Iowa Farmers and Hearing Witnesses Endorse Grassley Fertilizer Bill, Discuss Need for Transparency in Seed and Fertilizer Industries

WASHINGTON - Sen. Chuck Grassley (R-Iowa), Chairman of the Senate Judiciary Committee and the Senate's only grain farmer, led a committee hearing this morning to examine how market consolidation drives up production costs for family farmers. The hearing also touched on the high cost of fertilizer and efforts to fill in reporting gaps after the Obama administration discontinued annual reports on the fertilizer industry in 2014. Grassley's bipartisan Fertilizer Research Act would shed light on market factors driving the cost of fertilizer, a major expense for farmers.

Witnesses at the hearing included two Iowans, Noah Coppess of Coppess Family Farms in Stanwood and John Latham of Latham Quality in Alexander. Grassley asked Coppess and Latham to discuss how market consolidation has impacted their businesses, including the number of corn and soybean varieties available to farmers.

Latham stated the percentage of a seed bag's cost going to royalties has risen from 42% five years ago to 70% today. According to the U.S. Department of Agriculture (USDA) Economic Research Service, Bayer and Corteva together account for more than half of U.S. sales of corn, soybean and cotton seed.

During the hearing, Grassley entered letters and statements from several groups into the record, including the Iowa Corn Growers Association.

The head of the Fertilizer Institute also testified on behalf of its members who have large workforces in Iowa, including Bayer and Corteva.

Grassley also questioned the Progressive Policy Institute Vice President and Director of Competition Policy Dr. Diana Moss, the American Soybean Association President Caleb Ragland, the Fertilizer Institute CEO Corey Rosenbusch and the American Seed Trade Association President and CEO Andrew LaVigne.

OPENING STATEMENT VIDEO

FIRST ROUND OF QUESTIONS VIDEO

SECOND ROUND OF QUESTIONS VIDEO

On the need for more information in the fertilizer industry:

Mr. Rosenbusch, in 2014, the Obama administration discontinued annual reports on the fertilizer industry. Since then, prices have become more and more opaque, making it harder for farmers to know if they're getting a fair deal.

My Fertilizer Research Act seeks to fill in these reporting gaps. So, could you tell us what measures are being taken to ensure transparency in pricing mechanisms, so farmers aren't unfairly penalized by last-minute price increases?

On price transparency:

Dr. Moss, in your opinion, what types of public reporting could provide the necessary transparency in fertilizer markets for farmers looking to get a fair price?

On the impact of market consolidation:

Mr. Latham and Mr. Coppess, major mergers and business transactions over the last decade reduced the 'Big 6' ag companies to only four. The U.S. Department of Agriculture's Economic Research Service reports that Bayer and Corteva together account for more than half of the U.S. sales of corn, soybean and cotton seed.

What impact does this have on your business? Has there been an impact on the number of corn and soybean varieties available to farmers?

Control over inputs rivals need:

Dr. Moss, in your opinion, if a trait owner conditions access in ways that predictably raises rivals' costs or limits stacking with competing traits, is that a problem? And, should it trigger enforcement?

On trait stacking and access:

So, I'm going to ask Mr. Latham. Across corn and soybeans today, are there still contractual or technical barriers that keep you from offering a seed with a competitor's trait stacked alongside another? Could you describe the specific clauses and data obligations that get in the way?

On intimidation and retaliation:

Mr. Coppess, farmers report rebate claw backs, delayed allocations and audit threats after trying rival products and services. Could you give us some details of recent incidents where a supplier or retailer used rebate leverage or allocation delays to punish switching?

On the times licensing promotes competition or forecloses it:

Mr. LaVigne, your organization says on its website that your membership includes 85 percent of all private U.S. seed companies operating in the United States, both big and small. Is there disagreement among your members regarding antitrust and intellectual property issues, laws and enforcement?

On the national security risks of foreign-owned companies:

This question would be to Dr. Moss, Mr. Rosenbusch and Mr. LaVigne. Only one of the four largest companies controlling the ag market is U.S. owned. In your opinion, does this represent any national security risk to our country?

On preventing domestic de facto monopolies:

For you Mr. Rosenbusch, when a single foreign supplier dominates an essential input and [the Department of] Commerce and [the U.S. International Trade Commission] impose duties that may choke off that source, what specific safeguards would the Fertilizer Institute support to prevent a de facto domestic monopoly and keep farmers supplied?

On speeding innovation versus walling off rivals:

Dr. Moss, in plain English, where's the line between licensing that speeds innovation and licensing that walls off rivals-especially for stacked traits? Do you support narrowly tailored measures similar to Fair, Reasonable and Non-Discriminatory (FRAND) agreements? If so, why?

On availability of generic insect resistant traits:

My last question will be for Mr. LaVigne and Dr. Moss. I want to understand why generic insect resistant traits haven't materialized despite patent expirations. I understand that there does not appear to be a single generic insect resistant (IR) trait available to growers, notwithstanding frameworks touted as solutions. Why is this the case?

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