War of Words Coming over Market Power Abuse

Monsanto fires up its spin machine as Justice Department workshops loom

We're all going to get a real earful on anti-competitive practices in the crop and livestock sectors as the Department of Justice and USDA move forward on their workshops this year. And the words will be blasting from all angles.

As you may recall from our November cover story, the Department of Justice (DOJ) and USDA will, for the first time, team up to hold a series of workshops on antitrust issues. Workshops, beginning in Ankeny, Iowa, March 12, will explore competition issues related to crop agriculture and the appropriate role for antitrust and regulatory enforcement in the industry.  Four more workshops are planned for the year. You can access more information about the workshops online here.  

This is happening after years of farmer complaints, suggesting that mergers and acquisitions have shrunk the number of input supplier and market players to a dangerous level. Some dairy farmers have only one place to sell their milk. Some hog farmers have just one choice to sell hogs, within a reasonable transport distance. Some grain farmers have just one or two places to sell grain. And a lot of people talk about the value of biotech seed even as they complain there are too few choices where you can get them. You get the idea.

Shortly after our cover story appeared, other business publications, such as Forbes, began picking up on the story. Then the bomb dropped when Associated Press came out with their mid-December investigative report detailing Monsanto Co.'s business practices, revealing how "the world's biggest seed developer is squeezing competitors, controlling smaller seed companies and protecting its dominance over the multibillion-dollar market for genetically altered crops."

Monsanto quickly responded with its own take on the story. Check that out here.

As the workshops near, DOJ invited everyone to post public comments online up until Dec. 31. Monsanto’s submissions to the USDA/DOJ public comment period can be found on the company's Web site. The materials are posted off of a new button to the front-page on their Web site called “A look at the Seed Industry.” It's available here. You can access more of Monsanto's public comments online here

Last October, the American Antitrust Institute released a paper entitled, "Transgenic Seed Platforms: Competition between a rock and a hard place?" Monsanto also has a rebuttal to this paper, which you can access here

If your head isn't already spinning enough, get the meat industry's take on this  here: More accusations and rebuttals to come, no doubt.

Towering concentration Neil Harl is professor emeritus at Iowa State University. With doctorate and Juris Doctor degrees, Harl practically wrote the book on ag law in the United States. “Farmers see towering concentration on the input side and towering concentration on the processing and output side, and it leaves them in an extremely vulnerable state,” he says.

All of this has been a shot in the arm for farmers and people like Fred Stokes, executive director at the Organization for Competitive Markets. “There’s a new day in Washington now,” he says. “Antitrust law is about maintaining competition. We are against concentration because we think it leads to market power and its abuse.”

The war of words is only beginning. Your thoughts?

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