Civil Liberties, Health Care, Food Policies

Rapid Rise in Seed Prices Draws U.S. Scrutiny

Monsanto researchers in Stonington, Ill., are working to develop new soybean varieties that will be tolerant to agricultural herbicide and have greater yields.

March 11, 2010

New York Times - During the depths of the economic crisis last year, the prices for many goods held steady or even dropped. But on American farms, the picture was far different, as farmers watched the price they paid for seeds skyrocket. Corn seed prices rose 32 percent; soybean seeds were up 24 percent.

Such price increases for seeds — the most important purchase a farmer makes each year — are part of an unprecedented climb that began more than a decade ago, stemming from the advent of genetically engineered crops and the rapid concentration in the seed industry that accompanied it.

The price increases have not only irritated many farmers, they have caught the attention of the Obama administration. The Justice Department began an antitrust investigation of the seed industry last year, with an apparent focus on Monsanto, which controls much of the market for the expensive bioengineered traits that make crops resistant to insect pests and herbicides.

The investigation is just one facet of a push by the Obama administration to take a closer look at competition — or the lack thereof — in agriculture, from the dairy industry to livestock to commodity crops, like corn and soybeans.

On Friday, as the spring planting season approaches, Eric H. Holder Jr., the attorney general, and Tom Vilsack, the agriculture secretary, will speak at the first of a series of public meetings aimed at letting farmers and industry executives voice their ideas. The meeting, in Ankeny, Iowa, will include a session on the seed industry.

“I think most farmers would look to have more competition in the industry,” said Laura L. Foell, who raises corn and soybeans on 900 acres in Schaller, Iowa.

The Iowa attorney general, Tom Miller, has also been scrutinizing Monsanto’s market dominance. The company’s genetically engineered traits are in the vast majority of corn and soybeans grown in the United States, Mr. Miller said.

“That gives them considerable power, and questions arise about how that power is used,” he said.

Critics charge that Monsanto has used license agreements with smaller seed companies to gain an unfair advantage over competitors and to block cheaper generic versions of its seeds from eventually entering the market. DuPont, a rival company, also claims Monsanto has unfairly barred it from combining biotech traits in a way that would benefit farmers.

In a recent interview at Monsanto’s headquarters in St. Louis, its chief executive, Hugh Grant, said that while his company might be the market leader, competition was increasing as the era of biotech crops matured.

“We were the first out of the blocks, and I think what you see now is a bunch of people catching up and aggressively competing, and I’m fighting with them,” Mr. Grant said. He said farmers chose the company’s products because they liked the results in the field, not because of any untoward conduct on Monsanto’s part.

Yet in a seed market that Monsanto dominates, the jump in prices has been nothing short of stunning.

Including the sharp increases last year, Agriculture Department figures show that corn seed prices have risen 135 percent since 2001. Soybean prices went up 108 percent over that period. By contrast, the Consumer Price Index rose only 20 percent in that period.

Many farmers have been willing to pay a premium price because the genetically engineered seeds that make up most of the market come with advantages. Genetic modifications for both corn and soybeans make the crops resistant to herbicides, simplifying weed control and saving labor, fuel and machinery costs. Many genetically engineered corn and cotton seeds also resist insect pests, which cuts down on chemical spraying.

Lee Quarles, a Monsanto spokesman, said the price increases were justified because the quality of the seeds had been going up, and new biotech traits kept being added. For example, he said, many corn varieties now include multiple genes to battle insect pests, raising their value.

Mr. Quarles said higher prices were justified because the traits saved farmers money and made their operations more efficient.

Monsanto began investing heavily in biotechnology in the 1980s — ahead of most other agricultural companies. In the mid-1990s, it became the first to widely market genetically engineered seeds for row crops, introducing soybeans containing the so-called Roundup Ready gene, which allowed plants to tolerate spraying of its popular Roundup weed killer. Soon after, it began selling corn seed engineered with a gene to resist insect pests.

The number of biotech plant traits has grown since then, and other large companies — including DuPont, Dow Chemical, Syngenta, BASF and Bayer CropScience — have gotten into the business. But Monsanto has taken advantage of its head start. Today more than 90 percent of soybeans and more than 80 percent of the corn grown in this country are genetically engineered. A majority of those crops contain one or more Monsanto genes.

As biotechnology has spread, Monsanto and its competitors have bought dozens of smaller seed companies, increasing the concentration of market power in the industry ...

Federal Regulators Launch Probe of Big Agriculture

Federal regulators begin unprecedented set of hearings on competition in US

March 8, 2010

The Associated Press - Some Obama administration officials have made clear their unease with the increasing control a handful of corporations have over the nation's food supply, and this week in Iowa they could show whether they are serious about changing the system.

The first joint workshops on agriculture by regulators at the U.S. Justice and Agriculture Departments is expected to give farmers, lobbyists, executives and academics a strong indication of where the Obama administration stands on consolidation in agriculture.

Administration officials said the meeting Friday in the Des Moines suburb of Ankeny will give antitrust attorneys and farm regulators their first chance to work side-by-side and examine the concentration of power in rural America. The Iowa meeting will be followed by four other gatherings held later in the year.

Industry officials and farming groups aren't sure whether the hearings are political theater or a first step toward legal action, or both. For farmers, it's the most attention paid in years to their long-standing complaints that big corporations are choking out smaller players.

"This is certainly a much brighter spotlight than we've seen in the last 10 years," said Tara Smith, the American Farm Bureau's director of congressional relations.

A newly invigorated antitrust team in Washington is behind the hearings.

Christine Varney, head of the Justice Department's antitrust division, came into office last spring complaining that regulators have been too slow to file cases and that the Bush administration's guidelines on enforcement had fostered "extreme hesitancy" in the department.

In a troubled economy where food costs are pinching consumers, Varney said agriculture will be a top priority.

"We've seen a lot of consolidation in the industry in the past decade," she said. "Any time you have a lot of concentration in any part of the market, or any part of a vertical chain, it merits looking at."

Varney and U.S. Secretary of Agriculture Tom Vilsack said the workshops are aimed at creating broad policies to foster competition in agriculture, rather than scattered enforcement actions. Both will attend the hearings, and they emphasized that no action would be taken if competition was deemed fair. The point is to listen and learn.

"We want to make sure the playing field is level," Vilsack said.

The series of workshops will run through December, looking at the seed, dairy, poultry, beef and crop industries. At issue will be the practices of industrial agriculture's biggest players, such as grain processors Archer Daniels Midland Co. and Cargill Inc., meat companies Tyson Foods Inc. and JBS SA and biotech seed firms Monsanto Co. and DuPont.

The hearings are welcome news to Bill Heffernan, a retired rural sociologist from the University of Missouri who has been tracking growing concentration in agriculture for 20 years.

When he began studying the issue 22 years ago, Heffernan said the greatest consolidation was in the beef industry, where four firms controlled more than 50 percent of the market.

When he took his last survey in 2007, the top four meatpackers processed 84 percent of all U.S. beef. Consolidation also had spread to the poultry market, soybean crushing (which turns beans into a wide array of food products) and corn milling, he said.

With so few companies given so much power, Heffernan contends they don't need to cut backroom deals to control the market. They just follow each others' lead on how much to pay for grain or animals and force farmers to take what they can get.

"They don't have to go down to the lounge and talk about price fixing," he said.

Industry groups dispute the notion that consolidation signifies a lack of competition or could lead to price fixing.

The American Meat Institute, which represents meat processors, filed testimony for the hearings, arguing that the companies have gotten so big in large part because of government regulation.

Stringent food safety rules and constant inspections forced the industry to build expensive, high-tech plants, the group said. And the firms have paid the cost for massive recalls of tainted meat, forcing large companies to merge to share the risk and smaller ones to leave the market, the testimony said.

"I think the meat industry is extremely competitive," AMI Policy Director Mark Dopp said. "My hope is (regulators) learn how things really work. We think that will be a good story for the meat industry."

That story line is sure to be one that many regulators will hear in the coming months.

"As I travel around the country, listening to farmers and ranchers, there is a fairy consistent message coming from them," Vilsack said. "They want to make sure that the playing field is level, whether it's access to technology or the way they market their products."