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The Lid Is Off

April 7, 2010
By: Jeanne Bernick, Top Producer Editor
 
 

The rush of standing next to hundreds of farmers chanting "Bust up big ag” was worth the 2½-hour drive to Ankeny, Iowa, says Garry Klicker. He hates the idea of a few companies controlling the market, so he joined other like-minded farmers at a rally the night before the first-ever hearing on competition in agriculture.

"If we continue to consolidate agriculture, eventually only one person is going to own all the beef and hogs,” says Klicker, a small grain and beef producer from Bloomfield, Iowa. "A few packers are already setting prices for us. There is no free market anymore.”

Corn and soybean grower Ken Fawcett feels the same way about the seed industry, where Monsanto Company and DuPont's subsidiary Pioneer Hi-Bred control the market share for biotech seeds. He believes lack of competition has led to a rise in seed prices, which have tripled in four years.

"Farmers need to have choices about what they grow, free from corporate control,” says Fawcett, who farms in eastern Iowa.

The brewing pot of anger, fear and confusion about concentration in agriculture has finally boiled over, and the Barack Obama administration is taking the lid off the divisive issue. More than 700 farmers, food processing workers, politicians and executives gathered in March for a hearing that begins the process of recreating antitrust policy in agriculture. The public meeting was the first of five to be held across the U.S.

"Big is not bad, but it can be bad if the power that comes with it is misused,” says Eric Holder, Attorney General, U.S. Department of Justice (DOJ), who attended the hearing to learn about agriculture. "That is not something this department will stand for.”

 

Is It Monopoly? American Soybean Association vice president and Iowa farmer Ray Gaesser was keyed up before speaking at the hearing on a panel regarding the seed industry. He's watched corn seed prices rise nearly 30% and soybeans rise 20% in 2009. "There is a responsibility for the seed companies to play fair,” Gaesser says.

The seed industry is a complex, consolidating structure, says panelist Diana Moss, vice president and senior fellow at the American Antitrust Institute. "If you look upstream at the trait markets, there is a monopolist, and it is Monsanto,” Moss says.

While Monsanto has broadly licensed its technology, and that is good, "what is deceptive is that it gives the illusion of choice,” Moss says. She argues that Monsanto's licensing agreements prohibit competition and give the company too much control of the seed industry.

The American Antitrust Institute receives funding from DuPont, which is in litigation with Monsanto over licensing agreements with its subsidiary, Pioneer.

Jim Tobin, Monsanto's vice president for industry affairs, defends his company's market dominance in the seed industry, saying its success is due to strong demand for Roundup Ready seeds. "That's why we have such a high market share,” he says. "It's only because farmers choose to have Roundup Ready soybeans.”

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FEATURED IN: Top Producer - SPRING 2010
RELATED TOPICS: Trends, Economy

 
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