Merger bids amid the top six seed and chemical companies have been giving farmers cause for worry for months. On Tuesday, Sept. 20, representatives from agribusinesses, farmer organizations and others participated in a Senate Judiciary Hearing on “Consolidation and Competition in the U.S. Seed and Agrochemical Industry.” Here are some highlights of the witness testimony at this hearing. Senator Chuck Grassley (R-IA)“It’s no secret that I’ve long been concerned about concentration and competition in the agriculture sector. Farmers are unique, their profession involves accepting prices from input providers and commodity markets, while hoping for good weather in-between. Farmers don’t have the ability to simply raise the price of their crops when they sell them to pass on higher input costs.”Jim Blome, President and CEO of Bayer CropScience LP “As a native Iowan and farmer, I am highly optimistic for the future. By combining with Monsanto we will be well positioned to deliver on the innovation that farmers demand. Most importantly, this transaction brings together creative minds from two complementary segments of the industry to address the challenges farmers face today and in the future.” Tim Hassinger, President and CEO of Dow AgroSciences “In order for the U.S. to maintain its global leadership in agricultural production and technology, companies such as Dow and DuPont must find ways to more effectively and efficiently deliver new technologies and tools to the American farmer. With new technology, farmers will be able to improve productivity and deliver the quality and quantity of food the world needs. And that is the rationale behind our proposed merger.” Senator Patrick Leahy (D-VT) “These mega-mergers raise questions about competition, our food supply, nutrition, and the livelihood of our farm economy. A number of voices have expressed significant concerns that the proposed mergers would eliminate head-to-head competition, dampen innovation, reduce choices for farmers, increase prices for both farmers and their customers, and threaten our national security.”
The recent wave of mergers and acquisitions in the agriculture and chemical businesses won't raise prices for farmers or stifle innovation, industry executives told the Senate Judiciary Committee. Of the top six U.S. and European agribusiness companies, five are in talks for a merger or a buy-out. The trend in consolidation could fundamentally reshape the global agrochemical and bioengineered seed industries, with critics saying that less competition could mean bigger costs for farmers already suffering under low commodity prices. Executives from DuPont Co., Dow Chemical Co., Monsanto Co., Bayer AG and Syngenta Ag—all involved in proposed deals—told the panel that consolidation in the industry will create efficiencies to better bring new technologies to the market. But panel members were largely skeptical. “Further concentration in the industry will reduce choice and further raise the price of chemicals and seeds for farmers, which ultimately will affect choice and costs for consumers,” Committee Chairman Chuck Grassley (R-Iowa), said. Concern was bipartisan, with Sen. Amy Klobuchar (D-Minn.) noting that the hot merger and acquisition climate would leave only a few companies at the top. “Our farmers and consumers face enough challenges without the additional benefit of an anti-competitive market,” Klobuchar said. “The three transactions before us are substantial. Taken together they reduce the six major agribusiness firms to four.”
The U.S. Food and Drug Administration has issued draft guidance for industry (GFI #233) entitled, “Veterinary Feed Directive Common Format Questions and Answers” to provide animal drug sponsors who are seeking approval for use of their drug in or on animal feed as a veterinary feed directive (VFD) drug with a recommended common format for a fillable form -- called a VFD -- that can later be used by veterinarians to authorize the use of the sponsor’s drug in feed. The draft guidance describes the requirements for sponsor submission of a VFD to FDA as part of the application process for approval of a new animal drug for use in or on animal feed as a VFD drug, as well as the required and optional information to be included on the VFD. The draft guidance also provides examples that illustrate how a common VFD format might appear and how some of the information on the VFD may be pre-populated by a sponsor. By recommending a common format, the draft guidance is expected to help veterinarians, distributors (including feed mills), and animal producers quickly identify relevant information on a VFD order. A common format is also expected to reduce the risk of a veterinarian making an error or leaving out required information when filling in the form. Guidance documents represent the FDA’s current thinking on particular topics, policies, and regulatory issues. While “guidance for industry” documents are prepared primarily for industry, they also are used by FDA staff and other stakeholders to understand the agency’s interpretation of laws and policies.
Bayer AG Chief Executive Werner Baumann defended the company’s planned $66 billion acquisition of U.S. seed maker Monsanto Co. to a gathering of investors and analysts, while laying out increased midterm sales and earnings targets for the crop and pharmaceuticals businesses. “There was a perception that this was something that came out of the blue and was completely off strategy,” Mr. Baumann said of the Monsanto deal.“Just to set the record straight, we were crystal clear, in Sept 2014, that our objective is to build our life-sciences portfolio,” based on health care and agriculture, he added. Mr. Baumann’s comments came less than a week after Bayer announced an agreement to acquire Monsanto for $128 a share, following months of haggling between the two companies.
Sens. Thad Cochran (R., Miss.) and Jon Tester (D., Mont.) introduced legislation to amend a 95-year-old law to address technological advances now being used in livestock sales. The senators’ bill (S. 3350) would amend the Packers & Stockyards Act of 1921 to ensure that the law’s protections are extended to online or video livestock auctions and to ensure modern electronic banking options. “The Packers & Stockyards Act was written to protect the integrity of livestock sales and to promote competition. This legislation is intended to make certain that this law remains an effective tool for livestock producers by recognizing the benefits of modern technology,” Cochran said. “Plain and simple, the old laws on the books are all hat and no cattle. Every year when I buy my steer and hog to feed my family, I think about the folks who are buying and selling 1,000 head. These hardworking producers deserve a sensible process that keeps up with their changing industry,” Tester said. “This is a commonsense bill that will strengthen Montana’s livestock industry and ensure that it continues trucking into the future.” The Senate legislation would clarify that Packers & Stockyards Act provisions apply to online or video auctions. This change would ensure that producer protections provided at fixed-facility livestock markets are extended to those who buy or sell through online or video auctions.
The Trans Pacific Partnership (TPP) sets forth each nation’s tariff commitments. It is argued by many in agriculture that TPP is a good deal and needs all of our support. Others are more critical. The annex sections dealing with Japan appear to be fodder for those who have concern about the fairness of TPP regarding the United States. The section on rice, for example, does not appear to be great. While Canada has four chapters regarding tariff eliminations and tariff rate quotas and Chile has two, there are eight such chapters related to Japan. Among the eight chapters is Japan’s listing of its tariff schedule that numbers 1,133 pages. (HUGE!) The level of detail is mind boggling. It can be read from the Japanese schedule there are certain areas where it imposes substantial tariffs on the product. Certain meats presently have a 50% base rate tariff and in year 1 of the agreement, if ratified, the tariff on Cheek meat and head meat would drop from 50% to 39% and tariffs on such products would last not for 20 years. Even after 20 years a 9% tariff would apply to the product.
The Agricultural Development Bank of China [AGDBC.UL], one of the country's main policy lenders, agreed to loan at least 3 trillion yuan ($450 billion) by 2020 for the modernization of China's agriculture industry, state media said on Sunday. The Ministry of Agriculture and the bank, which lends in line with government policy, signed an agreement to protect national food security, support the sector doing business overseas and develop China's seed industry, according to the official Xinhua news agency. It was not immediately clear whether this commitment is separate from the bank's plan announced in May to lend 3 trillion yuan for poverty reduction via agricultural investments.The move reported on Sunday also aims to increase the agriculture industry's efficiency and foster rural income growth.
U.S. Department of Agriculture (USDA) Under Secretary for Natural Resources and Environment Robert Bonnie today announced a new three-year, $328 million restoration strategy to improve water quality and help coastal ecosystems heal following the Deepwater Horizon oil spill. The strategy will guide how USDA will steer conservation efforts on private lands in priority areas of the Gulf of Mexico region. As Gulf Coast Ecosystem Restoration Council, or RESTORE Council, USDA will work in partnership with the five Gulf States, other federal agencies, and landowners to explore opportunities for how the funding announced today can complement RESTORE Council and other funding from the settlement of the Deepwater Horizon oil spill. Bonnie announced the strategy today from a working forest near Carriere, Mississippi where the landowner has worked with USDA's Natural Resources Conservation Service (NRCS) to adopt a variety of conservation practices to improve water quality downstream.
The Senate has approved a bill to boost efforts to combat illegal wildlife poaching and trafficking, a growing problem worldwide with an estimated cost of up to $10 billion a year. The measure is aimed at protecting a variety of animals, from lions, elephants and rhinos to exotic birds and sharks. It supports ongoing work of a presidential task force on wildlife trafficking and directs U.S. agencies to work with countries affected by wildlife crime, such as the 2015 killing of Cecil the lion by an American during an illegal hunt in Zimbabwe. It also gives prosecutors more tools to go after individuals involved in trophy hunting and other crimes.
Half of private sector employees don’t have access to a workplace retirement savings plan, but by next year several states expect to have new plans up and running. Washington state is anticipating an early 2017 start date for its Small Business Retirement Marketplace, where financial services firms will offer low-cost plans to businesses with less than 100 employees, including solo business owners. The Marketplace will be voluntary for employers—and employees. By contrast, programs in Oregon and Illinois, with expected June 1, 2017 start dates, will be mandatory for employers, while employees will always be able to opt out. In Oregon, employees will be automatically enrolled into a plan that is pooled and professionally managed. In Illinois’ Secure Choice program, employees will be automatically enrolled in a Roth IRA-like savings account.