1.Monsanto, DuPont square off in crop seed turf war
2.Federal officials stress the 'anti' in antitrust
EXTRACT: "We're hearing lots of complaints from farmers about huge price increases and that non-GMO seed availability no longer exists." (item 1)
An Indiana seed dealer grew so disturbed by the prices Monsanto charged to farmers growing in different parts of his service area that he simply stopped selling the company's seed.
The stories are all the same - as competition declines... farmers are finding their prices decline and their costs increase. (item 2)
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1.MONSANTO-DUPONT/DISPUTE (BUSINESS FEATURE)
Monsanto, DuPont square off in crop seed turf war
By Carey Gillam
Reuters News, August 18 2009
http://www.forexyard.com/en/reuters_inner.tpl?action=2009-08-18T203448Z_01_N18437534_RTRIDST_0_MONSANTO-DUPONT-DISPUTE-BUSINESS-FEATURE
* DuPont claims Monsanto holds "illegal monopoly"
* Monsanto CEO seeks probe by DuPont independent directors
* Justice Dept., USDA to examine antitrust concerns
KANSAS CITY, Mo. - It's getting dirty down on the farm.
As U.S. farmers prepare to harvest billions of bushels of corn and soybeans -- key ingredients in food, livestock feed and transportation fuel around the world -- seed technology titan Monsanto Co and its chief rival DuPont are ramping up their rivalry to new heights.
DuPont is accusing Monsanto of illegal anti-competitive practices, while Monsanto counters that DuPont is engaging in a covert smear campaign that borders on fraud.
Monsanto CEO Hugh Grant this week sent a letter, a copy of which was obtained by Reuters, to DuPont chairman Charles Holliday accusing the company of a "serious breach of business ethics" and requesting that a special committee of DuPont's independent directors investigate what Grant called an "attack" on Monsanto's seed business.
Monsanto officials claim DuPont has supported forged documents and secretly funded Monsanto critics.
"This is just the tip of the iceberg of dirty tricks. I have never seen corporate conduct of this nature," said Monsanto lawyer Scott Partridge.
DuPont counters that it is simply trying to expose what it calls Monsanto's "illegal monopoly" and the harm it says Monsanto is doing to farmers and others up and down the food chain.
"This is not just a DuPont problem. This is a competition problem. They've gained illegal monopoly power," said DuPont attorney Don Flexner.
The stakes have now risen as both the U.S. Department of Agriculture and the Justice Department said this month they will launch an examination of competition and antitrust concerns in the seed industry.
"We understand that there are concerns regarding the levels of concentration in the seed industry, particularly for corn and soybeans," said Philip Weiser, deputy assistant attorney general in the antitrust division at the U.S. Department of Justice.
SOURED RELATIONS
Both companies have strong positions in the U.S. seed industry and have been racing each other and other competitors to develop higher-yielding crops through genetic modifications and other means.
This spring, the competition spilled into the courts as Monsanto and DuPont sued each other over a soured licensing arrangement.
Monsanto claimed DuPont was using its Roundup Ready herbicide-tolerant trait outside the scope of the agreement. DuPont countersued, seeking relief under antitrust laws to end what it calls "Monsanto's multifaceted, anti-competitive scheme to unlawfully restrict competition."
Monsanto claims, and DuPont does not dispute, that DuPont has been aligning with, and in some cases funding, groups critical of Monsanto.
Monsanto in turn has launched an effort to discredit DuPont, working with a Washington law firm to circulate documents that lay out a series of scathing accusations. The documents accuse DuPont of misleading investors about certain product capabilities, as well as involvement in what Monsanto has said were several falsified letters to lawmakers and others that criticize Monsanto.
Monsanto spokesman Lee Quarles said the company wants to protect itself against DuPont's "smear campaigns" designed to "compete through deceit."
DuPont spokesman Anthony Farina said Monsanto is engaging in a "campaign of diversion" and that DuPont was cooperating with a group of attorneys general from states including Iowa, the top U.S. corn grower, investigating Monsanto's business practices.
CRYING FOUL
The biotech corporate battle comes at a time when farmers, agricultural academics and consumer groups are growing increasingly concerned about climbing seed prices and industry concentration.
"We're hearing lots of complaints from farmers about huge price increases and that non-GMO (genetically modified) seed availability no longer exists," said Bill Wenzel, national director of the Farmer to Farmer Campaign on Genetic Engineering, which has been studying the sharp price increases in soy and corn seed in recent years.
A decade ago, DuPont's Pioneer Hi-Bred seed unit, based in Johnston, Iowa, controlled more than 40 percent of the lucrative U.S. corn seed market. But that had fallen to about 30 percent in 2008, according to DuPont, which gets about a quarter of its $30 billion in revenues from its agricultural and nutrition unit.
Monsanto's rapid rise in power over the last decade has come through a series of seed company acquisitions, broad licensing deals and tightly protected patents for its proprietary seed technology.
St. Louis, Missouri-based Monsanto pegs its market share for its branded corn seed at about 36 percent, and says branded soy seed enjoys a 29 percent share and cotton a 41 percent share in the United States.
But DuPont and other critics say that, through licensing deals with about 200 other companies, Monsanto's genetic traits are spread through nearly all of the U.S. corn, soy and cotton acres planted each year.
They say Monsanto's power translates into steep price increases for farmers and increasingly fewer seed choices.
"That level of concentration is scary," said Iowa State University agricultural economist Neil Harl. "The Department of Justice antitrust division is right on target in my view."
Monsanto recently announced, for instance, that its new Roundup Ready 2 Yield soybeans will cost farmers about $74 an acre in 2010 on average, while the current version of its Roundup Ready soybeans cost $52 an acre.
Monsanto said the price hikes are valid because farmers receive added value with technological improvements to the seeds, higher yields and greater efficiencies. It also argues there is no shortage of seed varieties.
Monsanto's prowess in the seed industry has made it a darling of Wall Street. Last year the company posted record net sales of $11.4 billion for fiscal 2008, a 36 percent jump from fiscal 2007.
Monsanto officials say they welcome the added antitrust scrutiny.
"This is a very competitive industry," said Partridge. "We welcome the opportunity to participate and to be involved in these discussions so people can learn more about Monsanto and how we compete." (Reporting by Carey Gillam; editing by Jim Marshall)
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2.Federal officials stress the 'anti' in antitrust
Daily Yonder, North Platte Bulletin, 17 August 2009
http://www.northplattebulletin.com/index.asp?show=news&action=readStory&storyID=17088&pageID=29
The room was filled. There were Nebraska hog raisers, corn farmers from Missouri, Colorado feed lot owners and ranchers from Wyoming. They were Republicans and Democrats, pro-life and pro-choice, church-goers and agnostics.
The one thing they had in common is a belief that the markets for food and agriculture are dominated by a few big companies and, as a result, the prices paid to farmers and charged to consumers aren't fair.
The members of the Organization for Competitive Markets have been denouncing big business for years. OCM has issued press releases and joined lawsuits. Their annual meetings have been small, however, and the organization's influence has been weak. OCM has had few successes convincing a largely uninterested federal government aggressively to enforce antitrust laws and the rules governing market concentration in the livestock business.
Those times may be changing.
"This is a narrow moment in history when a difference can be made," Omaha attorney David Domina said near the end of OCM's annual meeting this year in St. Louis. This moment arrived with last November's election.
The Department of Justice under President George Bush was slow to prosecute under long-standing antitrust laws. The Obama Administration, however, has promised stricter interpretation of those statutes. And the Democrats have shown a particular interest in competition (or the lack of it) in agriculture markets.
The Department of Justice and the Department of Agriculture announced last week that they will hold "workshops" to "openly discuss legal and economic issues associated with competition in the agriculture industry."
Two top federal officials charged with enforcing antitrust and competition laws in the agriculture and livestock sectors came to speak to the farmers and ranchers at the OCM meeting.
The workshops will begin in January. These will be evidence gathering sessions for a government investigating ways that competition is currently restricted, from the sale of seed to the ownership and control over grocery-store shelves. Both DOJ and USDA officials said they are eager to receive comments on agriculture markets across the country, including anonymous statements.
To find more information on these workshops and see where to send your comments, look here.
The Obama Administration appears to be looking at four areas in the agriculture markets:
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Dairy - Last week, Vermont Sen. Bernie Sanders wrote to the Department of Justice asking that it investigate major milk buyers to see if they violate antitrust laws.
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Seeds - That is, Monsanto. Monsanto now controls almost all the genetically modified soy, cotton and corn seed. Philip Weiser, the new Deputy Assistant Attorney General who spoke at the OCM conference, said the Justice Department would be taking a hard look at market concentration in the seed industry.
"For many farmers and consumer advocates, we understand that there are concerns regarding the levels of concentration in the seed industry -- particularly for corn and soybeans," Weiser said.
That is an understatement. Farmers across the Midwest have been meeting to protest Monsanto's control of the seed market. OCM attorney David Balto reminded Weiser that Democrats in the Clinton Administration filed an antitrust action against Microsoft, the software maker.
"Back then, you started off suing Microsoft," Balto said. "That's a nice letter to begin with."
Surely it wasn't lost on St. Louis-based Monsanto that Weiser came to its hometown to give his first public speech after joining the Obama Administration - and that his speech was in part about the seed business.
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Livestock - Dudley Butler, administrator for USDA's Grain Inspection, Packers & Stockyards Administration, told the OCM meeting that he planned to "get out in the countryside. We know we have an imbalance of power in some of the industries now."
Livestock raisers have been fighting consolidation among packing firms. Weiser said specifically that the Department of Justice was "interested in learning whether the controls of the (Packers and Stockyards Act of 1921) are relevant to the way businesses are run today and whether the law is being implemented effectively to promote competition."
Butler gave a populist-tinged speech that sat well with the latter-day populists in the crowd. Asking for comments from farm producers who are often afraid to cross their buyers and suppliers, Butler said, "I understand the concept of retaliation."
Food Costs - The DOJ says it will investigate whether the vertical integration of the food business - where the same company can control a product from seed genetics to the grocery shelves - violates antitrust rules.
"We recognize this is a very important sector," Weiser said of the department's interest in agriculture. He said antitrust chief Christine Varney "has put a huge emphasis on" the ag sector and has set no preconditions on the inquiry.
"We can say we're really committed to learning and hearing from as many people as we can," Weiser said, adding, "I can't go much deeper."
If the OCM conference was any indication, the USDA and DOJ are likely to get an earful when they begin their workshops. Jim Foster, a Missouri hog raiser for more than five decades, told the conference that the big meat packers had gained control of so many animals that they could do without the independent producers. "They own enough hogs that they don't need us," Foster said.
An Indiana seed dealer grew so disturbed by the prices Monsanto charged to farmers growing in different parts of his service area that he simply stopped selling the company's seed.
The stories are all the same - as competition declines, farmers and ranchers have fewer choices about where to sell their crops or cattle or where to buy their seed. As competition declines, farmers are finding their prices decline and their costs increase.
The farmers and ranchers at the OCM meeting represent an older style of politics and economics. (Long before Monsanto developed into a seed-selling giant, George Washington said, "It is miserable for a farmer to be obliged to buy his seed....")
While some economists now argue that monopolies may be a product of efficient markets, David Domina reminded the ranchers and farmers at the OCM conference that having just a few corporations dominate markets is probably not good for the country.
"You can't combine a field using a machine with just three moving parts," the Omaha attorney said. "You need thousands."
The farmers and ranchers who met in St. Louis are anxious to see if the federal government and courts agree.