The agricultural sector in the United States is in a state of transition. During this period, thousand of small-scale farmersùthe family farmersùand many more marginal operators find themselves in critical situations with respect to the ability to thrive or survive in American agriculture.
There does exist one type of organizational device, however, which affords some advantages to the smaller, independent family farmers over the corporate farms and the associations of larger farmers. This organizational device is the agricultural cooperative, which, through a combination of antitrust exemptions and federal income tax benefits, permits members farmers to compete on a more equal footing with larger agricultural organizations. This study examines the ways in which the antitrust exemptions may be used for the benefit of members of agricultural cooperatives.
Philosophical and Constitutional Issues
A trust, in its most simple form and in the context of economic control, is a combination of industrial or commercial enterprises in which control is exercised by a central authority. When this centralized authority has sufficient influence within an industry or a market to either control prices or to restrain trade (restrict competition), the trust concerned may be subject to antitrust action by the federal government in the United States.
In the United States, business combinations which have the effect of monopoly creation or restraint of trade are illegal under the antitrust legislation enacted in this country (Dilorenzo, 1985, pp. 73-90). Depending upon the philosophical and political perspectives of the administration in office and depending upon prevailing economic conditions in the country, however, the application of antitrust laws in the United States tends to vary widelyùwhile President Theodore Roosevelt was known as a "trustbuster," President Richard Nixon publicly proclaimed that "bigness is not necessarily bad...