▶ 0:17:39Chair Grassley: This is kind of the order of business for today. I'll have an opening statement, senator durbin have an opening statement, then we have the chairman and ranking member of the subcommittees to make their opening statement. That is the antitrust subcommittee. And then we will swear in -- introduce and swearn the witnesses and take the testimony.
▶ 0:18:09Chair Grassley: Today the judiciary committee turns its attention to the problem iowa farmers talk to me about at the kitchen table and at the local co-op. This time of the year, farmers are buying the basics they needed to plant and harvest the crop. These farmers don't feel like they have a real choice, let alone a fair price. America's farmers are the most productive in the world.
▶ 0:18:40Chair Grassley: They take the risk, put in the work, and feed the united states and much of the world. They also operate on thin profit margins if they have a profit. If input costs go up, or switching suppliers is too hard, that pinch is felt by every farmer, family, and consumer in the world.
▶ 0:19:09Chair Grassley: Farmers across the country are shouldering significant higher input costs, particularly for seed fertilizer, according to the usda's agriculture price reports. The price indexes farmers pay for these categories were notably higher in january 2025 than at the start of 2021.
▶ 0:19:36Chair Grassley: This was obviously due in part to the record high inflation that took place during the last four years. Rising input prices squeeze already thin margins, especially when combined with volatile commodity markets, higher borrowing costs, and weather risks.
▶ 0:20:02Chair Grassley: Today's hearing will examine the drivers behind these trends, energy markets thainfluence nitrogen production, global supply disruptions, logistic bottlenecks, and market concentration.
▶ 0:20:20Chair Grassley: This hearing will evaluate practical steps that increase transparency and competition so processors and producers can remain viable and resilient. One such step would be to pass my legislation, the fertilizer research act.
▶ 0:20:43Chair Grassley: The bill would require department of agriculture to do a comprehensive study on fertilizer industry to shed light on the reason farmers are paying so much for fertilizer. The department would be to give recommendations --would be required to give recommendations on regular -- and do regular reporting to the public. This hearing is focused on competition issues.
▶ 0:21:15Chair Grassley: However, there is something that the trump administration can do right now to ease the burden for farmers, lowering the countervailing duties on phosphate from morocco. In 2024, the biden administration increased the duties on moroccan phosphate to 18%.
▶ 0:21:34Chair Grassley: The biden phosphate duties have only heard farmers by boxing out access to thismportant market on an essential input with no substitute. I'm calling on the trump administration to help ameran farmers and get rid of that phosphate duty. Over the last 20 years, a few big companies have bought up many of the smaller seed and chemical businesses.
▶ 0:22:06Chair Grassley: Those same companies now sell not just the seeds, but also the pesticides and digital farming tools that tell farmers what to plant and when. Because all of these products and data systems are tied together, it is hard for farmers to switch to a different brand. Their data and recommendations are locked into one company's system.
▶ 0:22:33Chair Grassley: On the fertilizer side, global energy and trade shocks hit prices fast. Regional markets, those prices can be slow to fall. On top of that are the contracts and dealer practices, like loyalty rebates, most favored clauses, and early-order calendars than can lock in a farm o local retailerr even when
▶ 0:23:06Chair Grassley: There is better options on paper. Now, nobody here wants to punish innovation. We want better yields, healthier soils, quality products. And we've been vastly improving in that area the last 40 years. But we also want competition that's fair, transparent, and local competition that a farmer can express when he or she sits down to make a purchase.
▶ 0:23:36Chair Grassley: Competition law is about making sure that the rules don't give a few players the power to decide what everyone else pays and what choices are even available. This hearing focuses on problems and workable solutions. First, transparency.
▶ 0:23:59Chair Grassley: Farmers deserve to know the effective price they are paying, including how rebates and clawbacks really work, and whether wholesale fertilizer declines are being passed through in a timely way. Second, portability.
▶ 0:24:15Chair Grassley: Farmers are to control their own data ad data and move it quickly, completely, and affordably, so they can seek independent economic advice -- economic advice - without fear of losing their history. Third, dealing. Contract should not as a de facto exclusive arrangement in rural counties where there might be one or two service outlets. And forth, accountability.
▶ 0:24:46Chair Grassley: When mergers don't deliver what was promised on paper, agencies should look back and fix it. I represent iowa, so I'm thinking about logistics, early-season timing, and the reality that at a loss multiline dealer can mean fewer options. But these issues across state lines, and the principles of the same whether you farm in iowa, illinois, or anywhere else.
▶ 0:25:19Chair Grassley: More sunlight, more choice. Less fineprint, level playing field. I appreciate senator durbin's partnership in setting this constructive bipartisan tone today. We'll hear from farmers, producers, industry experts.
▶ 0:25:36Chair Grassley: My goal is pretty simple, identify practical steps, legislative and regulatory, that respect innovation and property rights but restore real on-th e-ground competition. We are joined by gail slater, assistant attorney general for antitrust at the department of justice.
▶ 0:26:02Chair Grassley: Her presence is a strong showing of good faith and continued collaboration on ag antitrust issues that I hope to have with her and have had already. When farmers win fair choices at fair prices, communities win, american food security wins. I look forward to this discussion and I now turn to senator durbin.
▶ 0:26:28Sen. Durbin: Thanks, senator grassley. We are of different political faith, but we are friends, and we have many issues in common particularly as they relate to agriculture. I reluctantly concede that iowa is the number one producer of corn in the united states. And add quickly, illinois first in soybeans. We have one category where we are currently ahead of iowa, and I want to note it this week, and that is in the area of pumpkins.
▶ 0:26:58Sen. Durbin: We are proud of that fact. I thank you for this hearing. I think we need to take a look at the overall state of the farm economy as we address this particular challenge today. More than 50 years ago in 1973, the U.S. economy was in turmoil. Inflation and the cost of living were up, food prices were high, and american families were angry. At the same time, there was a global shortage of livestock feed, causing price of soybeans to spike. President nixon, in an effort to stem inflation, stopped all U.S.
▶ 0:27:28Sen. Durbin: Soybean exports, including those headed to japan, then our biggest customer this interruption lasted about three months. But for japan, it was the last straw. The japanese wanted a more reliable soybean supplier, so they found a handful of small soybean farms in brazil and started investing. Today, brazil is the second largest soybean producer in the world. And the biggest competitor to illinois soybean farms.
▶ 0:27:57Sen. Durbin: All it took was one presidential misstep and three months of trade uncertainty. Three months. Sadly, president trump is not a student of history. His tariffs on china, even as they change from one week to the next, our values for illinois farmers and good news for brazilian farmers -- are bad news for illinois farmers and good news for brazilian farmers.
▶ 0:28:21Sen. Durbin: Tariffs are also good news for argentina, which has sold $708 million more in soybeans to china this year. Yet president trump is propping up argentina's government with a $40 billion lifeline, and american farmers are to stay in business. The president is in asia for trait discussions with china. I hope they will be positive. But china is investing heavily in south american farming even building mega ports there to manage massive shipments of soybeans, corn, and sugar.
▶ 0:28:55Sen. Durbin: It is a replay of what we saw with japan and brazil in the 1970's. And china is playing the long game at the expense of american farmers. Illinois farmers are concerned about the increasing cost of doing business, especially the cost of seed, fertilizer, and equipment. One problem is there are just 3 -- probably just a few big companies in these sectors, where market concentration reduces competition.
▶ 0:29:21Sen. Durbin: The committee has examined these dynamics in other parts of the food industry such as meatpacking and groceries. It is a compex issue -- complex issue, which is why I joined chairman grassley back in april 2 look at why the department of justice planned to close its chicago field office that specializes in agriculture antitrust issues. The administration has not provided a response. Farmers need policy certainty from washington, but these past 10 months, that is not what we have given them.
▶ 0:29:53Sen. Durbin: The chairman and I cosponsored a bill to allow for year-round e-15 ethanol sales. It almost passed congress until donald trump and elon musk opposed it and stop the bill. 70% of farm workers in the united states are foreign-born. But the way this administration targeted immigrant farmworkers is another sign of how this administration values farmers.
▶ 0:30:21Sen. Durbin: Usda has forced out more than 15,000 employees since january, and farmers are seeing widespread delay in services as a result. My farmers, all farmers need help, but no amount of financial relief can replace lost markets, especially if they go from farmers to the handful of seed fertilizer and equipment companies. Big companies say their size help them compete and survive while providing consumers with a consistent, reliable product. Farmers disagree.
▶ 0:30:54Sen. Durbin: Saying seed and fertilizer are not affordable, coming with strict contracts and requirements that prevent farmers from exploring alternatives, pressure tactics that keep farmers cap as customers, and zero transparency on how personal farming data gets collected and sent to who knows where for who knows what. This month at the nobel prize for economics was awarded to three economists believe economic growth happens when conditions exist that allow new innovation and technology to rise up to replace old ones.
▶ 0:31:25Sen. Durbin: Today's witnesses will report on whether that is actually happening. Thank you, Mr. schiff.
▶ 0:31:30Chair Grassley: Before I call on senator lee, chairman of the subcommittee, and senator booker, the ranking member, I think we all saw the tv reports over the weekend that secretary bessent feels he is making progress with the chinese counterparts, and I suppose to some extent that comes from the fact that the president has used tariffs as a carrot and stick to make progress in this area.
▶ 0:31:57Chair Grassley: But we hope that when president trump gets done with his meeting with president xi this weekend that we have good reports on soybeans going into china. Senator lee.
▶ 0:32:09Sen. Lee: Thank you, chairman grassley and ranking member durbin, for holding this important hearing on competition in american agriculture. Agriculture is of course one of our greatest strengths as a country. Our farmers work harder to produce nutritious food, not just for families at home, but to feed hungry people around the world. And yet today, farmers are facing mounting pressure from market consolidation that's been squeezing them from both sides, creating a bottleneck.
▶ 0:32:42Sen. Lee: Companies that farmers buy from keep raising prices on some of the essential supplies they have to have in order to produce their commodities. At the same time, the buyers that farmers try to sell to continue to negotiate down, and they are negotiating down what they will pay for crops and for livestock. Farmers are caught in the middle. Very often watching their margins shrink year after year.
▶ 0:33:09Sen. Lee: Market consolidation has, of course, raised some additional concerns. Just two companies control about 90% of corn seed genetics. Four firms produce roughly 75% of the nitrogen fertilizer used in this country. In cattle, four meat packers handle about 85% of fed cattle a lot of capacity in america.
▶ 0:33:37Sen. Lee: Consolidation's impacts are felt not just on the farm, but all the way to the grocery store, where consumers face fewer choices and fairly consistently higher prices at the same time. In addition to consolidation, sometimes regulations add to the problem, even when this is unintended, as it sometimes is. Federal regulations often impose compliance costs that small operators simply can't shoulder.
▶ 0:34:08Sen. Lee: What often may start a safety measures can become barriers that keep new competitors out of the market altogether. They serve as a sort of moat, an anticompetitive moat around the industry. And they can exclude people from becoming competitors who might otherwise reach that status. This is why I've been an original cosponsor of the processing, revival, and interstate meet interstate memeat market exemption act, the prime act.
▶ 0:34:41Sen. Lee: It would let states sit their own inspection standards for meats processed and sold in a single state's boundaries. The constitution properly understood, understood based on its text and based on its original public meeting at the time of its adoption, simply does not support the proposition that federal regulatory authorities should extend to commerce, as to products that never cross state lines to begin with.
▶ 0:35:09Sen. Lee: By removing this onerous federal regulatory footprint and allowing states to play their role where it is appropriate for states to play, we can help small processes compete far more effectively. More processors would mean farmers would have more options as to where they could sell their products, which would strengthen local economies and build resilient food systems. We also need strong enforcement efforts to address some of our competition issues.
▶ 0:35:41Sen. Lee: President trump's task force is a joint effort between the U.S. department of justice antitrust division and the U.S. department of agriculture. It is an effort that brings together doj's enforcement authority and usda's deep knowledge of agricultural markets. It's a comprehensive approach designed to root out anticompetitive behavior. The task force is tackling these problems head on.
▶ 0:36:07Sen. Lee: Doj isn't as to getting price-fixing schemes -- doj is investigating price-fixing schemes and allegations of collusion, taking a fresh look at past mergers to see how they may have impacted the state of competition. They are examining whether dominant firms are sharing information in ways that let them illegally coordinate their actions.
▶ 0:36:26Sen. Lee: The task force is also going after predatory pricing, where dominant corporations deliberately sell at prices below cost to drive smaller rivals out of business so that they can then seize a dominant position. And of course addressing patent abuses that stifle innovation and keep new competitors locked out. The task force also recognizes that we need to address the structural problems that created these issues in the first place.
▶ 0:36:56Sen. Lee: Take the cost squeeze farmers face every planting season. When essential inputs such as seed and fertilizer become more expensive, farmers' profit margins inevitably shrink. These costs stay high of limited competition. When farmers face these market conditions, we are not just looking at an agricultural problem.
▶ 0:37:18Sen. Lee: We are looking at a broader threat that reaches across the economy and into our nations food security, something that we pay a lot of attention to in this town. Competitive markets are essential infrastructure, you might say, within our economy. When competition works come innovation flourishes, because new ideas can break through, because they have every incentive to do so. Consumers benefit from better products at fair prices.
▶ 0:37:50Sen. Lee: Rural communities prospered because farmers can earn a decent living. But when competition breaks down we tend to see the opposite of that. Costs climb while innovation stalls. Farmers and ranchers look at the shrinking markets and wonder if the next generation will have any future in farming at all. And we can't let that happen. Agricultural markets are not exempt from the rule of law, certainly not exempt from her antitrust statutes.
▶ 0:38:18Sen. Lee: -- our antitrust statutes will farmers, ranchers, and consumers deserve markets where success come from innovation, efficiency, and hardware, not from consolidation or collusion. I look forward to hearing from our witnesses today and doing all of this with an eye toward keeping american agriculture strong for generations to come. In order to do that, we all understand we need robust competition. Thank you, Mr. chairman.
▶ 0:38:48Sen. Booker: I'm grateful for that, Mr. chairman. I'm grateful for you in the ranking member for organizing what I think is a vitally important hearing. I want to thank senator mike lee. He and I have a whole bunch of overlap, a wide swath of agreement on the urgency of these issues, and a lot of common ideas about what we need to do about them. I want to start by saying something that doesn't really need to be said, because it is happening all over this country, but american farmers are in crisis.
▶ 0:39:19Sen. Booker: Farms in new jersey and across our country are facing unprecedented conditions, and we are seeing a loss of american family farmers in a wy that could -- way that could be described as an extinction-level event. These are incredible americans who scratch from the soil the food that feeds our families and makes us competitive globally. But year after year they have seen the cost of seed, fertilizer, fuel, and land go up, while the prices for their crops barely budge.
▶ 0:39:49Sen. Booker: And we are going to hear testimony today about the serious financial challenges facing our soybean farmers, really created by the trump administration's chaotic trade policies. And I want folks to hear that, because again, I've gone across this country in multiple states and met with soybean farmers, seen their true fealty to this nation and their mission.
▶ 0:40:14Sen. Booker: But while soybean farmers are struggling unnecessarily, we also need to remember that many other farmers, including farmers growing fruits and vegetables, are also struggling and in need of assistance of congress. They need action from this body. They need is to not only rightfully point out the problems, but come up with solutions.
▶ 0:40:35Sen. Booker: Because our food system today suffers from come as my colleague mike lee was saying, hyper concentration command full of megacorporations dominate every step of the supply chain, and that begins with seeds. The seed market, used to include hundreds of small, regionally-based seed companies, is controlled by a few powerful global corporations. Corteva, signeta.
▶ 0:41:06Sen. Booker: Three mergers and acquisitions and aggressive patent practices can these firms have driven of nearly all the smaller competitors. As a result, these companies can dictate what seeds are available, what trades they carry, ultimately what crops farmers grow. Seeds aren't just another input.
▶ 0:41:25Sen. Booker: They are unique because they are living organisms, the foundation of our food system, which used to be controlled and dictated by great americans, individual farmers who know their soil, who are stewards of the land. But now you have to go and have good seeds, but -- you have to have good seeds to grow, and they know that.
▶ 0:41:47Sen. Booker: For thousands of years, these stewards of our lands, these great americans saved seeds from one harvest of the next and fed america. But in recent decades, the fundamental right of farmers to save seeds has literally been stolen from them by corporate greed.
▶ 0:42:05Sen. Booker: On center locked up -- monsanto locked up seats with sweeping utility patents in suit american firms for doing what they've always done, saving and replanting the progeny of seeds they planted, their parents planted, their grandparents planted. Since the 1990's, companies have engineered to medically -- genetically modified seeds with traits like herbicide resistance.
▶ 0:42:31Sen. Booker: These patented seeds are bundled with their own pesticides by corporations, so farmers are forced to buy the whole package. This transformers in an expensive system they may not want or even need. Last november I sent a letter to the epa urging them to deny the pending read approval for the pesticide notorious for drifting and damaging neighboring farms of crops that aren't engineered to withstand it.
▶ 0:43:03Sen. Booker: This creates an inescapable lose-lose for our american farmers -- either buy the resistant seeds or riskier crops being destroyed by pesticide drift. It forces farmers into seed- pesticide bundles and expense corporate control. That's not real choice. That's not a free market. It's coercion through chemistry. Choice is disappearing across our farm economy. It is anti-free market.
▶ 0:43:34Sen. Booker: In our public research institutions who have the tools to innovate our steer deserve bayer and corteva's interest. These company's not only control funny, but distribution, blocking independent seeds from reaching the market. The result, fewer varieties, weaker resilience, and lost opportunities to adapt to a rapidly changing climate.
▶ 0:44:02Sen. Booker: This is corporate capture of the very first link in our food chain. And when you control the seed, you have unjust control over farmers, and ultimately you control the food. We are america. The home of the brave and the land of the free. But freedom is being stolen by this corporate concentration. It is not just farmers that are hurting because of this broken, corrupt system. Consumers also pay the price.
▶ 0:44:34Sen. Booker: We must do better. We must restore competition and fairness in the system. Because I know american farmers. Give them a fair playing field, and they can compete, and they can compete with the world. And when our farmers compete, all of america wins. So this means reinforcing our antitrust laws and placing a moratorium on any new big ag mergers.
▶ 0:45:01Sen. Booker: It means protecting farmers' rights to save seeds enters inputs based on need. It means continuing the ban on dicom beer and investing in public research that serves the public interest. Public research that serves farmers and not corporations. This is a moment of urgency.
▶ 0:45:25Sen. Booker: If we do not act now, we will reach a point where so many farmers are driven off the land that they have been on for generation after generation, land their grandfathers and great grandfathers and mothers cleared with their own bare hands. What is happening in america is dire. Congress must not just talk about the problems, we have got to fix them, or american farming as we know what will be forever changed. I look forward to hearing from the witnesses. Thank you, gentlemen.
▶ 0:45:55Chair Grassley: Thank you, senator booker. Now I will introduce the witnesses. Noah coppess is an iowa farmer. He owns coppess family farms. He also co-owns lincolnway ag services, a custom pesticide application business. He holds an associate degree in applied sciences and agricultural mechanization from kirkwood college.
▶ 0:46:28Chair Grassley: We also have john latham, another fellow iowan. Mr. latham is president of latham high-tech seeds, a company his grandparents founded in 1947. To this day, latham seed offers coin, soybean, alfalfa products. Mr.
▶ 0:46:52Chair Grassley: Latham holds a bachelor of science degree in agriculture business from iowa state university. Mr. caleb ragland is president of the american soybean association. He leads the kentucky livestock coalition. Caleb and his wife co-owns magnolia green and stock farm, where they raise soybeans, corn, winter wheat.
▶ 0:47:22Chair Grassley: Mr. ragland holds a bachelors degree in business management and economic finance from bryan college. Mr. corey rosenbusch, president and coo of the fertilizer institute. Mr.
▶ 0:47:39Chair Grassley: Rosenbusch previously led global coaching alliance and worked in indonesia on the usda's sponsored agricultural development initiative through the borlaug institute. Mr. rosenbusch holds a degree in international development from harvard and a bachelors of science degree in agricultural education from texas a&m.
▶ 0:48:09Chair Grassley: Lastly, or not lastly, andy lavigne is president and ceo of the american seed trade association, which represents companies involved in plant breeding, seed production, distribution, and related industries. Mr. lavigne holds a bachelor of arts degree in political science with a minor in economics from the university of florida. Lastly, we are joined by Dr.
▶ 0:48:41Chair Grassley: Diana moss, who serves as vice president and director of competition policy at the progressive policy institute. Her work includes studying antitrust enforcement and sector regulation, including agricultural. She previously served -- led to the american antitrust institute and served at the federal energy regulatory commission.
▶ 0:49:07Chair Grassley: She has a masters degree from the university of denver and a phd from colorado school of mines. I thank you all for appearing. Now I would ask you stand, and I will swear you in. Do you swear or affirm that the testimony you are about to give before this committee will be the truth, the whole truth, and nothing but the truth, so hope you god? They all answered affirmatively.
▶ 0:49:40Chair Grassley: Mr. coppess, you start with your testimony, please, and then we will go to latham and down the table that way. Proceed.
▶ 0:49:48Mr. Coppess: All right, hate, everybody-- hey, everybody. My name is noah coppess. My wife and I run full-time and agriculture business while raising our two teenage kids on the farm. We go commercial corn, seed corn, soybeans, and have a small cow herd. Today I'm here to represent my farm, my customers, my county, and my fellow members of the iowa farm bureau.
▶ 0:50:15Mr. Coppess: I've been involved in my family's row crop farm for my entire life. After college I spent 12 years working in the local farm equipment dealership before and after to work on our farm full-time. After getting our ag service business established, we have grown into the fertilizer and pesticide sales market and can discuss the challenges we have had and the pressures we see in our farm. The reality informing today is we are price takers rather than pacemakers. That is especially true when consolidation limits are options.
▶ 0:50:46Mr. Coppess: It is further complicated by a lack of price transparency. With farmers forced to operate at the liberty of the market at the front and back end, I have concerns without input and equipment supply chains and their ability to manipulate our costs. I recognize that consolidation can offer benefits including cost efficiencies and technological adoption, which are critical for meeting global food demand.
▶ 0:51:12Mr. Coppess: However, if the market becomes too constricted, it is ultimately the farmer who loses. Fertilizer pricing has become very volatile with at times wild swings in costs, varying as much as 25 to 50% from year to year. We are asked to prepare for fertilizer three to six month prior to it being applied to the soil and up to 14 months before the crop will be harvested.
▶ 0:51:36Mr. Coppess: Many of the contracts are written with a narrow window to get the product supplied or the contract expires and the input is repriced at a higher value, where monthly fees can be applied to extend the contract. Phosphate fertilizer has become a bare minimum usage fertilizer on our farm due to the cost. We have invested significant capital and time trying to find other ways to manage our phosphorus needs as the cost of this input is at a point of negative return.
▶ 0:52:06Mr. Coppess: Following a profitable 2022, farmers lost nearly a quarter of their income in just two years due is lumping commodity prices and record high input costs. That pain was felt on our farm, and we are feeling it today. Our ag business, we are a startup. We struggle with the supply chain's willingness to sell its product due to competition with bigger customers. In our area, there are several retail locations to buy fertilizer from.
▶ 0:52:35Mr. Coppess: There are very few wholesale options. Regardless of who I work with, we will be competing with bigger customers, therefore struggle to get access. We use john deere operations center to provide connectivity between our equipment, record data in our fields, and implement strategic placement of seed, fertilizer, and pesticides.
▶ 0:52:56Mr. Coppess: John deere's user agreement and its they enacted to all the data we record from our equipment -- have access to all the data we record from our quitman and the right to do as they please with it. We utilize the application of certain herbicides to the weeds the spare can see from a highly advanced camera and processing system. This has reduced the use of pesticides 50 to 80%.
▶ 0:53:22Mr. Coppess: It comes with a tech fee charged per acre so we are paying a usage fee on 50 to 80% of the fields that we don't even use the product for. We also have to pay a significant fee to purchase the upgrade on the machine at the beginning. There are other platforms were equipment manufacturers have gone to per-acreage usage fees we don't use on our farm. We are under heavy pressure to find safer and environmentally friendly ways to produce a product.
▶ 0:53:51Mr. Coppess: How is it we need to pay for the equipment up front and then pay a usage fee in addition to achieve these goals? We struggle in the seed industry with genetic options. If we want to trade a seed for pesticide or disease defense, we can be at the mercy of what one company is bought from another. We are getting genetically the same hybrid for multiple company's in a different back. This is prevalent on the soybean side. We lack options.
▶ 0:54:21Mr. Coppess: The consolidation of the companies has narrowed the developing of new genetic. On our farm, we raise non-gmo specialty crops when the opportunity aligns with our resources. We are struggling with advancements in seed genetics to support those areas with only a couple companies owning a majority of the seed production. We are at the mercy of what they choose to focus on. We have been planting the same soybean variety for five years now due to a lack of competitive options. This limits the resiliency of our farm.
▶ 0:54:52Mr. Coppess: It is time to assess what bargaining strength the farmer has today. We have no doubt consolidation will continue, and the challenge will makers and the ag industry will be to balance efficiency with fairness and resiliency. >> thank you, chairman grassley, senator durbin, the entire community for the opportunity to speak to today my name is john latham. I'm a third-generation seedsman in iowa.
▶ 0:55:23Mr. Coppess: My grandfather started the business in 1947. I own latham quality inc. With my wife and our brother. We sell corn,, soybeans and alfalfa seed under the latham brand in several midwest states. We operate a soybean production plant and have a corn breeding program. Independent companies are the lifeblood of rural america because we are connected to the farmer customers we serve. Independent seed companies can offer products better suited for specific geographies than multinationals.
▶ 0:55:54Mr. Coppess: Unfortunately, many independent countries are going out of business as the multinational countries have become more powerful, and frankly, predatory. The seed corn industry is 90% controlled by two companies. 90%, including their own brands and licensing. Due to this massive consolidation, the price of technology in our seeds has gone up significantly since 2021. These higher seed royalty prices are contributing to higher input costs for farmers and forcing many family farms to close.
▶ 0:56:26Mr. Coppess: Prices aren't just increasing for the newest and latest seed technology, but also older technologies that are going off patent or soon to be off patent. One example is nk-603, a corn product which went off patent in 2022. Farmers are being charged the highest royalties ever for this off patent technology.
▶ 0:56:46Mr. Coppess: More than 90% of biotech-treated corn in the united states is life estate -- glyphosate-resistant. As difficult as it has been for independent companies across america, I believe we have been hit the hardest. Latham started corn breeding in 2020 with the belief we could create niche corn products that could help customers fight corn diseases like tar spot.
▶ 0:57:14Mr. Coppess: We created products that weren't available from our suppliers, but are very modest -- our very modest corn breeding program was met with anger from the leading big ag provider. After a heated discussion in 2022, we were told latham's corn product would have the largest price increase in company history. And it did. Every technology, even older technologies that had gone off patent or worsen to go off patent, were increased.
▶ 0:57:43Mr. Coppess: Imagine having to license all of your technology from your largest competitor and that having to give your competitor internal company information, including the names and orders of all your customers. Imagine putting your hard-earned money into a breeding program to help your customers but being forced out by the dominant firms in the industry. Imagine being subjected to restrictive rebates programs that require you to sell near exclusively one companies technology to qualify for the rebates.
▶ 0:58:13Mr. Coppess: Imagine relying on his rebates to generate any kind of profit. Imagine having your entire year of profits being tied to off the record funding that could be taken away at any time by your largest competitor. Imagine being in a business where you don't know your cost of goods before you buy it, and your competitor can raise or cost at any time. Imagine being in a business where the older products that you can't sell increase in price, leaving you with a mountain of expensive inventory and higher prices for farmers.
▶ 0:58:45Mr. Coppess: Imagine being in a business whether technology royalty continues to increase even as it goes off patent. Seed prices increase even when commodity prices are low, and farmers can't even break even. Imagine being in an industry where it is impossible to capture off patent genetics because of restrictive licenses and scrambled codes of the seed depository.
▶ 0:59:09Mr. Coppess: He had the unfortunate realities of an independent seed company in an industry without competition --these are the unfortunate realities of an independent seed company in in and industry without cap addition or oversight. It is a national security risk were a biotech attack could threaten the nation's corn supply. I appreciate the opportunity to tell our story and the story of independent seed companies.
▶ 0:59:35Mr. Coppess: I do so at great personal risk, but I believe our company's story of independent companies and the farmer customers we serve must be told. I look forward to taking your questions. Thank you.
▶ 0:59:53Mr. Ragland: Good morning, chairman grassley, ranking member durbin, and members of the committee. It is an honor to join you to testify on behalf of the american soybean association regarding the state of the farm economy and the impact of rising input costs for farmers. My name is caleb ragland. I am a ninth-generation farmer from kentucky. I also serve as president of the asa. U.S. agriculture is facing significant challenges, which are illustrated by rapidly plunging margins for farmers.
▶ 1:00:26Mr. Ragland: Commodity prices are down nearly 50% from highs experienced just three years ago. And farm production costs continue to skyrocket for land, seeds, fertilizer,, pesticides and farm machinery, while high interest rates create additional pressure. For soybean farmers, the loss of our largest export market due to trade retaliation by china has made financial problems even worth.
▶ 1:00:52Mr. Ragland: We are hopeful that this market will be restored following the meeting between presidents trump and xi. Still, high production costs and market losses mean soybean farmers are expected to face a loss of around $109 an acre for this year's crop. Farmers are paying more than ever to grow their crops.
▶ 1:01:13Mr. Ragland: In just five years, seed prices have increased by 18%, fertilizer by 37%, pesticides by 25%, machinery by 23%, and interest expense by 37%. Seed is a key cost consideration for farmers. Advancements in seed technology and pesticides have delivered real ergonomic benefits but at an added cost.
▶ 1:01:41Mr. Ragland: The importance of seed quality and pesticides to farm production means farmers cannot cut these costs. Fertilizer is a major component of the overall production costs. Unlike most other farming inputs, fertilizer relies on global supply chains, which makes the cost unpredictable. This is also a significant input risk that can impact the farmer's ability to have an accurate budget.
▶ 1:02:11Mr. Ragland: While agribusiness has faced much consolidation, asa has not done analysis to provide the committee with an informed position regarding the impact of consolidation on our input costs. However, other factors are contributing to higher input costs. The U.S. imports $33 billion in inputs annually.
▶ 1:02:35Mr. Ragland: For high-cost products like fertilizer and pesticides, tariffs create a heavy financial burden. Ieepa tariffs have raised tariff input expenses for farmers from 1% to over 12% this year. Inputs also depend on the global market. Many fertilizers and half of the active ingredients for pesticides are imported.
▶ 1:03:01Mr. Ragland: Global dynamics like demand shifts and geopolitical issues also impact prices. The high cost of farm production has eroded the financial safety net of soybean farmers and has made it harder to weather trade-related market losses this year. Asa appreciates actions to investigate competition and market dynamics impacting input price increases.
▶ 1:03:28Mr. Ragland: Like the usda and doj competition partnership and the introduction of chairman grassley's fertilizer research act, which asa supports. If high input costs continue on this path, farm profitability for row crops like soybeans remains dire.
▶ 1:03:50Mr. Ragland: As congress and the administration continue to address the overall cost of from production, I would like to highlight three immediate achievable opportunities to improve economic conditions for soybean farmers. One, remove ieepa tariffs on critical inputs, machinery, and parts, which will immediately lower cost of production for farmers.
▶ 1:04:12Mr. Ragland: Two, the 45z tax credit and proposed rfs volumes will drive investment in soybean processing and biofuel production that needs to be finalized this year. And three, given the state of the farm economy, targeted farmer assistance is desperately needed to offset trade--related losses and negative bases being experienced in many regions. Thank you again for the opportunity to testify on behalf of U.S.
▶ 1:04:42Mr. Ragland: Soybean farmers regarding the impact of rising input costs on our industry. Asa appreciates the committee seeking to identify opportunities to improve the state of the farm economy. I look forward to your questions.
▶ 1:04:56Chair Grassley: Thank you, Mr. ragland. Now Mr. rosenbusch.
▶ 1:05:01Mr. Rosenbusch: Thank you, and good morning, chairman grassley, ranking member durbin, members of the committee. The fertilizer institute is made up of wholesalers, retailers, and manufacturers that serve american farmers. There are over 200 producers of fertilizers globally, and the U.S. is one of three countries in the world that has more than 20 unique companies producing fertilizer. Half of the crop yields in this world are made possible by the use of fertilizer.
▶ 1:05:30Mr. Rosenbusch: I grew up in a small rural texas town of glen rose where we raised hogs and my dad was the faa advisor. The highlight of this job is to get out in the real world and visit with growers. I was at a farmers co-op meeting and there were two critical conversations that came up. The lack of market demand for their crops, and high input costs. Fertilizer prices were at historic lows just a few years ago, followed by record highs.
▶ 1:06:00Mr. Rosenbusch: This kind of volatility is a challenge for growers and for the fertilizer industry, because without farmers there would be no fertilizer industry. We often speak of fertilizer as a single product, but it is many different materials and most of our focus today will be on the three macronutrientss, nitrogen, phosphate, and potash. There each different resource -- they are each different resource-dependent materials with very given markets.
▶ 1:06:28Mr. Rosenbusch: The united states has a significant production of nitrogen and phosphate. However, we have a small amount of production of potash and import almost 98% of our need, 87 of which comes from canada. The U.S. only accounts for about 7% of total global fertilizer production, and we are a net importer. Overall, 90% of all fertilizer used in this world is used outside of the united states.
▶ 1:06:55Mr. Rosenbusch: If you hear nothing else I say today, please hear this -- fertilizer is a globally traded commodity subject to fierce global competition and supply and demand. To understand that supply and demand, we have to begin with geopolitics. China is the world's largest producer of fertilizers, with about a third of all nitrogen and 40% of phosphate production. They are currently restricting exports, which are forcing growers to source those tons elsewhere.
▶ 1:07:25Mr. Rosenbusch: India, which is the second largest consumer of fertilizers behind china, procure their products centrally through the federal government, which is then heavily subsidized for their farmers. Conflict in the middle east have interrupted egyptian and north african nitrogen operations due to the natural gas supply, which is the feedstock for nitrogen, largely coming from israel. When I ran's nuclear facilities were destroyed recently, it seriously disrupted their fertilizer production.
▶ 1:07:55Mr. Rosenbusch: Iran is the world's second-largest supplier of urea, behind russia. Speaking of russia, it is the largest global exporter of fertilizer, and of course we all know they are still facing sanctions because of the war in ukraine. Russia also supplied a lot of europe's natural gas, which resulted in about 70% of europeans' nitrogen production being curtailed a few years ago. That made europe the new marginal producer.
▶ 1:08:26Mr. Rosenbusch: So you can see we have had significant global supply shortages for fertilizer, but we have also had demand growth. Fertilizer demand is tied to crop demand, and 50% of all the crop nutrients used in the united states is driven by corn. While commodity prices have been low, we saw 8 million additional planted acres of corn this year, which created even more demand for fertilizer.
▶ 1:08:51Mr. Rosenbusch: Many of the largest globally traded agricultural commodities that are experiencing price growth, thus creating high fertilizer demand, are not even grown in the united states, such as canola, coffee, and palm oil. We recognize how challenging and frustrating this must be for our customer partners at a time when they are experiencing very low prices for the crops that they grow.
▶ 1:09:15Mr. Rosenbusch: That is why we want to be a partner with our growers and with policymakers to develop solutions. In the interest of time, I will refer to my written testimony for a detailed this christian of those policy solutions, but I can summarize it by saying that fertilizer production facilities are very capital-intensive, sometimes costing as much as $5 billion for a nitrogen facility or 10 years to develop a potash or phosphate mine.
▶ 1:09:43Mr. Rosenbusch: I want to be very clear that fertilizer is a globally traded commodity, so while we cannot directly influence prices, we can bolster domestic supply to help mitigate geopolitical risks for our american farmers. Thank you.
▶ 1:10:04Mr. Lavigne: Thank you, chairman grassley, ranking member durbin, members of the committee for the opportunity to testify. I am andy lavigne, president and ceo of the american seed association. We are one of the oldest trade organizations in the united states. Membership consists of a 700 committees involved in seed production, distribution, plant breeding, biotechnology, and related industries in north america.
▶ 1:10:33Mr. Lavigne: Our members produce seed from alfalfa to zucchini and production systems from conventional to organic to biotechnology. Every season farmers choose seed s that have been approved through plant breeding and biotech and treatments. We ensure that farmers have access to reliable seed varieties, helping them reduce risk and boost productivity.
▶ 1:10:56Mr. Lavigne: Seed development and production begins with advanced breeding and research programs, moves to seed production with practices ranging from large-scale crops to hand-pollinated varieties then the seed crop is harvested and concludes with the conditioning, treatment, and testing of seed quality and purity prior to commercial sale.
▶ 1:11:16Mr. Lavigne: This process can take place in multiple countries as companies rely on different regional climates and leverage multiple growing seasons per year to accelerate the rate of research and seed production activities. Even with this highly efficient and optimized process, it can take eight to 10 years and several million dollars just to bring a new variety to market.
▶ 1:11:39Mr. Lavigne: Plant breeding and seeding improvement is an ongoing, iterative process that depends on the market, disease evolution, and constant fluctuations. In the case of seed companies developing biotech products or biotech seed, the cost of domestic and international regulatory compliance are significant. A study in 2022 estimates the cost and time to bring a new biotech treatment to market at roughly $50 million over 16 years.
▶ 1:12:08Mr. Lavigne: In export markets, particularly for a subset of biotech crops, the seed industry faces constraints from nontariff trade barriers including countries that deliberately use regulatory system to stymie american seed innovation and export of american products. The seed sector has a long history of delivering seed choice, ensuring seed performance for america's farmers and managers.
▶ 1:12:35Mr. Lavigne: Ensuring the best seed is available to meet the range of environments and practices. International trade and global movement of seed is critical to the U.S. seed industry to officially develop and commercialize improved varieties for U.S. farmers.
▶ 1:12:51Mr. Lavigne: Across all seed varieties, the continued tariff escalation on seed poses a unique challenge for the tomato seed can cross six or seven international borders for research and development to do seed multiplication before it is sold to a farmer. For each crossing, a tariff may be levied on that same seed, burdening the same producer multiple times. Our industry believes there is a path forward to alleviate some of the pressures that both farmers and seed producers currently face.
▶ 1:13:23Mr. Lavigne: First, we are advocating both domestically and internationally for risk-proportionate,- science-based regulatory reform for the associate cost that impact companies of all sizes. Our advocacy applies to ge editingg as well as biotech crops.
▶ 1:13:52Mr. Lavigne: Second, and I will hit this very quickly, but it is most important, is our investment in agricultural research, not only from the private sector, but from the public sector. Our partners and land-grant institutions and research institutions are vital in this process as we go forward in discovering the genetics-based science, and that needs to continue, and they are strained as all of you know right now.
▶ 1:14:20Mr. Lavigne: That research at the land-grant institution is even more important as we look at low-acreage crops, fruit and vegetables, grasses. It is important for the public-private partnership to bring improved varieties to the market place. From seed to table, the entire value chain is navigating pressures from the brunt of inflation and economic uncertainty. We know that farmers are taking this economic challenge head-on to continue feeding, fueling, and clothing the world.
▶ 1:14:54Mr. Lavigne: Producers are working to deliver high-quality U.S. farmers expect in season. Farmers are investing in potential, resilience to pests and weather and the ability to produce. They are investing in better seed for a better quality of life. Thank you to the members of the committee.
▶ 1:15:15Chair Grassley: Thank you Mr. lavigne. Dr. moss.
▶ 1:15:21Dr. Moss: I am the director at the progressive policy institute. Seeds and fertilizers are in a highly concentrated market with only a few firms. Both sectors have been the surface of massive consolidation and strategic business practices. The six large agricultural biotech submerged in the late 2010s to form the big three.
▶ 1:15:53Dr. Moss: Today two firms control 66% of the soybean market. Three companies control 86% of the cottonseed market. Fertilizer markets are also highly concentrated. The ratio is about 77% and the ratio for phosphates is 100%. These are big numbers.
▶ 1:16:17Dr. Moss: Highly concentrated markets are more conducive to anti-competitive coordination rather than the hard competition that lowers prices and royalty rates. What does concentration lead for food prices? Shocks to supply chains such as weather and disease and U.S. trade policies.
▶ 1:16:44Dr. Moss: As seed and fertilizer markets have become more concentrated, it is hard to dispute that business practices have played a major role. U.S. farmers struggle with the high cost of intermediate inputs such as pesticides and fertilizers which account for almost 40% of their total intermediate production costs.
▶ 1:17:04Dr. Moss: In the last 30 years the average price for genetically modified seed rose by almost 450% while commodities process -- prices increased by only 50%.
▶ 1:17:19Dr. Moss: Prices for phosphorus spite dramatically in two thousand eight, again in 2012 and again in 2020 two, raising concerns about the potential for collusion among global fertilizer producers. All of this puts the squeeze on farmers margins.
▶ 1:17:39Dr. Moss: The crop form index for the prices that farmers receive for their commodities has remained consistently below the index for prices paid by farmers for fuel, seeds and fertilizers. These competitive input prices initially harm farmers but they quickly translate into high food prices for consumers who are already grappling with the high cost of living.
▶ 1:18:06Dr. Moss: Consumers spent 30% of their budget on food, the third largest budget item behind housing and transportation. Public concern about food price inflation is at an all-time high. In light of these troubling trends, we need to widen the lens on competition and agricultural input.
▶ 1:18:26Dr. Moss: Antitrust rule has been less than exemplary as concerns over excessive consolidation and price-fixing has gone on pursuit. The agencies have also ignored other costs of consolidation such as delaying entry of generic gm seed. Bundled cropping systems that are engineered not to operate with other products and lock out smaller innovators.
▶ 1:18:54Dr. Moss: Antitrust has also ignored the loss of stability and resiliency in supply chains created by market power bottlenecks. These issues transcend traditional policy concerns. Farmers should be able to count on fair prices and sustainable margins. Consumers should be able to count on low food prices.
▶ 1:19:20Dr. Moss: Both farmers and consumers should be able to count on having choice and what they buy and who they buy from. A more coherent approach is to strengthen antitrust in strengthen antitrust enforcement. Another is to require better coordination between the doj, the ftc and the fda including better data collection to promote price transparency.
▶ 1:19:46Dr. Moss: We might also consider giving usda authority to intervene if consolidation raises supply chain safety, stability and resiliency issues. With farmers in the middle of this vortex, we should also be very worried that high concentration costs, prices and lack of choice risks a permanent loss of U.S. agricultural productive capacities as farmers hang up their hats and close down their farms.
▶ 1:20:15Dr. Moss: This means that promoting competition should garner broad support. I appreciate the opportunity to be here. I look forward to your questions.
▶ 1:20:29Chair Grassley: Thank all of you for staying within the five minutes. We will go into five minute rounds of questioning. You will see members in and out because there are two votes on the floor. We will take turns questioning. Mr. rosenbusch, in 2014 the obama administration discontinued annual reports on the fertilizer industry.
▶ 1:20:57Chair Grassley: Since then prices have become more and more opaque, making it harder for farmers to know if they are getting a fair deal. My fertilizer research act seeks to fill in these reporting gaps. Can you tell us what measures are being taken to ensure transparency in pricing mechanisms so farmers are not unfairly penalized by last-minute price increases?
▶ 1:21:25Mr. Rosenbusch: Mr. chairman, thank you for that question. We fully support your efforts to provide transparency to growers. Them having information about what's going on in the marketplace is critical. We have been working with your staff, your team and on the house side to reinstate the position at the U.S. department of agricultural that has been vacant for more than 20 years now that was focused on transparency.
▶ 1:21:57Mr. Rosenbusch: Growers having that independent source at the usda would be a tremendous benefit to growers and farmers to be able to recognize and understand all of these dynamics going on and help them make decisions.
▶ 1:22:08Chair Grassley: With that also cover price transparency?
▶ 1:22:13Mr. Rosenbusch: Yes, they would be doing research on prices globally. The united states. They would be looking at a variety of factors. I did a report on this a couple of years ago. We believe that position would be helpful long term.
▶ 1:22:27Chair Grassley: Dr. moss, in your opinion what types of reporting could provide the transparency in fertilizer markets for farmers looking for a fair price?
▶ 1:22:41Dr. Moss: Thank you for the question. Increasing price reporting to promote transparency would be incredibly helpful not only for members of the industry but for organizations like mine and university researchers to be able to do analysis of the markets and the price is emerging from highly concentrated markets. Price transparency remains a problem in agricultural inputs but also in cattle and ranching.
▶ 1:23:11Dr. Moss: I think that is the starting point is to improve and promote coherent, efficient price collection databases so that we can have better tools to work with.
▶ 1:23:25Chair Grassley: Mr. latham, Mr. coppess, major mergers in business transactions over the last decade reduced the big six agricultural companies to only four. U.S. department of agriculture economic research service reports that they account for more than half of U.S. sales of corn, soybean, cottonseed. What impact does this have on your business?
▶ 1:23:55Chair Grassley: Has there been an impact on the number of corn or soybean varieties available to farmers? >> thank you for the question. It has been a huge impact on our business. Especially the last five years. My brother and I were looking at prices over the last five years. Five years ago 42% of a bag of seed went to royalties. Now 70% goes to royalties.
▶ 1:24:26Chair Grassley: These are the existing products that we had five years ago. There has been no innovation or upgrade. There are some new products but overall from 42% to 70% has risen tremendously. They did it because commodity prices were good at the time a few years ago. They said farmers can afford it now so the prices went up significantly.
▶ 1:24:52Chair Grassley: Unfortunately, commodity prices are down and those prices have not gone down at all.
▶ 1:24:57Mr. Coppess: Thank you for the question. On the farm when we purchased seed, I have a relationship that I enjoy with a person that we work with and I am not looking to change that relationship. We have very little to no price bargaining. The price is the price and it has consistently gone up every year with some slight changes. It might be a little bit cheaper than next year. What we have seen no relief in price.
▶ 1:25:26Chair Grassley: Dr. moss, in your opinion if there are conditions that raise the cost or limit stacking with competing trades, is that a problem and should it trigger enforcement?
▶ 1:25:46Dr. Moss: I do believe that is a problem. One of the biggest issues we face is with a large mergers we now see highly integrated engineering systems of trades development, traded seed, chemicals and now farming.
▶ 1:26:06Dr. Moss: It is difficult for smaller innovators like independent seed companies or innovators to penetrate markets, to get a foothold and compete and effectively distribute their technologies when they are facing an enormous castle wall of a vertically integrated platform. If companies hold a dominant position in those markets, that makes the walls even harder to scale.
▶ 1:26:29Chair Grassley: Senator durbin, before you go, has the vote started yet? We will wait and see. If we do, then senator leeds will take.
▶ 1:26:47Chair Durbin: Thank you. Since the 1930's U.S. government-funded research has helped to boost our output by one hundred 70%. Today most agricultural research is funded by large private sector companies, not the government.
▶ 1:27:06Chair Durbin: Agricultural research funded has plummeted in the past 30 years while china's government investment in agricultural research has risen eight times, surpassing the U.S. 10 years over. China is the world's biggest funder of government-funded farm research. The trump administration and doge want the U.S.
▶ 1:27:30Chair Durbin: To close and consolidate a laboratory at the university of illinois for soybean germ connection -- collection, a genetic seed bank that has cured soybean disease, improved yields and invented new varieties and uses. If this lab were too close, there is only one of the remaining. Do you want to guess where it is? China.
▶ 1:28:00Chair Durbin: Does anyone on this panel think that is a good idea? Obviously not. Mr. latham, that kind of federal research has to be part of your calculation as well when you talk about innovation.
▶ 1:28:16Mr. Latham: I would love to see more investment in research from public universities. That would be very helpful.
▶ 1:28:28Chair Durbin: Dr. moss, a series of mergers produced three big companies that dominate different sectors. . They produced the big three in fertilizer. Should any trusted sources at the ftc have done more to block these mergers that produced the big three in seed and fertilizer?
▶ 1:28:57Dr. Moss: The answer is an unequivocal yes. These massive mergers which have completely restructured our industries are now responsible for high prices, limited choice and less effective innovation. The major problem with antitrust today is a very narrow view that antitrust takes in defining markets.
▶ 1:29:23Dr. Moss: The investors we have taken and the mergers were very targeted and small. We now know that high levels of concentration are not necessary to drive innovation. These mergers produce more harm than good.
▶ 1:29:48Chair Durbin: Do you believe that new legal tools are needed to stop the anti-competitive practices of these firms or is it a simple matter of oversight enforcement?
▶ 1:29:59Dr. Moss: Antitrust plays a very important role given the limited set of tools. The consumer welfare standard can approach concerns about high prices and lower quality and less innovation but the bottom line is most of antitrust enforcement just focuses on prices. The kinds of problems we see in food and agricultur are bottleneck supply chains, loss of stability, delay of generic entry.
▶ 1:30:27Dr. Moss: These are all things that are much harder for antitrust to approach in the normal course of a merger investigation or a monopolization investigation, which is why I mentioned we might want to start thinking about giving usda more authority.
▶ 1:30:39Chair Durbin: Mr. rosenbusch, how do you respond to those observations?
▶ 1:30:45Mr. Rosenbusch: Thank you for that question. We believe we need a strong domestic fertilizer industry to compete in the global marketplace especially when you are looking at countries that are often state owned enterprises producing fertilizers. We think the ftc has taken a close look at this. In the last two years the two acquisitions in this space were carefully studied by the ftc and reviewed.
▶ 1:31:13Mr. Rosenbusch: We have seen the usda go through a competitive analysis of the industry to ensure that we are competing on a global level and global supply and demand are not interrupted.
▶ 1:31:25Chair Durbin: The farmers buying your products say you are killing them. If you have consolidated so they have few choices and your prices are killing them. You say you are competitive globally. It does that help the farmer. I happen to know that the global market is competitive. How do you respond to that?
▶ 1:31:43Mr. Rosenbusch: We need the farmers to succeed.
▶ 1:31:47Chair Durbin: You are killing them with your prices.
▶ 1:31:50Mr. Rosenbusch: These are driven by global supply and demand and geopolitical events. Reliance on supply is a huge impact on that.
▶ 1:31:59Chair Durbin: Thank you. >> Mr. latham, I would like to start with you. One of the main barriers that independent seed companies face when stacking patented traits in this industry?
▶ 1:32:25Mr. Latham: There is a long list. A lot of areas I could go into. One thing that has hurt the industry in general we have these restrictive rebates we are under which really stifle competition because of a new company coming into the market and if the whole industry is under a rebate that if they go to the new innovator, they are going to lose their rebate and they can fall off a cliff.
▶ 1:32:51Mr. Latham: I think that is one thing that is really impacting the whole industry and there is a longer list. I know you have short time.
▶ 1:32:58Sen. Lee: When we think about intellectual property laws, they are kind of a paradox. The whole point of intellectual property laws is to give someone at least a temporary monopoly in something. On the other hand, they are procompetitive to the extent that it fosters innovation. In your view, how does our current intellectual property framework either help or hinder competition or innovation?
▶ 1:33:29Mr. Latham: I am all for intellectual property protection. Innovation, you have to have that to have innovation. Unfortunately we have seen some of these patents where the products get stacked with some new product only to be able to use to extend the patent so the patents go from 20 years to many more years.
▶ 1:33:51Mr. Latham: Unfortunately in 2014 a lot of different corn traits were not on patent and we still don't have the market for on patent technology. Something needs to fundamentally change.
▶ 1:34:03Sen. Lee: What about consolidation, consolidation among the major players in the seed industry. How does that influence your research and development strategy internally?
▶ 1:34:17Mr. Latham: Unfortunately on the corn side, 90% which includes licensing as well as their own brands. When you have that big of consolidation, it makes it difficult for any new innovator to get in the market especially if they wanted to trade or even conventional that makes it difficult. Since 2016 when the committee met last we have seen massive consolidation.
▶ 1:34:46Mr. Latham: We have seen less innovation and much higher prices for our customers.
▶ 1:34:50Sen. Lee: Those two things naturally lead one to another. They diminish competition which will always result in higher prices. Ort diminished quality. Sometimes both. Regardless of what the cause is, if it is prompted by an excessive regulatory footprint, that could do it.
▶ 1:35:20Sen. Lee: Regardless of the cause, there are fewer competitors, there is often less competition, and that causes other problems. Mr. coppess, have you noticed reduced competition for consolidation among local dealers or fewer independent options over time?
▶ 1:35:37Mr. Coppess: Thank you for the question. Yes. The independent seed companies, when somebody retires, often times that does not get replaced by a younger person or a new person taking on that business. That dealership just goes away often times.
▶ 1:35:57Sen. Lee: That is helpful. Mr. ragland, how does dependence on imported potash and nitrogen affect the U.S. grower's resilience?
▶ 1:36:12Mr. Ragland: As we mentioned in our testimony, the global market requires a lot of planning ahead. There are global forces at work and we have a limited number of options where we can purchase. The less competition come often times the higher the prices are. We have some data we provided that shows that since the ukraine war in particular, prices has spiked drastically.
▶ 1:36:44Mr. Ragland: They came back down but then they plateaued at a much higher price than they were before.
▶ 1:36:48Sen. Lee: They never fully retreated?
▶ 1:36:53Mr. Ragland: Not anywhere close. That has had a major impact.
▶ 1:36:57Sen. Lee: Reminiscent of what happened during covid. Mr. rosenbusch, how do dealer incentive programs work in practice? They limit fair competition?
▶ 1:37:09Mr. Rosenbusch: Thank you for that question. On the fertilizer side, we do not have dealer incentive practices.
▶ 1:37:17Sen. Lee: My time has expired. Senator klobuchar is next.
▶ 1:37:23Sen. Klobuchar: Thank you for holding this hearing. I am used to seeing many of you. I am the ranking member on ag. Mr. ragland has testified before. The head of antitrust for the justice department who has widespread support on this committee. One of my farmers described this situation as a perfect storm of ugly.
▶ 1:37:50Sen. Klobuchar: He talked about the input costs, some of which are caused by consolidation that we have been talking about so well today. Talking about what is happening with labor and the fact that we are missing some workers right now. I think there is another way this could be handled. Talked about the tariffs and iep a.
▶ 1:38:14Sen. Klobuchar: I know that with soybeans and I am glad there are discussions going on but even if somehow that market came back immediately, as you know it will not do, it is still poor for our farmers in terms of half of their market is china but the other half is other countries, nearly all of which are also subject to these tariffs.
▶ 1:38:36Sen. Klobuchar: I think that if you look at this as a whole and not just with soybeans but for other crops and what is happening with machine parts as you point out, that this is a really hard part, saying that is going on right now. I would like to see a reversal of these tariffs. That would be the quickest way to solve many of these problems. Let's start with market consolidation. I will start with you, Mr. latham. What would it mean to you to have real competition in this
▶ 1:39:05Seed Mr. Latham: ♪ -- in the Mr. latham: -- in the Mr. lseed market?
▶ 1:39:19Mr. Latham: If you had no consistent rebates, broad licensing, you would see a flood into the market which is vastly needed. With gene editing, there is a host of new technologies we could take advantage of. When you have a couple of different companies controlling the whole market, it makes it very difficult for a company to invest in new technology.
▶ 1:39:41Sen. Klobuchar: Thank you. That is helpful. How does consolidation affect the resiliency of the ag system?
▶ 1:39:51Dr. Moss: Consolidation is responsible in many food and ag supply chains for creating enormous bottlenecks where you have powerful companies and dominant firms controlling prices paid to producers but also controlling prices that consumers have to pay in the grocery store. These bottlenecks are really susceptible to instability.
▶ 1:40:23Dr. Moss: If a supply chain is hit by some sort of shock like weather or disease, they are very few other competitors to step in so supply chains go down. That is not only a national security issue but a health and human safety issue.
▶ 1:40:35Sen. Klobuchar: Just a quick answer on this because I called you as a witness many times when I chair to the committee, now working with senator blackburn. With reform to our antitrust laws with either the bill that senator grassley and I have introduced which is beyond specific industries, would that be helpful when it comes to these issues?
▶ 1:40:58Dr. Moss: Absolutely, yes. Anything to strengthen our laws.
▶ 1:41:02Sen. Klobuchar: Thank you. Mr. ragland, could you talk about the market for soybeans outside of china and what is happening with some of that as well? I think all of the focus gets on china but there are a lot of other countries.
▶ 1:41:16Mr. Ragland: Those markets outside of china are roughly half of our exports. China is the other half of exports. Those markets are fairly strong but they are only a limited amount of demand for our product. And that which is left by the lack of china involvement is very detrimental.
▶ 1:41:40Sen. Klobuchar: Are the tariffs under iepa affecting all of these markets? In my state about 60% of soybeans goes to exports which is pretty high. Do you want to talk about the export market which we chair export market which we cha erish, why that is such an integral part of american agriculture?
▶ 1:42:08Mr. Ragland: Yes. Soybeans are the largest ag export from this country. It is so vital to the economy not just in terms of agricultural but rural america.
▶ 1:42:25Mr. Ragland: That gaping hole that is left by the lack of china involvement right now is going to trickle down to rural communities and rural economies and have a detrimental impact because rural america, agricultural is the backbone of rural america.
▶ 1:42:40Sen. Klobuchar: I think we make about 20% more than we use here which allows us to keep going and why this is such a perfect storm of ugly. Thank you.
▶ 1:42:58Chair Grassley: On competition and price transparency. Go ahead. >> Mr. chairman, thank you for holding this issue on this timely issue. Agricultural is the bedrock of our economy. I am so proud of what our farmers do not just coast to coast the world.
▶ 1:43:29Chair Grassley: Ranking in the top states in the country alabama does when it comes to poultry, catfish, peanuts, cotton. We are really proud of the work that our farmers do. Alabama farmers are acutely familiar with the impact of skyrocketing input costs and what that has done on the bottom line.
▶ 1:43:49Chair Grassley: When we look at the last four years, knowing the input costs have gone up across the board but that our agriculture community has been hit the hardest. Just knowing that farmers are experiencing record-breaking yields but yet, losing hundreds of dollars per acre. When you try to square these things, we know that we have to do something.
▶ 1:44:15Chair Grassley: In fact, based on historical yields, every major rural crop will be produced at a loss in 2020 five. Food security is national security. We say that all the time. We know that our farmers are the bedrock of our rural communities. If farmers are not thriving, rural communities are not either. There is so much at stake in making sure we get this right.
▶ 1:44:44Chair Grassley: There are concerns with the limited number of companies that provide seed, fertilizer and crop protection products. That consolidation does not stop with inputs. We see the same consolidation in equipment manufacturers and I'm up on farms to a certain extent. Crop input suppliers, manufacturers and farmers have been forced to grow larger to achieve economies of scale and increase productivity while attempting to decrease costs. I want to start with Mr.
▶ 1:45:13Chair Grassley: Lavigne . It is clear that the primary driver of consolidation across the industry is a desire to lower costs. We have seen thus consolidation but instead of prices going down for farmers, we have seen the opposite. Can you speak to some of the outside pressures that have prevented the industry from achieving true economies of scale?
▶ 1:45:37Mr. Lavigne: Thank you for that question very much. As we continue to innovate in the agricultural industry especially on the seed side, the cost of regulatory compliance has increased dramatically.
▶ 1:45:56Mr. Lavigne: Working with the industry to ensure that the markets that we export to are open and have transparent processes to review those two products that come to market. We have seen that in china. We shared the chairman's comments that we hope to see good news this week because we were supposed to have those approvals in phase one and know we do not have those.
▶ 1:46:25Mr. Lavigne: The regulatory costs have become extremely high and challenging as we try to bring new products to market. I think we have several regulations in place that are out of date. We have a very strong safety record with the production of new varieties and biotech traits over the last several years over a framework that has not evolved.
▶ 1:46:51Mr. Lavigne: We have not changed that process to make it more efficient for new companies to come into the marketplace. The same with new varieties as we look at as john mentioned, gene editing as a tool, how is the fda and usda going to manage those policies coming into the marketplace? If they are too burdensome, it will be restricted to large companies that can afford the process.
▶ 1:47:17Sen. Britt: Thank you. I want to stay on that same. I have been encouraged by many other things that have been done. My question is in what ways do federal regulations impact your member company's to bring innovation and affordable products to market?
▶ 1:47:43Mr. Rosenbusch: Thank you for that question. It is a huge impact on those who want to grow supply domestically as we look to expand operations or build a new ammonia plant. You have environmental permitting that has to be streamlined. You also have new products. It is difficult to know where they get regulated.
▶ 1:48:06Mr. Rosenbusch: As you think about some bio stimulant products we are looking at or even tools that help nitrogen be more efficient, or ensuring that it is regulated at a state level which is where most fertilizer is regulated, it is critical to giving farmers additional tools especially in these difficult market times.
▶ 1:48:24Sen. Britt: Thank you so much.
▶ 1:48:26Chair Grassley: Senator booker.
▶ 1:48:30Sen. Booker: I want to thank all of the witnesses. Your testimony was invaluable. Mr. latham, a question for you. Despite two court orders in 2020 and 2024, because of the damage to neighboring farms causing crop loss, the epa recently proposed to reauthorize this herbicide.
▶ 1:49:00Sen. Booker: What impact would it have on your community and the farmers you say you saerve when they approve it for over-the-top use?
▶ 1:49:14Mr. Latham: Thank you for the question. We have seen enough issues. The technology is needed. But over the top because of so many issues that I don't think it should be approved for over-the-top.
▶ 1:49:30Sen. Booker: If it was, what would happen to those communities?
▶ 1:49:38Mr. Latham: We have seen drift into other crops and vineyards and different things so it has become an issue in rural areas.
▶ 1:49:45Sen. Booker: Knowing what you just stated about how harmful it is, it would be as a practical manner, if it is once again approved, would your company have any discretion in whether or not to sell those seeds?
▶ 1:50:03Mr. Latham: Unfortunately, we will probably have to sell it to make the rebates.
▶ 1:50:10Sen. Booker: That is stunning to me that something that you know should not be used but just to stay competitive, you would have to sell it. Does that strike you as indicative of free-market capitalism?
▶ 1:50:26Mr. Latham: It does not. We should be able to sell what our customers want and the best value to them.
▶ 1:50:32Sen. Booker: It is not just an assault on free-market capitalism but something alm ost akin to a system where you are told what you have to plant and use. That is not very american. Do you agree?
▶ 1:50:51Mr. Latham: I agree.
▶ 1:50:59Sen. Booker: I will be introducing legislation to encourage the doj to do a look back over the biggest mergers happening to unwind any mergers that they find cause material harm to competition or to farmers or workers or consumers. Dr.
▶ 1:51:21Sen. Booker: Moss, do you think this type of look back would be beneficial and if it was conducted, do you expect that many of the previously approved mergers would be found to have caused material harm?
▶ 1:51:34Dr. Moss: Thank you for that really good question. Yes, I think the value of retrospective studies of mergers is critical and invaluable. We end the economics community have encouraged enforcers to spend more time doing look back. Of course, they are research intensive. There are number of pieces of legislation that would fund those types of efforts.
▶ 1:52:04Dr. Moss: I think in the stage we are at with food and ag, the look back's would be important. It is up to the agencies to enforce presumption against mergers. They are still not there.
▶ 1:52:28Dr. Moss: Those structural presumptions for high concentration did not get a lot of intention and now we are paying the price for that.
▶ 1:52:36Sen. Booker: Farmers are paying a tremendous price for the concentration of these very powerful companies who are advocating for mergers down here in washington. The real people being harmed are the consumers and farmers themselves. That brings me to my final question. Noah, I appreciated your testimony.
▶ 1:53:05Sen. Booker: Given the consolidation within the agricultural industry, do you have any flexibility to purchase seeds or fertilizer from firms other than the big four?
▶ 1:53:16Mr. Coppess: Thank you for the question. We have retail locations that serve the needs for fertilizer. We don't have on farm storage to handle those products. It is unclear who the manufacturer is for that product. But you can tell when you go from retail to retail and the price is the same, that they are coming from the same place.
▶ 1:53:37Sen. Booker: I spend a lot of time in iowa and I met a lot of farmers from across the spectrum. This gentleman moved to me when he said five generations on his farm and I still remember seeing farmers who still had that original deed going back to the 1800s and the pride of every generation being able to not just make a living, but raise their families and strengthen their communities and provide for american hunger and demand
▶ 1:54:07Sen. Booker: And suddenly the economics of five generations barely adds up. It is no ability to serve out what you do for america. You are great patriots. I know how much you care about american farmers so I hope we can find some bipartisan work to do together to keep people like him at the center of our thought process. This is un-american. This is a perversion of the free market.
▶ 1:54:38Sen. Booker: If we give them a chance to compete, that promise is that the family will have another five years of success on that farm. >> thank you for calling this important hearing. I don't know that many people across the country have an understanding of how american agriculture touches that only their everyday lives but their security.
▶ 1:55:00Sen. Booker: I think this hearing is so important whether they live in iowa or florida which is where I am from, the winter strawberry capital of the world. Proud to be from there and also now represent florida as their newest U.S. senator. Agriculture is so important to our cities and states and our nation.
▶ 1:55:24Sen. Booker: If there is one take away from everything we are hearing and what every witness would agree with those that our food supply chain, its success and security is a matter of national security. Covid-19 put this into focus for us. We never really thought about where food came from, many people. Suddenly we were facing shortages and in many areas.
▶ 1:55:54Sen. Booker: Ppe, other products. And we had to start looking to china. So the same country responsible for covid, we had to import products from them to protect americans. We faced medicinal shortages. Where did we have to look? China. There are so many places when it came to a crisis that we had to go back to our foreign adversaries when we determined we had weaknesses in our supply chain.
▶ 1:56:25Sen. Booker: There is risk that comes with relying on a foreign country for critical supply. Corporations over time have focused more on lowering costs by off shoring, relying on foreign imports, minimizing inventories. We are now seeing how that affected jobs here in america, certainly. And there is interest in making sure we have fair markets, both domestically and internationally.
▶ 1:56:50Sen. Booker: But we cannot lose focus of the effects of that on our domestic supply and security and america's interests. It took that pressure test in 2020 to see how vulnerable we are now. One event can jeopardize our access to ppe, formula for infants.
▶ 1:57:13Sen. Booker: Imagine how important it is for american agriculture to prosper and that we have a food supply that withstands foreign interference. Florida is a big part of that. Not many people think of that when they think of florida. Think of the beach and the weather. But they do not think of agricultural. It is truly the lifeblood of our nation's agricultural. So much of the supply chain that goes to supporting growth in our farms comes from florida.
▶ 1:57:43Sen. Booker: When it comes to phosphate and the natural resources we need to put food on the table, florida leads the way. Truly, florida feeds the world in that sense. It is in the best interest of american farmers and our state and our country to pursue a balanced approach.
▶ 1:58:00Sen. Booker: That is one that unleashes the full potential of american mineral production and american products that support agriculture and our food supply, that at the same time ensuring we have a fair global market supply. There is no question that we must fortify our domestic food supply chain.
▶ 1:58:24Sen. Booker: And that starts with shoring up american products that are necessary to sustain a critical base of domestic food production. The industry that feeds us, that is life-sustaining, is much bigger than any economic impact statistic. We should take every step we can to make it more resilient. Securing the supply chain is a matter of national security and if american agricultur stumbles, our adversaries profit.
▶ 1:58:56Sen. Booker: We become more and more reliant on those adversaries. I hope to avoid all conflicts. I think that should be every americans interest. But should a conflict occur, we will start we can by -- we akened at the gate. We don't need the art of war to tell us that. That is common sense.
▶ 1:59:26Sen. Booker: A former national ffa president which I have great respect for, Mr. rosenbusch, thank you for being here. Is phosphate essential for growing food?
▶ 1:59:36Mr. Rosenbusch: Thank you. Plant city has more national ffa officers than any other city in the U.S..
▶ 1:59:44Sen. Moody: I did not know that.
▶ 1:59:46Mr. Rosenbusch: Phosphate is a critical mineral. You cannot grow half of the world's food on this planet without phosphate. Florida is the center of phosphate production. We have tremendous opportunities in this country to expand if we can remove some of the regulatory burden around buying and manufacturing.
▶ 2:00:04Sen. Moody: Ahead of the united states in terms of natural reserves, china, russia. So if we do not support and ensure that we have domestic production, we will become more reliant on china and russia, is that correct?
▶ 2:00:18Mr. Rosenbusch: Absolutely. China has restricted those exports. They present 40% of phosphates which is one of the nutrients that is really challenging growers right now. Holy one of the reasons they are doing so is to invest in lithium phosphate battery production. They definitely have policies impacting our growers.
▶ 2:00:40Sen. Moody: If I might just finish this one question. At the same time that we are making sure policies are supporting american growers and american products that support those growers, in order to keep input costs low, we also have to ensure there is a fair global market, is that correct?
▶ 2:01:00Mr. Rosenbusch: Yes.
▶ 2:01:01Chair Grassley: Thank you.
▶ 2:01:10Sen. Welch: I've missed some of the testimony. I want to start with Mr. coppess and Mr. latham. I also want to say, much of what the farming community is facing is a result of policies that have been allowed to take place by this congress and we revere the hard work of our farmers but we have to do some work of our own and address these policies. Both of you talked about the high input costs.
▶ 2:01:40Sen. Welch: What I understand is that it used to be $10 per bushel a few years ago. It is now $12. The selling price used to be $14. Now it is $10, is that right? So you are losing money on each one. We sold $12 billion to china. How many bushels have either of you sold to china this year?
▶ 2:02:13Mr. Coppess: When I drop it off, I am not sure where it is headed but to my knowledge we have not sold any.
▶ 2:02:21Sen. Welch: None. The market is destroyed because of the tariffs. This is killing these guys and we have to acknowledge that. There is discussion right now about taking some of the tariff money and sending it to farmers. I support getting a to farmers but let me -- I support getting aid to farmers, but let me ask this question.
▶ 2:02:49Sen. Welch: With the farmers prefer to sell or get a government handout?
▶ 2:02:53Mr. Coppess: Thank you for the question. We don't want to live by the government's hand. We are fine being the tip of the sword if we can correct the problems and have a better long-term future.
▶ 2:03:05Sen. Welch: If you want to work hard. You don't want a government handout? I am totally with you. You have some supplemental income in your state on agricultural land. It is when turbines -- wind turbines. Do they help farmers?
▶ 2:03:31Mr. Coppess: It is a discussion of whether or not it is a negative or positive thing.
▶ 2:03:37Sen. Welch: That takes away some income for farmers, is that correct?
▶ 2:03:46Mr. Coppess: On the farmland that has wind turbines, that is correct.
▶ 2:03:53Sen. Welch: Farmers are good at a lot of things but one of the things they are astonishing at is fixing things. Something goes wrong. You don't have the right to repair your equipment and it costs a ton. Sometimes you lose production time because your tractor is down and you have to wait for the dealer to come out. What I am introducing today, a right to repair. If you buy a tractor, 250 thousand dollars, you can fix it.
▶ 2:04:23Sen. Welch: You can do whatever it is to get the software you need. What is your view on right to repair?
▶ 2:04:28Mr. Coppess: Thank you for the question. The farmer needs the option to either repair himself or go to an independent repair shop if he does not have a relationship with his dealers.
▶ 2:04:39Sen. Welch: I agree with that. Our farmers across the country, vermont, iowa, you guys all work hard. You have to face all kinds of things. They are completely beyond your control. The things we have been talking about here, the tariffs, the high input prices, the concentrations so you cannot do seeds on your own, those are political decisions. Vermont is facing a crisis.
▶ 2:05:09Sen. Welch: The worst drought in 55 years. The dairy farmers do not have the crop. You have a lot of soybeans spilling over. Do you have any problem with the usda buying your soybeans to help us get through the winter and feet are -- feed our animals, one farmer helping another?
▶ 2:05:30Mr. Coppess: I would not have a problem with that.
▶ 2:05:33Sen. Welch: You would like it. You would be selling surplus and helping the vermont dairy farmers that are being crushed by the drought. I thank you for that. We have the phosphate. As you mentioned, that is everywhere. 14% increase in price in vermont. They have no control over that and most of what the import is from canada.
▶ 2:06:00Sen. Welch: Is dad in input cost that is also going up in iowa -- is that an input costs that is also going up in iowa?
▶ 2:06:08Mr. Coppess: It is. It is simply a negative return.
▶ 2:06:12Sen. Welch: Any thoughts on the administration position that we should start importing cattle from argentina? Is that going to help out?
▶ 2:06:20Mr. Coppess: Thank you for the question. At my farm we have 10 cowes. It is a small part of our farm. What I can tell you is if I am not a fan of the government dramatically changing the price of something we have. I have a 16-year-old and 14-year-old who are two cowes each into starting their herd.
▶ 2:06:45Mr. Coppess: It is a tough day for them to realize they have less than they were two days ago. We are not a fan of the government making those choices.
▶ 2:07:02Sen. Welch: I am with you. Mr. chairman, you are the best farmer in congress. You are patient with the president. I respect you for that. But I just want to say, I don't know him like you do. But the tariffs are really hurting us in vermont, the dairy farmers. This drought is just something they have to deal with.
▶ 2:07:26Sen. Welch: We would love to be able to get some of your surplus of grain to help our farmers who lost their crops. They cannot control the weather. But we can control some policies that will make it possible for another five generations to keep going. I really appreciate his hearing and your leadership on ag issues.
▶ 2:07:51Chair Grassley: Senator welch, I consistently express my views to the president's cabin about the impact to tariffs. I hear that all the time from audio once -- from iowans, farmers and non-farmers alike. I am going to continue to ask questions. I don't think anyone is coming back.
▶ 2:08:19Chair Grassley: As soon as I get called for this last vote, this will be the end of the meeting. I'm going to ask Mr. latham, across corn and soybeans today are there still barriers that keep you from offering a seed with a competitor stacked alongside another. Can you describe the specific data obligations?
▶ 2:08:46Mr. Latham: Thank you for the question. There are restrictive rebates that we fall under as an independent seed company. It happens a lot to farmers as well. But if we use an alternative and if we fall below, we could fall off a cliff and lose probability for the year.
▶ 2:09:09Chair Grassley: Mr. coppess, farmers report clawbacks and delays after trying rival products and services, can you give us some details of a recent incident where a supplier or retailer used allocation delays to punish switching?
▶ 2:09:29Mr. Coppess: Thank you for the question, senator. Often times our pricing structure on our farm is the more we buy, the cheaper it gets. I have not experienced a rebate call back but it is very clear when we are purchasing products that the more we buy, the cheaper the product gets, driving us down into we need to try to stack that to stay profitable and limits our options.
▶ 2:09:58Chair Grassley: Mr. lavigne, your organization says on its website that your membership includes 85% of all private U.S. seed companies operating in the U.S.. Is there a disagreement among your members regarding antitrust and intellectual-property issues , laws and enforcement?
▶ 2:10:23Mr. Lavigne: Thank you for that question. We are consistent with respect to intellectual property laws. It is a key pillar for our strategic plan. That is where our companies make investments as technology continues to improve and we bring more products to farmers. We also believe very strongly that our members have their own strategies for how they implement intellectual-property practices.
▶ 2:10:54Mr. Lavigne: We do not judge those by the company. That is not our position as an association. Whether they choose patents or licensing or trade secrets. Those are all tools that all innovators in the U.S. have available today.
▶ 2:11:12Chair Grassley: This question will be to Mr. rosenbusch and Mr. lavigne. Only one of the four largest companies controlling the ag market is U.S. stone. This does represent a national security risk to our country?
▶ 2:11:36Dr. Moss: I am happy to chime in on that. Having a concentrated market with just a few firms operating in that market absolutely represents a national security risk especially including agricultural. We talked about market power bottlenecks where producers and consumers are at the behest of a very powerful company in terms of prices paid for commodities and prices paid for food.
▶ 2:12:02Dr. Moss: So we have to be extra vigilant in food and agriculture to enforce our laws to ensure that we have competitive markets and the ability for smaller innovative entrance to get in and to have a go of it.
▶ 2:12:15Chair Grassley: Do the other two, if you want to add to that or express your own view. I invite the two of you to do that as well.
▶ 2:12:28Mr. Lavigne: Thank you. We obviously have respect for the U.S. laws and our own antitrust policies. We don't have a position with respect to how contracts are done or the pricing is done. Anything along those lines would be from a member standpoint. We want a strong intellectual property rights. We know the american market is one of the most competitive and we would like to continue that process.
▶ 2:12:57Mr. Lavigne: This is where the innovation in our industry is done. That is why we are the leaders globally. We would like to continue that as we go forward and hopefully that competition continues to stay strong.
▶ 2:13:09Chair Grassley: Do you have anything to add?
▶ 2:13:11Mr. Rosenbusch: Thank you. I would just say that on the fertilizer side most of the U.S. producers are U.S. owned.
▶ 2:13:21Chair Grassley: Mr. rosenbusch, when a single foreign supplier dominates an essential input and commerce imposes duties that might choke off that source, what specific safeguards would the fertilizer institute support to prevent a domestic monopoly and keep farmers supplied?
▶ 2:13:44Mr. Rosenbusch: Thank you for that question. The trade cases you are referring to are complex and have been adjudicated through the international trade commission. At the fertilizer institute we have both of those numbers on both sides of that case. A wise man once told me when you have two numbers on both sides of the issue, go with the number. We don't have an official policy on those cases.
▶ 2:14:12Mr. Rosenbusch: I will tell you there were many factors when that case came forward in 2020 that impact the market and impact of the supply. A lot of those tons ended up being filled by saudi arabia and other countries.
▶ 2:14:29Chair Grassley: We have some statements from people that want to get into the record. Statements and letters from several groups including the iowa corn growers association. I'm going to ask for unanimous consent that those statements be put in. There is nobody here to object. Dr.
▶ 2:14:58Chair Grassley: Moss, in plain english what is the line between licensing that speeds innovation and licensing that walls off rivals especially through stacked straits? Do you support measures similar to the nondiscriminatory agreements and if so, why?
▶ 2:15:22Dr. Moss: Thank you. Two things in response to that question. Antitrust is a very difficult dance with intellectual property law. Intellectual property laws are extremely important for spurring incentives to engage in r&d and innovate products.
▶ 2:15:40Dr. Moss: As we have seen in the pharmaceutical industry, there can absolutely be trouble ahead when firms use intellectual-property rights to shape or control how competition develops. We have seen that with product hopping and generic seats where generics are being kept out because a small changes in patents and another 20 years of patent protection. That is the first answer.
▶ 2:16:09Dr. Moss: The second is if we do get into the business of standard-setting organizations where the large biotech companies will be needing to figure out what the standards are, it will be a very difficult process given how much trade stacking there is. Determining what is a fair price for a license of course would be even more complex and require a good deal of government oversight. I would expect it would generate an enormous amount of controversy.
▶ 2:16:38Chair Grassley: My last question will be to Mr. lavigne and Dr. moss. I want to understand why generic insect resistant traits have not materialized despite patent exploration. I understand there does not appear to be a single generic insect resistant traits available to growers, notwithstanding frameworks touted as solutions. Why is this the case?
▶ 2:17:07Dr. Moss: My first response would be again, the ad biotech industry has borrowed a page from pharmaceuticals filing for new patents based on minor modifications which walks in another 30 years of the ability to mobilize prices. The ftc has a case looking into loyalty with pesticides. That is another way to limit the ability of farmers to switch.
▶ 2:17:38Dr. Moss: Lack of interoperability exacerbates this problem. We are nowhere near on top of these types of abuses of intellectual property that are really designed to stifle and control competition.
▶ 2:17:52Mr. Lavigne: Thank you, Mr. chairman. Just to reiterate, we are not in the practice of collecting what the practices are of members. It is against antitrust law. We support products coming to market. This is much more difficult than other chemicals or pharmaceuticals or things along those lines that come to the marketplace.
▶ 2:18:22Mr. Lavigne: You are looking at a lot of products where it may be the product what you are also looking for stacks of other products with that. Also newer varieties coming along, is someone going to stack them with a 20-year-old variety that is off patent? So the trait development process is an evolving process as we go along. It is not just stacked.
▶ 2:18:52Mr. Lavigne: We are not planting the same seed varieties we did 20 years ago. We are trying to bring the newest product to the farmer. The asset has been involved in driving the ag to get a platform for that marketplace. It has been a challenge. It is one that we need to work on with congress, the fda and usda to provide for those companies who choose to go to generic traits and varieties.
▶ 2:19:21Chair Grassley: Before I adjourn, I thank all of you for your contribution to this debate. If you have anything you did not get a chance to say, we will take it in writing. Senator durbin and I as well as the entire committee would like to thank each witness for taking the time to share their knowledge and expertise. Written questions can be submitted to the record for one week from today.
▶ 2:19:52Chair Grassley: I will ask the witness is to answer and return the questions to the committee within two weeks after you receive them. Thank you very much. Meeting adjourned. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap.org]