Feds shine spotlight on ag competition issues

In Ankeny, Iowa Friday, the Department of Justice (DOJ) and U.S. Department of Agriculture (USDA) held the first-ever joint public workshop on competition and regulatory issues in the agriculture industry. 

The workshop, led by U.S. Agriculture Secretary Tom Vilsack and U.S. Attorney General Eric Holder, featured panel discussions on a variety of topics, including competitive dynamics in the seed industry, trends in contracting, transparency and buyer power, and concluded with public testimony. 

“Today’s workshop provided the Department with an important opportunity to hear from a variety of perspectives and individuals about competition in the agriculture sector,” said Attorney General Eric Holder.  “We appreciate the importance of this industry to our economy and are committed to enforcing the antitrust laws effectively to ensure fair and open competition that protects both consumers and farmers.”

“In my travels across the country, I hear a consistent theme: producers are worried whether there is a future for them or their children in agriculture, and a viable market is an important factor in what that future looks like,” said Vilsack. “These issues are difficult and complex, which is why this workshop today is so important and long overdue.”

Friday’s meeting was the first in a series of workshops that will be held over the next several months. 

Holder, Varney serve notice to large agribusiness companies

The nation’s largest agribusiness firms received a stern warning from the Obama administration during Friday’s ag competition workshop in Ankeny, Iowa:  There’s a new sheriff in town and anti-competitive practices won’t be tolerated.

Attorney general Eric Holder set the tone for the session. “We know that a growing number of American farmers find it increasingly difficult to survive by doing what they have been doing for decades,” Holder said, “and we’ve learned that some them believe that the competitive environment may be, at least in part, to blame.”

Both Holder and Christine Varney, the assistant attorney general for antitrust, said that while big isn’t necessarily bad, it can be bad if the power that comes with being big is misused.  “With big comes an awful lot of responsibility,” said Varney.  “When you have a tremendous amount of market share, you have the responsibility to behave in ways that keep the competitive playing field open.  You cannot engage in acts that are designed to protect or extend your monopoly.”

Varney said her office will vigorously enforce antitrust law.  When pressed on what actions might be forthcoming, and when, Varney responded that it’s already happening.  She pointed to last year’s blockage of JBS SA’s attempt to purchase National Beef and a recent Justice Department lawsuit seeking to block milk processor Dean Foods’ acquisition of a competitor.   Her message was that future acquisitions and mergers will be getting much more scrutiny than they have in the past.

The following audio clips feature some of the opening comments made at the workshop.

AUDIO: Secretary of Agriculture Tom Vilsack (2 min MP3)

AUDIO: Attorney General Eric Holder (3 min MP3)

AUDIO: Christine Varney, head of DOJ Antitrust Division (3 min MP3)

AUDIO: Iowa Senator Chuck Grassley (3 min MP3)

 

Farmers have their say

The workshop agenda included a panel of six farmers conveying their thoughts on competition issues in agriculture.  Eric Nelson, a grain and cattle farmer from Moville, Iowa argued that the government needs to do a better job of enforcing the anti-competition and antitrust laws already in place.   Pam Johnson, a farmer from Floyd, Iowa, talked about the innovations that have made American agriculture the envy of the world.

AUDIO: Eric Nelson (7 min MP3)

AUDIO: Pam Johnson (6 min MP3)

First ag competition workshop is in Iowa

The first Department of Justice/USDA workshop on competition in agriculture takes place in Ankeny, Iowa Friday.

Agricultural competition is one of those “hot button” topics, one that evokes some very strong emotions.  Corning, Iowa farmer Ray Gaesser, vice-president of the American Soybean Association will be part of a workshop panel discussing seed competition issues.  He says there’s fine line between too much and too little regulation.

“We think there is a need to review what’s going on in our industry—but at the same time, we have concerns that we go too far and stifle innovation,” Gaesser says, “so it’s really a fine line that we must walk on to make sure that we have competition, but at the same time that we don’t over-control and stifle competition.”

How great is the interest in this subject?  DTN reports that, prior to the workshops, Justice and USDA asked for public comments and received more than 15-thousand responses—so many that DOJ has been unable to post all of them.

AUDIO: Ray Gaesser (2 min MP3)

Environmental leader has no beef with meat production

Unlike some of his counterparts in the environmental movement, Larry Schweiger has no beef with the nation’s meat producers.  In fact, he’s critical of those who use what he calls “wildly exaggerated” claims to advance an anti-meat agenda. 

Schweiger, the outspoken president of the National Wildlife Federation, was at the University of Nebraska Wednesday to discuss global warming.  After his presentation, we asked him about those environmentalists who attack agriculture— and specifically, meat production. 

“They’re animal rights groups that are pushing that, not the environmental community,” says Schweiger. “They want to stop the use of meat for food and they’re finding any way they can to do that—and I frankly take exception to their numbers—they’re wildly exaggerated and they’re not real.” 

A National Wildlife Federation report released in January suggested that increased corn plantings for ethanol production are threatening grassland bird populations in the Prairie Pothole states of Iowa, Minnesota, South Dakota and Minnesota.   The report blamed state and federal incentives for corn ethanol production for what it called “high increases in corn planting” and the resulting “destruction of natural habitat.”  

Schweiger was asked for his own views on biofuels such as ethanol and soy biodiesel. 

“Well, I think there will be some use of various ag crops,” he replied. “I actually think that there’s an opportunity in biogas.  If you were to take the corn fodder of corn residues and gasify those in a reactor, that will produce biochar.  You can put the carbon back in the soil in a way that stays there for a long time—actually improves the soil condition—while also producing gas off of these waste fuel crops.” 

Regarding climate change, Schweiger says the earth is warming at an alarming rate—and he strongly advocates stringent carbon reduction regulations.  His views are best summarized by the title of his latest book—Last Chance: Preserving Life on Earth.

AUDIO: Larry Schweiger (7 min MP3)

USDA slightly lowers 2009 corn, soybean production estimates

USDA has slightly lowered its 2009 corn and soybean production estimates following resurveys of farmers in a number of states where harvest was delayed.

USDA’s new corn production estimate is 13.131 billion bushels, compared to January’s projection of 13.151 billion bushels with an average yield of 164.9 bushels per acre, compared to 165.2 in the previous report.

Soybeans came out at 3.359 billion bushels, compared to 3.361 billion in January with an average yield of 44.0 bushels per acre, unchanged from January.

The resurvey includes corn in Illinois and Wisconsin and soybeans in South Carolina.

USDA will do another survey of corn in North and South Dakota later in the year.

Selected resurveyed states:

Illinois: Corn: 2.053 billion bushels with an average yield of 174.0 bushels per acre; planted area of 12.000 million acres and harvested area of 11.800 million acres.

South Carolina: Soybeans: 13.843 million bushels with an average yield of 24.5 bushels per acre; planted area of 590,000 acres and harvested area of 565,000 acres.

Wisconsin: Corn: 448.290 million bushels with an average yield of 153.0 bushels per acre; planted area of 3.850 million acres and harvested area of 2.930 million acres.

Alan Brugler discusses USDA’s revisions to production and supply and demand estimates (3 Minutes 15 Seconds MP3)

Crop reinsurance agreement caps agent commissions

Crop insurance agent commissions will be capped if the Federal Risk Management Agency has its way. The second draft of the standard reinsurance agreement says crop insurance agent commissions are to be no more than 80 percent of what the RMA provides to the company in administrative expenses for the policy.

Some reinsurers are currently paying as much as 27 percent in commissions to agents, says Bill Murphy, administrator of the Agency.

“How they’re making this work is that they’re betting that they’re going to have an underwriting gain in order to offset that cost,” Murphy told Brownfield Tuesday. “Well, what happens if we have another [year as bad as] ’93, say in Iowa?”

 AUDIO: Bill Murphy (8 min. MP3)

With that level of commission, Murphy says a bad year would put a financial strain on a company. As a concession, the RMA is proposing that agents be compensated with profit sharing, but he says agents aren’t buying it and Murphy says he’s surprised by their attitude.

“I have to question the logic,” says Murphy. “Would [agents] prefer that a company go out of business? You can just imagine in today’s environment, with the amount of insurance we’re now carrying, what kind of market disruption would occur if one of these major carriers went out of business.”

Murphy says the agreement is being renegotiated to control underwriting gains along with administrative and overhead costs. Combined, he says they went from $1.8 billion in 2006 to $4 billion in 2009.

“This is taxpayer money,” says Murphy. “There are better ways to spend this money.”

Murphy says the purpose of renegotiating the reinsurance agreement is to get control of costs.

“We’d like to make sure the companies get a reasonable rate of return [and] that the agents get a good amount of money to deliver the program,” says Murphy. “They are key to the success of this program.”

Nebraska ag delegation visits Japan

An agricultural delegation from Nebraska is concluding a visit to Japan.

Representatives of several Nebraska farm and commodity groups were part of the group, which was led by Nebraska Farm Bureau president Keith Olsen. Olsen says Japan is a very important market for Nebraska farmers.

“We ship a lot of corn here—some wheat—and we move a lot of meat, both pork and beef,” Olsen says, “and we were in a couple of supermarkets yesterday and did get to see Nebraska beef and Nebraska pork.”

As for the issues surrounding U.S. beef exports into Japan, Olsen says nothing much has changed.

“What they have said here—and what we’ve known for some time—is that it’s a political issue,” Olsen says, “Not so much a beef safety issue—just boiling down to a political issue.”

The trip was part of the U.S. Embassy’s “Partners in Agriculture” series.  It included an event to celebrate the Japanese Agricultural Exchange Program.  That program has brought more than 350 Japanese to Nebraska since 1952 to learn about the state’s farming practices.

AUDIO: Keith Olsen (8 min MP3)

Judge delays biotech sugar decision

No decision yet on whether U.S. sugar beet farmers will be barred from planting Roundup Ready beets this spring.

The district court judge who heard a petition Friday for a preliminary injunction to stop farmers from planting the genetically modified sugar beets has delayed his decision on the matter.  According to a Dow Jones Newswires report, the judge said he is considering the arguments presented by both sides and will issue a decision at a later date.

A group of organic farmers and environmental groups filed the petition in San Francisco.  They claim the USDA did not do a thorough enough assessment on the environmental risk of planting genetically modified sugar beets.  They say that genetic material from the biotech sugar beets will contaminate other non-biotech crops.   

If an injunction is granted, it could prevent the planting of the Roundup Ready beets until the USDA completes an environmental impact statement—a process that could take two to three years. 

Ninety-five percent of the 2009 U.S. sugar beet crop was Roundup Ready.  Sugar beet growers say they would not be able to plant non-biotech beets this year, even if they wanted to.  They say there’s not enough conventional seed to produce a crop this year.  The plaintiffs dispute that claim.

Pressure mounts to pass FTAs

Agricultural interests continue to express frustration with the lack of progress on pending free trade agreements (FTAs) with Columbia, Panama and South Korea.  Iowa Senator Chuck Grassley this week criticized the administration’s “apparent lack of urgency” in resolving outstanding issues with those countries. 

An official of USDA’s Foreign Ag Service, deputy undersecretary Darci Vetter, spoke at an ag conference in Nebraska Thursday.  Vetter agrees the FTAs would be very beneficial to agriculture.  But in each case, she says there are other issues involved—tax evasion issues in Panama, labor violence in Columbia and automobiles in South Korea.

“There are some issues with U.S. auto access to the Korean market, and for some of our other manufactured goods as well,” Vetter says, “so we need to reach out with the Koreans to resolve that—and work with members of Congress as to what they would find acceptable and work through it.  I don’t know that these are easy issues, but they are certainly ones where we are going to be putting our efforts forward.”

Following Vetter’s speech at the Governor’s Ag Conference in Kearney, Nebraska Cattlemen president Bill Rishel of North Platte made an impassioned plea for ratification of the South Korea FTA.  He said it would greatly benefit the Nebraska cattle industry, and would bring an additional 200 million dollars to the state annually.  Rishel says if U.S. doesn’t act soon, other countries will step in to fill the void.

In a guest editorial in The Hill, a leading Congressional newspaper, American Meat Institute president J. Patrick Boyle urged Congress to pass the agreements.  He says rising meat consumption in other countries is a great opportunity for the U.S.—but in his words, “if the U.S. is not there to fill their plates, other major exporting nations will.”

AUDIO: Darci Vetter (5 min MP3)

Iowa On-Farm Network to hold grower meetings

The Iowa Soybean Association On-Farm Network will hold informational meetings at four locations next week.  Meetings will be held in Storm Lake Monday, Council Bluffs Wednesday, Riverside on Thursday and Cedar Falls Friday.

Communications manager Mick Lane says 2009 results from their more than 500 replicated  strip trials will be presented.  They will also discuss new trials planned for 2010.

“The nitrogen management work in on-going.  We’ve really increased the amount of manure management work that we’re doing,” Lane says, “and we’re looking for more volunteers to work with nitrification inhibitors in manure, and also with spring-applied nitrogen products.”

For more on the next week’s On-Farm Network meetings, go to isafarmnet.com

AUDIO: Mick Lane (4 min MP3)

Soybean Yield Challenge Deadline Extended

Soy bean growers in Illinois have more time to decide on their participation in the Soybean Yield Challenge. The deadline for registration has been extended to April 15 to allow producers more time in case this year’s planting is delayed. The new deadline also allows for individuals and team growers more time to determine what varieties of soybeans they want to plant, plot locations, and other factors.

The challenge has also been enhanced with training sessions this year. Training sessions have been scheduled for Monday, March 29 at Heartland Community College in Normal, IL; Tuesday, March 30 at the Holiday Inn in Mt. Vernon, IL; and Wednesday, March 31, in Kishwaukee College in Malta, IL. Each meeting will be from 8:30 am to noon and there will also be opportunities for web training to increase interaction.

The Soybean Yield Challenge was created to make Illinois soybean farmers the global leader in yields by developing new and innovative practices.

Illinois Soybean Association

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