Cooperatives: The Capper-Volstead Act

When was it enacted? Who are Capper and Volstead?

The act was enacted in 1922. It was sponsored by Senator Arthur Capper and Representative Andrew Volstead. Senator Capper was a former two-term governor of Kansas, former President of the Kansas State Agricultural College Board of Regents, and media mogul. Representative Volstead spent twenty years in the U.S. House. He was a schoolteacher and lawyer and has been dubbed “the father of prohibition” for his role in advancing the temperance movement.

What is it?

The Capper-Volstead Act, 7 U.S.C. 291, provides limited antitrust immunity to qualified farmer cooperatives, allows for agricultural producers to join with other cooperatives to form a common market agency, and enables agricultural producers to join together to agree on prices for their products. Without the Capper-Volstead Act, such activities would violate the Sherman Act by eliminating competition. The Secretary of Agriculture has oversight authority over the implementation of the Capper-Volstead Act.

Who qualifies?

To qualify under the Capper-Volstead Act:

  • Cooperative’s voting members must all be producers.
  • Cooperative must choose to either operate under one member/one vote, or must limit distributions on dividends to eight percent.
  • Cooperative must conduct more than half of its business with members.

Are there any restrictions?

  • Agreements between cooperatives and non-cooperatives are subject to the antitrust laws.
  • Antitrust protection does not apply if cooperatives combine or conspire with non-producers to monopolize or restrain trade.
  • Monopolistic practices, engaged in outside the legitimate purposes of a cooperative, are not protected

What type of agricultural co-op producers rely on it?

  • Dairy
  • Fruits
  • Vegetables
  • Nuts
  • Sugar
  • Wheat
  • Feed Grains
  • Rice
  • Oil Seeds
  • Cotton
  • Livestock

This article was written by attorney Kim Lowe.