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)

Competitive Dynamics of the Seed Industry

Much of the focus of Friday’s workshop was the competitive dynamics of the seed industry–specifically Monsanto’s dominance in seed traits and whether the company is using that dominance unfairly.  At the heart of the discussion is the battle between rivals Monsanto and Dupont, which owns Pioneer Hi-Bred. 

One of the more interesting exchanges took place between Diana Moss with the American Antitrust Institute and Jim Tobin of Monsanto, both part of a panel discussing seed price, choice and innovation.   Dermot Hayes, Iowa State University professor of economics and finance, also weighed in.

AUDIO: Diana Moss (2 min MP3)

AUDIO: Jim Tobin (2 min MP3)

AUDIO: Dermot Hayes (2 min MP3)

University of Wisconsin ag economist Richard Barrows chairs the 21-member group made up of large, mid-size and small dairy farmers, both organic and conventional; large and small cheese makers and dairy processors; dairy veterinarians; consumers; and food safety and public health professionals.

On Monday the members will go over the goals of the group, establish the ground rules, begin to identify the raw milk issues and set up dates for the next meetings.

The meeting will be held at the Lyman G. Anderson Agriculture and Conservation Center in Madison.

Newly appointed are: George E. Marsh, Oregon; Ray S. Prock, California; Arlene J. Vander Eyk, California; Brian W. Esplin, Idaho; Neil A. Hoff, Texas; Paul A. Fritsche, Minnesota; Patricia M. Boettcher, Wisconsin; Mark E. Erdman, Illinois; Susan D. K. Troyer, Indiana; and Ronald R. McCormick, New York .

Reappointed to serve second terms were Randy G. Roecker of Wisconsin and Rita P. Kennedy of Pennsylvania.

Terms are for three years and begin immediately.

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)

One disappointing note, nonfat dry milk and skim milk powder exports dropped 41 percent from a year ago to 27.8 million pounds. On a daily average basis, that is the lowest amount in five-and-a-half years. For the month, the U.S. exported 19 percent of our total dairy production, less than half the average rate of the last five years.

As a result, price estimates have been lowered from last month; cheese estimates 7.5 cents lower now expected to range between $1.50 and $1.56 per pound. Butter is 1 to 2 cents lower at $1.415 to $1.505 per pound. The dry whey price is a penny lower and nonfat dry milk 4 to 5 cents below last month’s projections. This all means lower milk prices; Class III is down 70 to 80 cents from last month now expected to average between $14.20 and $14.80 this year. Class IV is 30 to 40 cents lower priced between $13.65 and $14.35 and the all milk price is now $15.55 to $16.15 representing a 65 to 75-cent drop from last month.

Michael Boccorodo with Dairy Cares says the four major dairy processors have signed-on with the effort which will start with a series of educational workshops to educate producers on best management practices. The next step is an on-farm evaluation of each dairy farm to assess current practices and identify any needed improvements. The final step is independent, third-party verification to demonstrate program integrity and credibility.

Education will begin in April and they hope to have on-farm assessments completed by the end of the year with third-party verification next year. The ultimate goal is to deliver to consumers a product they can be confident was produced in an environmentally sustainable manner by animals which are well cared for.

AUDIO: Michael Boccodoro talks about the effort

“It’s the Milk House” with Dr. Doug Braun of Pfizer Animal Health and Dr. Peter Vanderloo with the Wisconsin Diagnostic Lab. They will take you through the dissection of an udder to show you just how everything works.

“Make Every Conversation Count” will feature Donna Moenning, Vice President of Industry Image and Relations with Midwest Dairy Association and deal with communicating as a dairy producer with the consuming public.

“Putting the Wheels Under the Family Bus” with Michael Stolp of Northwest Farm Credit will help you not only operate a multi-generational farm business but prepare it for future generations.

“New Developments in Dairy Cattle Well-Being” has animal researcher Dr. Janice Swanson of Michigan State University talking about efforts to study and learn more about animal behavior and animal welfare.

The preconference sessions run from 9:30 to 11 a.m. on Tuesday, March 16 and will conclude in time for lunch prior to the general conference kickoff at 12:15.

The PDPW Business Conference runs through 4 p.m. on Wednesday, advanced registration is appreciated and available at the PDPW website however walk-ins are welcome.

AUDIO: Executive Director Shelly Mayer talks about the preconference sessions

The February base milk prices were also mixed when compared to January. Class II base for February production is $15.65 per hundredweight, 43 cents more than January and $5.45 better than February of 2009. The Class III base price for February is $14.28, down 22 cents from last month but $4.97 better than a year ago. Class IV base $12.90, down 95 cents from January but $3.45 higher than February, 2009. Component prices per pound for the month: butterfat $1.4404; protein $2.7066; nonfat solids $.9043; other solids $.1992.

One note of interest, looking at the futures as they are right now, this will be the highest milk price we see until July.

The two bills, SB 434 and AB 628 would legalize the sale of raw milk by farmers who have Grade A permits and a permit from the Wisconsin Department of Agriculture, Trade and Consumer Protection. They would also be required to display a notice that the raw milk does not provide the protection of pasteurization. Under the legislation, farmers would not be held liable for selling the product “except in cases of willful or wanton acts or omissions.”