Tag Archives: DoJ

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

CAS-IP submission to DoJ’s exploration of seed industry concentration

In August 2009, the US Department of Justice (DoJ), together with the US Department of Agriculture (USDA) announced a series of workshops intended to “explore competition and regulatory issues in the agriculture industry”. -  Agriculture and Antitrust Enforcement Issues in Our 21st Century Economy – will enquire into agriculture and into the dairy, poultry and livestock industries.  One of several workshops that has been scheduled will take place in Iowa and address “…seed technology, vertical integration, market transparency and buyer power”.

These hearings will ask if mergers and acquisitions have reduced competition in the US seed industry.  While this enquiry is US centric, CAS-IP, in its role to assist the CGIAR and its constituency of resource-poor farmers, argues that the availability of seed to poor farmers is critical to current and future food security.  This is no longer a national issue, and the food security of developing nations is of great concern to the US and to other developed nations.  By way of example, at the July, 2009 L’Aquila Summit President Obama made a powerful statement of support for agricultural development in developing countries:

“We have committed to investing $20 billion in food security — agricultural development programs to help fight world hunger.  This is in addition to the emergency humanitarian aid that we provide.  And I should just note…we had agreed to $15 billion; we exceeded that mark and obtained an additional $5 billion of hard commitments.  We do not view this assistance as an end in itself.  We believe that the purpose of aid must be to create the conditions where it’s no longer needed — to help people become self-sufficient, provide for their families, and lift their standards of living.”

Based on 2006 revenues the ETC Group estimates that the top ten global seed companies control 47% of the global proprietary seed market.  Of the top 10, three are US based and control 40% of the global proprietary seed market.  Any reduction of competition within the US will impact agriculture and, potentially, food security in the developing world.  Our submission to the DoJ argues, therefore, that the investigation be expanded and reference the impacts of reduced competition and the concentration of IP ownership within the US seed industry on developing countries.

Over the last year, our System Dynamics Modeling team has been studying the seed sector in several African countries and prepared a case study of the seed sector in Malawi.  This analysis, which supports our contention that reduced competition may have negative impact on agriculture in developing countries, is an integral part of the CAS submission to DoJ.

With support from PIIPA, Pillsbury Law provided pro bono legal consultations on the preparation of the submission, which was delivered on December 31st.  The document can be downloaded at http://www.cas-ip.org/resources/publications/publications-impact-of-seed-company-competition-on-access/

The paper is authored by Guat Hong Teh, Sebastian Derwisch, Victoria Henson-Apollonio and Peter Bloch of the CGIAR Central Advisory Service on Intellectual Property (CAS-IP).  The authors would like to acknowledge the contributions of Donna O. Perdue of Pillsbury Winthrop Shaw Pittman LLP.

Post written by Peter Bloch, consultant to CAS-IP