US seed industry concentration continues

Further to the CAS-IP submission to the DoJ on seed industry concentration, DuPont Pioneer Hi-Bred has acquired two of its distributors – Ohio-based Seed Consultants and Louisiana-based Terral Seed.  This brings total distributor acquisitions for December 2010 to five.  And on January 3rd the purchase of MECS, a technology company specializing in agriculture, was completed.  

Perhaps more disturbing, in 2010 there were several large takeovers in the fertilizer production business, and on December 20th Russian potash producer Uralkali announced that it was buying Silvinit, a smaller competitor, for $7.8 billion.

According to Business Week, the new entity will control 17% of global potash output.

While this is by no means an exhaustive listing of recent acquisitions, it is a reminder that the trend we wrote about a year ago, and which the DoJ planned to “investigate”, is ongoing.

On December 10th the DoJ held the fifth and final workshop on competition and concentration within the US agricultural sector (full transcript available here).  Francesca Re Manning reviewed the transcript (thanks, Francesca!) and observes that:

“In his presentation, Agriculture Secretary Tom Vilsack reminded the audience that a fair and competitive marketplace is important not only for producers, but also for consumers. John Crabtree of the Center for Rural Affairs urged the Ministry of Agriculture and the Department of Justice to stand up to industry and to stop the increasing concentration and vertical integration in farming, ranching, livestock production and meatpacking as this could only help revitalize rural America. 

 The organizers of the workshop series were praised for their efforts to engage with farmers, producers and retailers and for opening a dialogue to better understand the issues behind competition in U.S. agriculture. The role that intellectual property, in particular the patenting of seeds and genetic material, has on competition was indeed mentioned. And it is true that last October the Department of Justice opened investigations into Monsanto’s alleged violation of anti-trust rules in the GM crop market.  However, to my disappointment, the use and abuse of intellectual property rights was touched only marginally.  The focus seemed more on the availability to US consumers of healthy and varied food, perhaps due to Michelle Obama’s campaign on reducing obesity in children.

 I can only commend the workshop if, as a few people from the audience rightly urged, the Government will take the matter seriously and take action. In Mrs. Obama’s words, “Let’s Move”!”

Based on this, I get the impression that the DoJ investigation – which started 18 months ago – is probably not going to have much impact, and that global seed production and distribution will be controlled by fewer and fewer companies.  This will inevitably impact developing countries and further reduce farmer options.  Given the focus of USAID and other donors on food security, perhaps it is time for these organizations to involve themselves in the discussion – before it is too late.

Post written by Peter Bloch

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