Farmers and ranchers are independent folks. But when it comes to handling and marketing farm products it makes sense to work together. The Capper-Volstead Act is federal law that allows agricultural producers to form cooperative associations and be immune from the application of antitrust laws.
Antitrust laws are designed to prevent monopolies in the marketplace. Competition is generally beneficial for consumers. But farmers and ranchers have special challenges when it comes to marketing agricultural products. A single farmer or rancher rarely has the bargaining power to negotiate a good price for his or her products. But working together farmers and ranchers can act as one large farmer.
The Capper-Volstead Act allows agricultural producers to “act together” in the marketplace without violating antitrust laws. Producers are allowed to market, price and sell their products through cooperative means.
An association that desires to benefit from Capper-Volstead protection must be operated for the mutual benefit of its members who are agricultural producers, and it must not deal in the products of nonmember in an amount greater in value that such products that it handles for its members. Members of such cooperative association must each be allowed one vote, and the association is limited to the amount of dividends that may be paid (8 per cent per annum).
Today, agricultural cooperatives benefit potato growers, onion growers, and other producers of agricultural products. Cooperatives are also used for the purposes of marketing agricultural products. The Capper-Volstead Act continues to help farmers meet the challenges of an always changing agricultural economy.