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USDA and Justice Department Probe Market Concentration

posted on March 12, 2010


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As the number of seed companies dwindles, and the number of meat processors shrinks, some in Rural America have become concerned about a lack of competition.

Consolidation in Rural America is not a new development but some have become vocal enough to attract the attention of the White House. Obama Administration officials have pledged to take a closer look at what effect consolidation may have on U.S. agriculture.

To that end, USDA and the Department of Justice have joined forces to investigate the charges. A series of five meetings aimed at creating broad policies designed to foster competition were scheduled earlier this year. The first of those meetings took place this week in the heartland where politicians and farmers sat down to discuss the issue.

 

A cluster of the nation's agricultural and legal leaders convened in the Heartland this week to examine dwindling corporate competition complaints. The first in a series of public workshops organized by USDA and the U.S. Justice Department was spawned by increasing concern over consolidation in the nation's biotech seed and livestock sectors. The nation's top law enforcement officer, Attorney General Eric Holder, acknowledged Washington bureaucrats will not have all the answers for farmer and ranchers.

Eric Holder, U.S. Attorney General: "I'm reminded of President Eisenhower's observation that ‘farming looks mighty easy when your plow is a pencil and you're a thousand miles from the cornfield. His words remain true today. And in the decades since he spoke them, the challenges facing farmers and other leaders across our agriculture industry have become even more difficult."

Agriculture Secretary Tom Vilsack proclaimed the workshops were a breakthrough first-step to address growing concern that small farmers cannot compete.

Sec. Tom Vilsack, U.S. Dept. of Agriculture: "I think this country has got to get very serious about the future of rural communities because we're losing population and that population is aging. And so you understand what I'm talking about - one-sixth of our population lives in rural communities but 45 percent of those that serve us in uniform come from rural communities."

Vilsack's sentiment was well received among the hundreds of farmers and trade group representatives. Some farmers have long complained that seed firms Monsanto and Dupont have too much control over traditional crops like corn and soybeans. Dupont, the parent corporation of Pioneer Hi-bred, is a national underwriter of Market to Market.

Moe Parr, Lafayette, Indiana: "In 1983 it was a perfectly great idea because there was no law that said I couldn't clean seed. There still is no law that says I can't clean seed."

Farmer Moe Parr has had a series of legal run-ins with Monsanto Corporation over seed patents. Biotech companies patent seed strains in an effort to protect their lines and prevent farmers from reusing seeds in future seasons. Parr, an Indiana farmer, often "cleaned" seed between seasons in order to replant the following spring – a alleged violation of Monsanto's policy that led to a legal firestorm.

Moe Parr, Indiana Farmer: "I hope that they can withdraw the utility patent. I really think we need to go backwards to get rid of the utility patent on living organisms."

Monsanto's Vice President of Industry Affairs, Jim Tobin, defended his company and the need to protect legally patented seed.

Jim Tobin, Monsanto: "Its attracted a great deal of innovation. New investors, new dollars, new opportunities for farmers to choose to use products that help them make money. Its an exciting time. There are a lot of choices today and there is going to be a lot more choice in the future and their is tremendous competition for the farmers."

Monsanto has since filed a permanent injunction against Parr that forgoes any financial penalties as long as the Indiana farmer does not clean any of the seed firm's Roundup Ready soybeans. Parr told Market to Market he still cleans non-Monsanto seed varieties.

The case was widely publicized by critics of biotech seed companies and brought to the attention of top legal officers in Washington.

Christine Varney, the Justice Department's chief antitrust officer, entered the Obama administration pledging to tackle market concentration complaints and unwind what she called the "extreme hesitancy" of the Bush Administration. After the panel discussion, Varney acknowledged that the Justice Department is in the early stages of antitrust investigations but declined to mention Monsanto or other seed dealers.

Christine Varney, Antitrust Division U.S. Justice Dept: "We do not bring a preconceived notion to the table. We do not have an agenda to pursue or a result. We are not looking to restructure the economy or companies that participate in the economy. We are looking to enforce the law vigorously and fairly - wherever takes us."

The Obama Justice Department may have an unlikely bipartisan ally in Senator Charles Grassley. The longtime Iowa Republican has been highly critical of past DOJ decisions but voiced his support towards agricultural antitrust investigations that Grassley calls "long overdue."

Sen. Charles Grassley, R-Iowa: "I just think that it's very important that they do what they're doing not just at this hearing but following through on making sure that laws are enforced."

But it's unclear how much action, if any, the Obama Administration will take in coming years. Attorney General Eric Holder cautioned against prejudging the complaints against any companies but argued the Justice Department is already active in the agricultural arena.

Eric Holder, U.S. Attorney General: "But you should not take from the fact that we are having these meetings is some sense that we are sitting on our hands waiting for the 5th workshop to decide what it is we will be doing. We are active right now."

 


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