Some members of the ag industry say the rapid consolidation of crop input companies raises concerns about competition and transparency.
During a Senate Judiciary Committee hearing on Tuesday, American Soybean Association President and Kentucky farmer Caleb Ragland told lawmakers prices have skyrocketed since 2020 while commodity prices have fallen. “In just 5 years, seed prices have increased by 18 percent, fertilizer by 37 percent, pesticides by 25 percent, machinery by 23 percent and interest expense by 37 percent.”
Iowa farmer and small ag business owner Noah Coppess says the lack of price transparency in the fertilizer industry drives up costs. “We struggle with the supply chain’s willingness to sell us product due to our low volume and competition with their bigger customers. In our area, there are several retail locations to buy fertilizer from. However, there are very few wholesale options. Regardless of who I work with, we will be competing with bigger customers and struggle to gain access.”
Corey Rosenbush, President and CEO of The Fertilizer Institute, says geopolitical conflicts are creating supply and demand issues. For example, “China is the world’s largest producer of fertilizers with about a third of all nitrogen and about 40 percent of phosphate production. They are currently restricting their exports forcing growers to source those tons elsewhere.”
And, he says, “Conflicts in the Middle East have interrupted Egyptian and North African nitrogen operations due to natural gas supply which is the feed stock for nitrogen largely coming from Israel. When Iran’s nuclear facilities were destroyed it also seriously disrupted their fertilizer production. Iran is the world’s second largest supplier of urea behind Russia.”
John Latham owns a seed dealership in north-central Iowa and says royalty costs have gotten out of control. “Unfortunately, many independent companies are going out of business as these multinational companies are becoming more powerful, and frankly, predatory. The seed corn industry is 90 percent controlled by two companies. Ninety percent, including their own brand and licensing.”
President and CEO of the American Seed Trade Association Andy LaVigne says there is a path forward to improve prices for farmers and seed producers. “Our advocacy applies to plant breeding innovations like gene editing and biotech crops. Reform is needed to ensure rapid pace of scientific innovation is not hampered by unjustified regulatory obstacles.”
Diana Moss, Vice President and director of competition policy with the Progressive Policy Institute says the factors eventually increase costs for consumers. “In light of these troubling trends, I believe we need to widen the lens on competition on agricultural inputs. Anti-trust’s role has been less than exemplary as concerns over excessive consolidation in ag biotech and potential price fixing in fertilizers has gone largely unpursued.”
All of the witnesses testified that unchecked consolidation also impacts the long-term health of rural economies.
