural issues.

In summary, the evolution of cooperation within Vermont’s dairy industry reflects a broader agricultural trend, highlighting the undeniable power of collaboration and the regulatory changes that have transformed the farming landscape in the early 20th century.

Limited antitrust protection for agricultural cooperatives

The Capper-Volstead Act of 1922 is rightly regarded as a cornerstone of agricultural cooperative law, made possible by President Theodore Roosevelt’s vigorous “trust-busting” initiatives, which included lawsuits against 43 major corporations during his presidency. Historical analysis reveals that the “Gilded Age” (1877-1890) resulted in stark economic disparities, prompting a call for reform.

The Progressive Era (1890-1917) catalyzed the formation of the Progressive Party, dedicated to reshaping American society and governance. Numerous federal policies aimed at supporting agriculture and farm cooperatives were enacted during this time, including the Smith-Lever Act of 1914, which established Cooperative Extension Services affiliated with land-grant universities, and the Federal Land Bank Act of 1916 that created district banks for low-interest loans secured by agricultural real estate. The Capper-Volstead Act provided critical antitrust protections for farmers collaborating to market their products, addressing historical prosecutions against collective agricultural action.

Antitrust laws, including the Federal Trade Commission Act of 1914, were designed to uphold competition in the American system, serving as a necessary response to the historical monopolies that dominated various industries, including steel and agriculture.

Importance of economic competition

Since the establishment of antitrust laws, including Capper-Volstead, monumental changes have transpired in society and business, especially within the agricultural sector. In a notable 1965 address, Everette, the Federal Trade Commission Commissioner, underscored the critical importance of understanding the implications of economic concentration.

The President’s agricultural economy message to Congress in January 1964 highlighted the diminishing bargaining power of farmers as market mechanisms became increasingly concentrated in the hands of fewer buyers, processors, and distributors.

Current economic concentration

Extensive studies have identified the stark concentration of power within the food system and agricultural inputs. Approximately three dozen corporations now exert overwhelming control over agricultural input manufacturing and food distribution, signaling a pressing concern for market fairness. For example:

– By 2015, six companies dominated the global markets for seeds and agricultural chemicals.

– Four multinational firms now control 80% of beef processing and 70% of pork processing.

– By 2023, eleven leading grocery retailers commanded nearly three-quarters of the market, with Walmart and Kroger holding substantial shares.

The concentration of power extends beyond grocery retailing; single firms monopolize key fertilizer markets, while several companies dominate major agricultural exports, further exacerbating concerns about market control in the food system.

Changes in farming and cooperatives today

The agricultural landscape has experienced dramatic shifts since the 1920s when the Capper-Volstead Act was introduced. At that time, a full 30% of Americans lived on farms, with 26% of the workforce engaged in agriculture. Today, that figure has dwindled to approximately 2% of the population residing on farms, with only 1.4% employed in agriculture. Modern U.S. farmers now feed around 155 people, a remarkable feat achieved through technological advancements, improved equipment, and innovative management practices.

Regarding agricultural cooperatives, USDA data from 2022 reveal that there were 1,621 cooperatives, a staggering decline of 86% from the peak of 12,000 in 1929. This reduction reflects the ongoing trend of mergers among cooperatives. In 2022, 867 cooperatives primarily focused on marketing commodities, while the remaining 804 included farm supply and service cooperatives, signifying the critical adaptations required in the cooperative landscape.

History of the farmer cooperative movement and Vermont

In the early 1900s, Vermont’s dairy farming pivoted from butter and cheese production to fluid milk production, aiming to satisfy urban demand. By 1922, Vermont significantly contributed to the Boston market, highlighting its crucial role in dairy.

This shift brought challenges such as fair pricing, high shipping costs, and stringent sanitary regulations, leading to the closure of many local creameries. With growing competition from the West, it became imperative for farmers to unite and adapt.

The Grange emerged as a formidable advocate for farmers, pushing for regulatory reforms and cooperatives. The Sherman Antitrust Act of 1890 marked a crucial turning point by protecting farmers from monopolistic practices, notably in rail transport.

As the cooperative movement gained momentum, Vermont appointed a state commissioner of agriculture in 1909, with Orlando Martin championing educational initiatives to empower farmers. The federal extension service further fortified local support for agriculture.

E.S. Brigham, the first commissioner, stressed the necessity of cooperation to address marketing challenges, advocating for cooperative organizations to ensure equitable pricing. By the 1920s, a network of cooperative creameries flourished, demonstrating the strength of farmer collaboration.

The cooperative movement in the U.S. drew from European models, particularly the Rochdale principles. The Capper-Volstead Act of 1922 solidified the legal framework for cooperatives, offering essential antitrust protections.

As cooperatives thrived in Vermont, regional initiatives, like the Eastern States Farmers’ Exchange, underscored the need for collective action in addressing agricultural challenges. George Aiken, Vermont’s governor and later U.S. Senator, championed the cooperative movement, emphasizing the need for unified efforts in solving agricultural issues.

In summary, the evolution of cooperation in Vermont’s dairy industry reflects a broader agricultural trend, highlighting the power of collaboration and necessary regulatory changes that transformed the farming landscape in the early 20th century.

What brought about limited anti-trust protection for agricultural cooperatives.

In helping to create the conditions for the passage of the Capper-Volstead Act in 1922, considered to be the Magna Carta of agricultural cooperative law, President Theodore Roosevelt pursued a policy of “trust busting” by initiating suits against forty-three (43) major corporations during his administration. In an article of Theodore Roosevelt and the Trusts by Alice Stevens Wilson The Golden Institute of American History, she states “as industries grew and revolutionized American life society became stratified and the poor became poorer, and the rich richer.” The Historians call this “Gilded Age” (1877-1890).  

During the Progress era that followed, (1890-1917) the Progressive Party was formed to try to reform American society and the government.  It was around this time that many federal policies and programs addressing agriculture and the farm cooperative needs were passed. Some of these included the Smith-Lever Act of 1914 that established the Cooperative Extension Services connected to Land Grant Universitas; The Federal Land Bank Act of 1916, setup through twelve district banks throughout the U.S. to provide low-interest long-term loans secured by agricultural real estate (other Farm Credit Acts would follow).  In 1922, the Capper-Volstead Act was passed providing limited anti-trust protection to farmers who joined together in the marketing of their products.

The anti-trust laws, and Federal Trade Commission Act of 1914 (signed by President Wilson (that outlaw’s unfair methods of competition and unfair acts or practices that affect commerce), and Capper-Volstead Act of 1922 were designed to preserve the American system of competition. Before Capper-Volstead Act farmers were being prosecuted for acting together to market their products, and by this time cooperatives had a major presence in several segments of the food industry. These laws were created as a reaction to the trusts that existed in the past and that controlled many enterprises then such as steel oil, sugar, grains and cattle.

Why economic competition is important

There have been enormous changes in society and in businesses to include the farm sector and business structure in the many years since the passage of the anti-trust laws including Capper-Volstead. Perhaps this is best noted in a 1965 Address by Everette, Commissioner of the Federal Trade Commission on Agricultural Cooperatives and the Anti-Trust Laws, before the American Institute of Cooperation, University of Missouri on August 9, 1965.  In his statement, he said:

“The economic data supplied by the Chief Economist of the FTC in recent U.S. Senate hearings on economic concentration is significant.  He testified that there is a need for understanding the implications of the accumulations of economic power is compelling today that the turn of the century.”

The President in his agricultural economy message to Congress in January of 1964, advocated the strengthening of cooperatives.  He stated in his message then, “this week the bargaining position of farmers becomes more evident as market mechanisms for farm products fall into the hands of fewer buyers’ processors, and distributors.  It is further amplified as horizontal integration takes place many of the suppliers of agricultural inputs and the costs and importance of these inputs increases,”

Economic concentration today 

There have been numerous studies on the concentration that exist in both the food system and inputs to production agriculture.  It is stated that “around three dozen corporations dictate the development and terms of trade for almost every industry that manufactures agricultural inputs processes agricultural crops and distributes food to the American public.”  Some examples.

• In 2015, six large firms dominated the global markets for seeds and agricultural chemicals

• Around three dozen corporations dictate the development and terms of trade for almost every industry that manufactures agricultural inputs, processes agricultural crops and distributes food to the American public.

• Meatpacking plants are now controlled by just a few as 80% of beef and 70 % of pork processing is controlled by four multinational firms.

• In 2023 the eleven leading grocery retail stores held close to ¾ of total industry market share.  Walmart held 23.6% and Kroger had over 10%.

Four multinationals now dominate the development and production of seeds and pesticides. Single firms monopolize each of the domestic markets for nitrogen, phosphorus, and potassium fertilizers. One corporation wields monopoly power over the manufacture, distribution, and repair of new farm tractors and combines.

Four conglomerates share power over the export of corn, wheat, and soybeans, as well as the processing of these crops into food and feed ingredients — with one of them often exercising monopolistic control over particular regional export markets and particular industries like flour and corn milling. Five companies hold similar sway over the nation’s meat and poultry industries, with one or two usually dominating the procurement and slaughter of cattle, hogs, and chickens in particular regions of the country. Comparable concentrations of market power pervade the fruit and vegetable processing industries and extend to egg production, milk processing, and grocery retailing.

Grocery sales — historically the domain of countless local and regional firms — are now primarily in the hands of just four national retailers. (from the article “Kings Over the Necessaries of Life”: Monopolization and Elimination of Competition in America’s Agricultural System, by Basel Musharbash, Sept. 2024,    

Changes in farm and cooperatives today

In the 1920’s when Capper-Volstead Act was passed, 30% of the U.S. population lived on farms and 26% of the labor force was involved in agriculture.  The farm sector then fed around 10-15 people.  Today only about 2% of our population live on farms and only about 1.4% are employed in agriculture.  Today the average U.S. farmer feeds around 155 people due to advances in technology, equipment, and management practices.

Relative to agricultural cooperatives, data from USDA’s Rural Business-Cooperative Service shows there were 1,621 agricultural cooperatives in 2022, down 86% from 1929 when the total number peaked at 12,000.  Over this time many cooperatives merged.  According to U.S.D.A. data in 2022, 867 cooperatives were primarily involved in marketing commodities, while the remaining 804 comprised 696 farm supply cooperatives and 108 service cooperatives.  Among the marketing cooperatives, 348 cooperatives focused on grain and oilseeds, 115 on cotton and cottonseed 97 on fruits and vegetables, 89 on milk and milk products 53 on livestock and poultry including eggs and 38 on fish.  The other 127 marketed a variety of commodities.

The author, a Townshend resident and a former Commissioner of the Vermont Department of Agriculture, grew up on a small hillside farm in Southern Vermont. ‘From an early age agriculture has been my passion. Many of the areas I have been involved in include agricultural policy, issues, trade, development, value added, credit, local and regional foods, and history,” he writes the What Ceres Might Say blog.