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)

 

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)

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)

FCA changes director election rules

The Farm Credit Administration (FCA) Board has approved a final rule on director elections for Farm Credit System institutions. The purpose of this rule is to strengthen stockholder involvement in the management, ownership, and control of System institutions by increasing stockholder participation in the director election process.

The final rule would revise Farm Credit bank and association director election and voting rules, the requirements associated with holding stockholder meetings, clarifying the duties of nominating committees, and making and accepting floor nominations. The rule also enhances annual meeting and election notices to stockholders.

The final rule will be effective 30 days after publication in the Federal Register.

Read more details from FCA;

Basic Food Flavors knew about salmonella contamination

The Food and Drug Administration says Basic Food Flavors knew of salmonella contamination at its Las Vegas, Nevada plant back in January but kept shipping product anyway. To date, more than 100 products have been recalled but thousands of products could be affected by the contamination of a popular flavor enhancer HVP (hydrolyzed vegetable protein). HVP is often blended with spices to make seasonings used in a variety of food products including hot dogs, soups, salad dressings, chili, sauces, stews, gravies, chips and dips.

According to the FDA, Best Food Flavors had learned that samples from the plant tested positive for salmonella on January 21st. The company tested for and found salmonella twice in January and once in February but never issued a recall or took steps to minimize the risk of contamination. They kept manufacturing and shipping HVP through February 15th.

FDA was notified by a Best Food customer of possible contamination and began investigation of the plant on February 12th. FDA does not have the authority to order a recall so they began negotiating with Best Food Flavors to initiate a voluntary recall of the products which the company did on February 26th.

So far, no illnesses have been linked to the HVP and FDA says the risk is low because most of the products it is used in are cooked at some stage at temperatures high enough to kill the salmonella. The main concern is with ready-to-eat snacks.

FAPRI ‘10 baseline “depends on recovery”

Members of Congress were given the FAPRI 2010 Baseline Report Tuesday and authors say the outlook for agriculture depends a lot on the general economy.

“So if we get recovery in the overall economy that should let people have a little more money to spend on things like meat and dairy products and that might help us to see at least a mild recovery in the overall farm economy after a very bad 2009,” says Pat Westhoff, co-director of FAPRI, the Food and Agricultural Policy Research Institute at the University of Missouri. He net farm income is expected to increase somewhat over the next two years mostly due to stronger livestock prices, assuming demand increases. The FAPRI report also projects more corn acres this spring and an increase in corn demand for ethanol production. Slightly lower prices for soybeans and fewer wheat acres are expected this year.

Westhoff says crop insurance will be a more important part of government expenditures on agriculture, “By the end of our 10-year baseline outlook, we’re spending almost as much on the crop insurance program as we are on the basic farm programs funded by the Commodity Credit Corporation.”

Over the next 10 years, the FAPRI report says, direct payments make up the bulk of government payments.

AUDIO: Pat Westhoff, co-director, FAPRI, University of Missouri (5 min., MP3)

Senate passes biodiesel extender, disaster aid

A one year retroactive extension of the biodiesel tax incentive passed the Senate Wednesday, part of the jobs bill.

National Biodiesel Board Federal Affairs Vice President Manning Feraci says the lapse in the tax credit at the end of 2009 has been disruptive to the biodiesel industry.

The incentive is designed to make biodiesel price competitive with conventional diesel fuel. Since its lapse, the US biodiesel industry has seen a dramatic drop in demand and production.

The House and Senate now have to reconcile differences between the two versions. Both provide for a one year retroactive extension of the biodiesel tax incentive.

Senate Ag Committee and Ranking Finance Committee chair Charles Grassley of Iowa voted against final passage of the Senate Tax Extenders Act on Wednesday. In a statement following the passage of the bill, which restores the biodiesel tax incentive, Grassley said he opposes the contingency to include more deficit spending to fund it. Grassley faults congressional leaders for what he calls “irresponsible and even offensive” actions. The bill, which also extends unemployment benefits, passed 62 to 36.

The American Soybean Association applauds the passage of the legislation and is urging quick reconciliation and retroactive restoration of the dollar per gallon tax credit on biodiesel which Congress allowed to lapse on December 31st.

The bill also includes Senate Ag Chairman Blanche Lincoln’s 1.5 Billion dollar disaster aid for Arkansas farmers affected by weather related disasters. Counties that received a primary disaster declaration in 2009 are eligible.  Producers in Lincoln’s home state of Arkansas, as well as Mississippi, were especially hard hit.

Brownfield’s Tom Steever contributed to this report

Light utility vehicles now legal for ag use on Wisconsin roads

Wisconsin Governor Jim Doyle signed Assembly Bill 574 into law on Wednesday. Authored by Representative Amy Sue Vruwink, the bill allows farmers to use light utility vehicles like Gators, Rangers and Mules on roadways for agricultural purposes. “You have to have headlights, taillights, a slow-moving-vehicle sign, you have to be 16-years-old and you have to be in agriculture to drive them on the road,” says Vruwink.

Animal care proposal advances in MO House

A move in the Missouri legislature to protect livestock care practices has gained some traction. A resolution supported by the Missourians for Animal Care Coalition passed the Missouri House last week. Missouri Farm Bureau’s legislative director Leslie Holloway says the intent is, “To try to ensure that additional restrictions on raising animals, whether it be livestock or dogs or whatever the case may be, are under the jurisdiction of the General Assembly rather than interests that might come in from out of state such as the Humane Society of the United States.”

If passed by the Senate, the animal care constitutional amendment would go before Missouri voters in November when an HSUS-backed ballot proposal cracking down on dog breeders is expected to also be in front of voters.

AUDIO: Leslie Holloway, Missouri Farm Bureau Director of State and Local Governmental Affairs (7 min., MP3)

Pork producers wary of HSUS bill in Congress

Pork producers will be keeping a close eye on that HSUS-backed animal rights bill introduced in the U.S. House of Representatives.

The bill proposes to set rules around confinement of animals used to produce food purchased by the federal government.  According to Dr. Jen Greiner with the National Pork Producers Council, it’s the first time legislation addressing animal housing—gestation stalls, veal crates and laying hen cages—has been introduced in Congress. 

Greiner doesn’t expect the proposal to gain much traction by itself—but she is concerned its backers might try to tie it to reauthorization of the Child Nutrition Act later this year.

“(It’s) the bill that gives USDA the ability to go out and purchase food products to go into the school lunch program, the school breakfast program, and the Women, Infants and Children—or WIC—program,” Greiner says, “and so, as we look at that, obviously those foods are going into federal programs and this legislation could get swept into it.  So, clearly, we’re concerned about that.”

HSUS has been successful with animal rights initiatives at the state level and, to this point, has not shown much interest in pursuing federal legislation.  We asked Greiner if she’s surprised with this move in Congress.

“We did pick this year—an election year for the House of Representatives and part of the Senators—we did pick this year as being a year of potential mischief,” she says, “but (we) really hadn’t seen a whole lot of movement in that direction until last week.  So I guess while we are maybe a little bit surprised that it came this early, (we’re) definitely not shocked.”

The federal government spends more than one billion dollars buying animal products for a variety of programs and agencies, including the national school lunch program, the armed services and federal prisons.

AUDIO: Jen Greiner (4 min MP3)

Amish farmer wins Wisconsin premises challenge

An Amish farmer has won his court case challenging Wisconsin’s livestock premises registration law. Clark County Circuit Judge Jon Counsell ruled the law violates Emanuel Miller Jr’s religious beliefs. The judge said the state failed to prove its need to protect food safety and animal health could not be achieved by adopting something less restrictive. Counsell cited several flaws in the state law noting it was impossible to keep the register current because farmers only have to sign up every three years and it does not require the farmer to have a telephone so in the case of an outbreak officials would still have to go door-to-door.

Clark County was the site of a pseudorabies outbreak in 2007 and state officials spent days going door-to-door looking for hogs in two quarantine areas.

Wisconsin Assistant State Veterinarian Paul McGraw expects his agency will appeal the ruling.

Thanks to Thom Gerretsen, Wheeler News Service.

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