[Senate Hearing 119-307]
[From the U.S. Government Publishing Office]
S. Hrg. 119-307
PRESSURE COOKER: COMPETITION ISSUES
IN THE SEED AND FERTILIZER INDUSTRIES
=======================================================================
HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED NINETEENTH CONGRESS
FIRST SESSION
__________
OCTOBER 28, 2025
__________
Serial No. J-119-45
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.judiciary.senate.gov
www.govinfo.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
62-935 WASHINGTON : 2026
COMMITTEE ON THE JUDICIARY
CHARLES E. GRASSLEY, Iowa, Chairman
LINDSEY O. GRAHAM, South Carolina RICHARD J. DURBIN, Illinois,
JOHN CORNYN, Texas Ranking Member
MICHAEL S. LEE, Utah SHELDON WHITEHOUSE, Rhode Island
TED CRUZ, Texas AMY KLOBUCHAR, Minnesota
JOSH HAWLEY, Missouri CHRISTOPHER A. COONS, Delaware
THOM TILLIS, North Carolina RICHARD BLUMENTHAL, Connecticut
JOHN KENNEDY, Louisiana MAZIE K. HIRONO, Hawaii
MARSHA BLACKBURN, Tennessee CORY A. BOOKER, New Jersey
ERIC SCHMITT, Missouri ALEX PADILLA, California
KATIE BOYD BRITT, Alabama PETER WELCH, Vermont
ASHLEY MOODY, Florida ADAM B. SCHIFF, California
Kolan Davis, Chief Counsel and Staff Director
Joe Zogby, Democratic Chief Counsel and Staff Director
C O N T E N T S
----------
OPENING STATEMENTS
Page
Grassley, Hon. Charles E......................................... 1
Durbin, Hon. Richard J........................................... 3
Lee, Hon. Michael S.............................................. 4
Booker, Hon. Cory A.............................................. 6
WITNESSES
Coppess, Noah.................................................... 9
Prepared statement........................................... 37
Responses to written questions............................... 86
Latham, John..................................................... 11
Prepared statement........................................... 41
Responses to written questions............................... 91
LaVigne, Andrew.................................................. 15
Prepared statement........................................... 45
Responses to written questions............................... 101
Moss, Diana...................................................... 17
Prepared statement........................................... 49
Responses to written questions............................... 107
Ragland, Caleb................................................... 12
Prepared statement........................................... 58
Responses to written questions............................... 111
Rosenbusch, Corey................................................ 13
Prepared statement........................................... 68
Responses to written questions............................... 117
APPENDIX
Items submitted for the record................................... 123
PRESSURE COOKER: COMPETITION ISSUES
IN THE SEED AND FERTILIZER INDUSTRIES
----------
TUESDAY, OCTOBER 28, 2025
United States Senate,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice, at 10:17 a.m., in
Room SH-106, Hart Senate Office Building, Hon. Charles E.
Grassley, Chairman of the Committee, presiding.
Present: Senators Grassley [presiding], Cornyn, Lee,
Hawley, Britt, Moody, Durbin, Klobuchar, Blumenthal, Booker,
and Welch.
OPENING STATEMENT OF HON. CHARLES E. GRASSLEY,
A U.S. SENATOR FROM THE STATE OF IOWA
Chairman Grassley. This is kind of the order of business
for today. I'll have an opening statement, Senator Durbin will
have an opening statement, then we have the Chairman and
Ranking Member of the Subcommittees to make an opening
statement--that's the Antitrust Subcommittee--and then we'll
introduce and swear in the witnesses and take the testimony.
Today, the Judiciary Committee turns its attention to the
problem Iowa farmers talked to me about at the kitchen table
and at the local co-op. This time of the year, farmers are
buying the basics they need to plant and harvest a 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. They take the risk, put in the work, and feed the United
States and much of the world, but 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.
Farmers across the country are shouldering significant
higher input costs, particularly for seed and fertilizer.
According to the USDA's agricultural price reports, the price
indexes farmers pay for these categories were notably higher in
January 2025 than at the start of 2021. This was obviously due
in part to the record high inflation that took place during the
last 4 years. Rising input prices squeeze already thin margins,
especially when combined with volatile commodity markets,
higher borrowing costs, and weather risk. Today's hearing will
examine the drivers behind these trends: energy markets that
influence nitrogen production, global supply disruptions,
logistic bottlenecks, and market concentration. 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. 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 required to give
recommendations and do regular reporting to the public.
This hearing is focused on competition issues. However,
there is something that the Trump administration can do right
now to help 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 percent. The Biden phosphate duties have only hurt
farmers by boxing out access to this important market on an
essential input with no substitute. I'm calling on the Trump
administration to help American 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. 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 these products and data systems are tied
together, it's hard for farmers to switch to a different brand.
Their data and recommendations are locked in to one company's
system. 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, that can lock in a farm or a local retailer even
when there's 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 for the last 40 years, but we
also want competition that's fair, transparent, and local
competition that a farmer can actually express when he or she
sits down to make a purchase. Competition law is about making
sure the rules don't give a few players the power to decide
what everyone else pays and which choices are even available.
This hearing focuses on problems and workable solutions.
First, transparency: farmers deserve to know the effective
price that they're paying, including how rebates and clawbacks
really work, and whether wholesale fertilizer declines are
being passed through in a timely way. Second, portability:
farmers ought to control their own data and move it quickly,
completely, and affordably so they can seek independent
agronomic advice without fear of losing their history. Third,
fair dealing: contracts and dealer programs shouldn't operate
as a de facto exclusive arrangement in rural counties where
there might only be one or two full-service outlets. And
fourth, accountability: 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 anhydrous ammonia
logistics, early season timing, and the reality that a lost
multiline dealer can mean a long drive and fewer options. But
these issues cross State lines, and the principles are the same
whether you farm in Iowa, Illinois, or anywhere else. More
sunlight, more choice, less fine print, level playing fields.
I appreciate Senator Durbin's partnership in setting this
constructive, bipartisan tone today. We'll hear from farmers,
producers, and industry experts. My goal is pretty simple:
identify practical steps, legislative and regulatory, that
respect innovation and property rights, but restore real, on-
the-ground competition. We're also joined today by Gail Slater,
the assistant attorney general for antitrust at the Department
of Justice. 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, the rural communities win, consumers
win and American food security wins. I look forward to the
discussion and now turn to Senator Durbin.
OPENING STATEMENT OF HON. RICHARD J. DURBIN,
A U.S. SENATOR FROM THE STATE OFILLINOIS
Senator 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
concede--reluctantly, but concede--that Iowa is the number one
producer of corn among States----
[Laughter.]
Senator Durbin [continuing]. And add quickly, Illinois is
first in soybeans. We have one category where I think we are
comfortably ahead of Iowa and I want it noted this week, and
that's in the area of pumpkins, so 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 the
price of soybeans to spike. President Nixon, in an effort to
stem inflation, stopped all U.S. soybean exports, including
those headed to Japan, then our biggest customer. This
interruption lasted about 3 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 farmers. All it took was one
Presidential misstep and 3 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, are bad news for Illinois farmers and good news for
Brazilian farmers, who've seen their sales of soybeans to China
increase by $2 billion this year. 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 when American farmers
are struggling to stay in business. The President is in Asia
for trade discussions with China. I hope that they will be
positive, but China is now investing heavily in South American
farming, even building mega ports there to manage massive
shipments of soybeans, corn, and sugar. 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 that there are just three--pardon
me--just a few big companies in these sectors where market
concentration reduces competition. The Committee has examined
these dynamics in other parts of the food industry, such as
meat packing and groceries. It's a complex issue, which is why
I joined Chairman Grassley back in April to question why the
Department of Justice plan 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's not what we've given them. The Chairman
and I co-sponsored a bill to allow for year-round E15 ethanol
sales. It almost passed Congress until Donald Trump and Elon
Musk stopped it and opposed the bill. Farmers also face severe
workforce shortages. Seventy percent of farm workers in the
United States are foreign born, but the way this administration
targeted immigrant farm workers is another sign of how this
administration values farmers. 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 relief
payments simply go from farmers straight to the handful of
seed, fertilizer, and equipment companies. Big companies say
their size helps them compete and survive while providing
consumers with a consistent, reliable product. Farmers
disagree, saying feed, seed, and fertilizer are not affordable,
come with strict contracts and requirements that prevent
farmers from exploring the alternatives, pressure tactics that
keep farmers trapped as customers, and zero transparency on how
personal farming data gets collected and sent to who knows
where for who knows what.
This month, the Nobel Prize for Economics was awarded to
three economists who believe that economic growth happens when
conditions exist that allow new innovation and technology to
rise up to replace old ones. Today's witnesses will report on
whether that is actually happening. Thank you, Mr. Chairman.
Senator Grassley. Chairman 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 that he's 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, 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 to China. Senator Lee.
OPENING STATEMENT OF HON. MICHAEL S. LEE,
A U.S. SENATOR FROM THE STATE OF UTAH
Senator 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 hard to produce nutritious food,
not just for families here 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. The 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, buyers that farmers try to sell
to continue to negotiate down, and they're negotiating down
what they'll pay for crops and for livestock. Farmers are
caught in the middle, very often watching their margins shrink
year after year.
Market consolidation has, of course, raised some additional
concerns. Just two companies now control about 90 percent of
corn seed genetics. Four firms produce roughly 75 percent of
the nitrogen fertilizer used in this country. In cattle, four
meat packers handle about 85 percent of fed cattle slaughter
capacity in America. 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.
What often may start as 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.
Now, this is why I've been an original co-sponsor of the
Processing Revival and Intrastate Meat Market Exemption Act,
also known as the PRIME Act. This bill takes a commonsense
approach. It would let States set their own inspection
standards for meat that's processed and sold entirely within a
single State's boundaries. The Constitution, properly
understood and understood based on its text and based on its
original public meaning at the time of its adoption, simply
does not support the proposition that Federal regulatory
authority should extend to commerce as to products that never
cross State lines to begin with. By removing this onerous
Federal regulatory footprint and allowing States to play their
role where it's appropriate for States to play, we could help
small processors 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. President Trump's Agricultural
Competition Task Force is a joint effort between the U.S.
Department of Justice Antitrust Division and the U.S.
Department of Agriculture. It's 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. DOJ is
investigating price-fixing schemes and allegations of
collusion. They're taking a fresh look at past mergers to see
how they may have impacted the state of competition. They're
examining whether dominant firms are sharing information in
ways that let them illegally coordinate their actions. 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. 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 because of limited competition,
and when farmers face these market conditions, we're not just
looking at an agricultural problem, we're looking at a broader
threat that reaches across the economy and into our Nation's
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, innovation
flourishes because new ideas can break through because they
have every incentive to do so. Consumers benefit from better
products at fairer prices, rural communities prosper 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 those 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 our antitrust statutes. Farmers,
ranchers, and American consumers deserve markets where success
comes from innovation, efficiency, and hard work, not from
consolidation or collusion. I look forward to hearing from our
witnesses today and doing all this with an eye toward keeping
American agriculture strong for generations to come. In order
to do that, we all understand that we need robust competition.
Thank you, Mr. Chairman.
Chairman Grassley [off mic]. Now to the distinguished
Ranking Member of the Subcommittee on Antitrust, Competition
Policy, and Consumer Rights, Senator Booker.
OPENING STATEMENT OF HON. CORY A. BOOKER,
A U.S. SENATOR FROM THE STATE OF NEW JERSEY
Senator Booker. Mr. Chairman, I'm grateful for you and 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 of the
urgency of these issues, and a lot of common ideas about what
we need to do about them.
I want to just start by saying something that doesn't
really need to be said because it's happening all over this
country, but American farmers are in crisis. Farms in New
Jersey and across our country are facing unprecedented
conditions, and we're seeing a loss of American family farmers
in a 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. And we're 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 and seen their true fealty to this Nation and
their mission.
But while soybean farmers are struggling, unnecessarily so,
we need to also remember that many other farmers, including
farmers growing fruits and vegetables, are also struggling and
in need of assistance from Congress. They need action from this
body. They need not us to only rightfully point out the
problems, but come up with solutions because our food system
today suffers from, as my colleague, Mike Lee, was saying,
hyper concentration. A handful of mega corporations now
dominate every step of the supply chain, and that begins with
seeds. The seed March market, which used to include hundreds of
small, regionally based seed companies, is now controlled by
just a few powerful global corporations: Bayer, Corteva,
Syngenta. Through mergers and acquisitions and aggressive
patent practices, these firms have driven out nearly all the
smaller competitors. As a result, these three companies can
dictate what seeds are available, what traits they carry, and,
ultimately, what crops farmers grow.
Seeds aren't just another input. 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 you have to have good seeds to grow, and they know
that. For thousands of years, these stewards of our lands,
these great Americans, saved seeds from one harvest to the next
and fed America, but in recent decades, this fundamental right
of farmers to save seeds has literally been stolen from them by
corporate greed. Monsanto, now Bayer, locked up seeds with
sweeping utility patents and sued our American farmers for
doing what they had always done. Saving and replanting the
progeny of seeds that they planted, that their parents planted,
that their grandparents planted. Since the 1990's, companies
have engineered genetically modified seeds with desirable
traits, like herbicide tolerance or insect resistance. These
patented seeds are bundled with their own pesticides by
corporations so farmers are forced to buy the whole package.
This traps farmers 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 re-approval for the pesticide, dicamba.
Dicamba is notorious for drifting and damaging neighboring
farms with crops that aren't engineered to withstand it. This
creates an inescapable lose-lose for our American farmers,
either by dicamba-resistant seeds or risk your crops being
destroyed by pesticide drift. It forces farmers into seed
pesticide bundles and expands 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, and our public research institutions, who have the
tools to innovate, are steered to serve Bayer and Corteva's
interests. These corporations not only control research
funding, 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. 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, and it's not just farmers that are hurting
because of this broken, corrupt system. Consumers also pay the
price. We must do better. We must restore competition and
fairness in this 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 enforcing our antitrust laws and
placing a moratorium on any new Big Ag mergers. It means
protecting farmers' rights to save seeds and choose inputs
based on need. It means continuing the ban on dicamba and
investing in public research that serves the public interest,
public research that serves farmers and not corporations. This
is a moment of urgency. 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's happening in America is dire.
Congress must not just talk about the problems. We've got to
fix them, or American farming as we know it will be forever
changed.
I look forward to hearing from the witnesses. Thank you,
Chairman.
Chairman Grassley. Thank you, Senator Booker. Now I'll
introduce the witnesses.
Noah Coppess is an Iowa farmer. He co-owns Coppess Family
Farms, Cedar County. He also co-owns Lincoln Way Ag Services, a
grain-hauling custom pesticide application business. He holds
an associate degree in applied sciences and agricultural
mechanization from Kirkwood College. We also have John Latham,
another fellow Iowan. Mr. Latham is president of Latham Hi-Tech
Seeds, a company his grandparents founded in 1947. To this day,
Latham Seed offers corn, soybean, alfalfa cover crop products.
Mr. 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 also the Kentucky Livestock Coalition.
Caleb and his wife co-own Magnolia Green and Stock Farm where
they raise soybeans, corn, and winter wheat. Mr. Ragland holds
a bachelor's degree in business management and economic finance
from Bryan College. Mr. Corey Rosenbusch, president and CEO of
The Fertilizer Institute. Mr. Rosenbusch previously led the
Global Cold Chain Alliance and worked in Indonesia on the USDA-
sponsored Agricultural Development Initiative through the
Borlaug Institute. Mr. Rosenbusch holds a degree in
international development from Harvard and a Bachelor of
Science degree in agricultural education from Texas A&M.
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. Last, we're joined by Dr. 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
agriculture. She previously served and led the American
Antitrust Institute and served at the Federal Energy Regulatory
Commission. She has a master's degree from the University of
Denver and a Ph.D. from Colorado School of Mines.
I thank you all for appearing. Now I would ask you stand,
and I will swear you in.
[Witnesses are sworn in.]
Chairman Grassley. They all answered affirmatively. Mr.
Coppess, will you start out with your testimony please, and
then we'll go to Latham and down the table that way. Proceed.
STATEMENT OF NOAH COPPESS,
FARMER, COPPESS FAMILY FARMS, STANWOOD, IA
Mr. Coppess. All right. Hey, everybody. My name is Noah
Coppess. I'm a fifth-generation farmer from Cedar County, Iowa.
My wife, Jess, and I farm full time and run an agriculture
business while raising our two teenage kids, Tucker and Ellie,
on the farm. We grow 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. 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 I left 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 on our row crop farm.
The reality in farming today is we're price takers rather
than price makers. That's especially true when consolidation
limits our options. It's further complicated by lack of price
transparency. With farmers forced to operate at the liberty of
the market at the front and back end, I have concerns with our
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 our global food
demand. 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 and costs varying as much as 25 to 50 percent from
year to year. We are asked to prepay for fertilizer 3 to 6
months prior to it being applied to the soil and up to 14
months before the crop will be harvested. Many of the contracts
are written with a narrow window to get the products applied,
or the contract expires and the input is repriced at a higher
value or 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.
Following a profitable 2022, farmers lost nearly a quarter
of their income in just 2 years due to slumping commodity
prices and record high input costs. That pain was felt on our
farm, and we're feeling it today. In our ag business, we are a
startup. We struggle with the supply chain's willingness to
sell us product due to our low volume and competition with
their bigger customers. In our area, there are several retail
locations to buy fertilizer from. However, there are very few
wholesale options. Regardless of who I work with, we will be
competing with bigger customers, 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. John
Deere's user agreement mandates they have access to all of the
data we record from our equipment and the right to do as they
please with it. We utilize a tool called See & Spray to
minimize the application of certain herbicides to the weeds the
sprayer can see from a highly advanced camera and processing
system. This has reduced the use of pesticides by 50 to 80
percent. This machine comes with a tech fee charged per acre,
not applied, so we are paying a usage fee on 50 to 80 percent
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 where
equipment manufacturers have gone to per-acre usage fees that
we don't use on our farm. We are under heavy pressure to find
safer and environmentally friendly ways to produce our
products. How is it that 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 a traited seed for pesticide or disease defense, we can
be at the mercy of what one company has bought from another. In
effect, we are often getting, genetically, the same or similar
hybrid from multiple companies in a different bag. This
situation is prevalent in the soybean side within list traits
being slow to the marketplace and in rootworm protection with
corn. We lack options. The consolidation of the companies has
narrowed up the development of new genetics. On our farm, we
raise non-GMO and specialty crops when the opportunity aligns
with our resources. We're struggling with advancements in seed
genetics to support those areas. With only a couple companies
owning the majority of the seed production, we're at the mercy
of what they choose to focus on. We've been planting the same
soybean variety for 5 years now due to lack of competitive
options. This limits the resiliency of our farm.
It's time to take a look into these areas and assess what
bargaining strength the farmer has today. We have no doubt that
consolidation will continue, and the challenge for lawmakers
and the ag industry will be to balance the efficiency with
fairness and resiliency.
[The prepared statement of Mr. Coppess appears as a
submission for the record.]
Chairman Grassley [off mic]. Thank you, Mr. Coppess. Now,
Mr. Latham.
STATEMENT OF JOHN LATHAM,
PRESIDENT, LATHAM QUALITY, INC., ALEXANDER, IA
Mr. Latham. Thank you, Chairman Grassley, Senator Durbin,
and the entire Committee, for the opportunity to speak with you
today. My name is John Latham. I'm a third-generation seedsman
from Alexander in North Central Iowa. My grandfather, Willard
Latham, started our business in 1947. I own Latham Quality,
Incorporated, with my wife, Shannon, and my brother, Chris. Our
independent seed company sells corn, soybeans, and alfalfa seed
under the Latham brand in seven Upper Midwest States. We also
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 the multinationals. Unfortunately,
many independent companies are going out of business as these
multinational companies have become more powerful and, frankly,
predatory. The seed corn industry is 90 percent controlled by
two companies--90 percent--including their own brands and
licensing. Due to this massive consolidation, the price of
technology on 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.
Prices aren't just increasing for the newest and latest
seed technology, but also in older technologies that are going
off patent or soon to be off patent. One example is NK603, a
glyphosate-resistant corn product which went off patent in
2022. Farmers are being charged the highest royalties ever for
this off-patent technology. More than 90 percent of biotech-
traded corn in the United States is glyphosate resistant, so
farmers are paying billions of dollars for seed royalties on a
trait that has been off patent for 3 years.
As difficult as it's been for independent companies across
America, I believe we have been hit the hardest. Latham started
corn breeding in 2020 with the belief that we could create
niche corn products that could help our customers fight corn
diseases, like tar spot. We created products that weren't
available from our suppliers, but our very modest corn breeding
program was met with anger from our leading Big Ag provider.
After a heated discussion about our corn breeding program, in
April 2022, we were told Latham's corn products would have the
largest price increase in company history, and it did. Every
technology, even older technologies that had gone off patent or
soon to go off patent, were increased.
Imagine having to license all your technology from your
largest competitor and then 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 rebate programs that require you to sell, near
exclusively, one company's technology in order to qualify for
those rebates, and imagine relying on those rebates to generate
any kind of profit. Imagine having your entire year of profits
being tied to off-the-record funding that can be taken away at
any time by your largest competitor. Imagine being in a
business where you don't know your costs of goods before you
buy it and your competitor can raise your costs 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. Imagine
being in a business where the technology royalty continues to
increase even after 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. These are the
unfortunate realities of an independent seed company in an
industry without competition or oversight. Farmers are paying
the price with higher input prices. The lack of new breeding
programs and diversity of genetics is a national security risk
where a bioterror attack or disease could threaten the Nation's
corn supply.
I appreciate very much the opportunity to tell our story
and the story of other independent seed companies. I do so at
great personal risk, but I believe our company's story and the
story of independent, family owned seed companies, and the
farmer customers that we serve must be told. I look forward to
taking your questions. Thank you.
[The prepared statement of Mr. Latham appears as a
submission for the record.]
Chairman Grassley [off mic]. Thank you, Mr. Latham. Now,
Mr. Ragland.
STATEMENT OF CALEB RAGLAND, PRESIDENT,
AMERICAN SOYBEAN ASSOCIATION, MAGNOLIA, KY
Mr. Ragland. Good morning, Chairman Grassley, Ranking
Member Durbin, and Members of the Senate Judiciary Committee.
It is an honor to join you today to testify on behalf of the
American Soybean Association regarding the State of the farm
economy and the impacts of rising input costs for farmers. My
name is Caleb Ragland. I'm a ninth-generation farmer from
Kentucky. I also serve as president of ASA.
U.S. agriculture is facing significant challenges, which
are illustrated by rapidly plunging margins for farmers.
Commodity prices are down nearly 50 percent from highs
experienced just 3 years ago, and farm production costs
continue to skyrocket for land, seeds, fertilizers, 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 worse. 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. In
just 5 years, seed prices have increased by 18 percent,
fertilizer by 37 percent, pesticides by 25 percent, machinery
by 23 percent, and interest expense by 37 percent. Seed is a
key cost consideration for farmers. Advancements in seed
technology and pesticides have delivered real agronomic
benefits but at an added cost. The importance of seed quality
and pesticides to crop protection means farmers cannot cut
these costs. Fertilizer is a major component of overall
production cost. 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.
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
cost. However, other factors are contributing to higher input
cost. The U.S. imports $33 billion in inputs annually. For
high-cost products, like fertilizer and pesticides, tariffs
create a heavy financial burden. IEEPA tariffs have raised
tariff-related input expenses for farmers from 1 percent to
over 12 percent this year. Inputs also depend on the global
market. Many fertilizers and half of the active ingredients for
pesticides are imported. 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, 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. As
Congress and the administration continue to address the overall
cost of farm 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. 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 farm assistance is desperately needed to offset trade-
related losses and negative basis being experienced in many
regions.
Thank you again for the opportunity to testify on behalf of
U.S. soybean farmers regarding the impact of rising input cost
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.
[The prepared statement of Mr. Ragland appears as a
submission for the record.]
Chairman Grassley. Thank you, Mr. Ragland. Now, Mr.
Rosenbusch.
STATEMENT OF COREY ROSENBUSCH, CEO,
THE FERTILIZER INSTITUTE, ARLINGTON, VA
Mr. Rosenbusch. Thank you, and good morning, Chairman
Grassley, Ranking Member Durbin, and Members of the Committee.
The Fertilizer Institute is made up of importers, wholesalers,
retailers, and manufacturers that serve our American farmers.
There are over 200 producers of fertilizers globally, and the
U.S. is 1 of 3 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. I
grew up in a small rural Texas town of Glenrose where we raised
hogs and my dad was the FFA advisor, so the highlight of this
job is to get out into the real world and visit with growers. I
was recently at a farmer's 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. 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
actually many different materials, and most of our focus today
will be on the three macronutrients: nitrogen, phosphate, and
potash. They're each different resource-dependent materials
with very different markets.
The United States does have significant production of
nitrogen in phosphate. However, we only have a small amount of
production of potash and import almost 98 percent of our need,
87 of which percent comes from Canada. The U.S. only accounts
for about 7 percent of total global fertilizer production, and
we are a net importer. Overall, 90 percent of all fertilizer
used in this world is used outside of the United States, so 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 percent
of phosphate production. They are currently restricting their
exports, which are forcing growers to source those tons
elsewhere. 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. Conflicts 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 Iran's nuclear facilities were
destroyed recently, it also seriously disrupted their
fertilizer production. Iran is the world's second largest
supplier of urea behind Russia. So, speaking of Russia, it's
the largest global exporter of fertilizer, and, of course, we
all know they're still facing sanctions because of the War in
Ukraine. Russia also supplied a lot of Europe's natural gas,
which resulted in about 70 percent of Europeans' nitrogen
production being curtailed a few years ago. That made Europe
the new marginal producer.
So, you can see we've had significant global supply
shortages for fertilizer, but we've also had demand growth.
Fertilizer demand is tied to crop demand, and 50 percent of all
the crop nutrients used in the United States is driven by corn,
and while commodity prices have been low, we saw 8 million
additional planted acres of corn this year, which created even
more demand for fertilizer. 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're experiencing very low
prices for the crops that they grow, and that's why we want to
be a partner with our growers and with policymakers to develop
some solutions.
In the interest of time, I'll refer to my written testimony
for a detailed description 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. But I do 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.
[The prepared statement of Mr. Rosenbusch appears as a
submission for the record.]
Chairman Grassley [off mic]. Thank you, Mr. Rosenbusch.
Now, Mr. LaVigne.
STATEMENT OF ANDREW LaVIGNE, PRESIDENT & CEO, AMERICAN SEED
ASSOCIATION, ALEXANDRIA, VA
Mr. LaVigne. Thank you, Chairman Grassley, Ranking Member
Durbin, and Members of the Committee for the opportunity to
testify for the hearing today. I'm Andy LaVigne, president and
CEO of the American Seed Trade Association, or better known as
ASTA. We were founded in 1883 and are one of the oldest trade
organizations in the United States. Its membership consists of
nearly 700 companies involved in seed production, distribution,
plant breeding, biotechnology, and related industries in North
America. Our members produce seed, from alfalfa to zucchini,
and in production systems, from conventional to organic to
biotechnology.
Every season, farmers choose seeds that have been improved
through plant breeding, biotech, and seed treatments. Our
members ensure that farmers have access to reliable, resilient
seed varieties tailored to local growing conditions, helping
them reduce risk and boost crop productivity. 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 conditioning, treatment,
and testing of the seed quality and purity prior to commercial
sale. This process could take place in multiple countries as
companies rely on different regional climates and leverage
multiple growing seasons per year to accelerate the rate of
both research and seed production activities. Even with this
highly efficient and optimized process, it can take 8 to 10
years and several million dollars just to bring a new variety
to market. Plant breeding and seed improvements is an ongoing
iterative process that depends on the market, pest and 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 trade to
market at roughly $115 million and over 16 years. In export
markets, particularly for a subset of biotech crops, the seed
industry faces severe constraints from non-tariff trade
barriers, including countries that deliberately use their
regulatory system to stymie American seed innovation and
exports of American grain products.
The seed sector has a long history of delivering seed
choice and ensuring seed performance for America's farmers,
gardeners, and landscape managers, ensuring the best seed is
available to meet the needs of the wide range of environments,
soil types, and management practices. International trade and
global movement of seed is critical to the U.S. seed industry
to efficiently develop and commercialize and improve varieties
for U.S. farmers. Across all seed varieties, the continued
escalation of tariffs on seed poses a unique challenge. For
example, a tomato seed can cross six or seven different
international borders for research and development to do seed
multiplication and clean and package seed before it's sold to a
farmer. For each crossing, a tariff may be levied on that same
seed, burdening the same seed producer multiple times.
Our industry believes there's a path forward to alleviate
some of the pressures that both farmers and seed producers
currently face. First, we're advocating, both domestically and
internationally, for risk-proportionate, science-based
regulatory reform to right-size regulatory compliance processes
and the associated costs that impact companies of all sizes.
Our advocacy applies to plant breeding innovations, like gene
editing, as well as biotech crops. Reform is needed to ensure
that rapid pace of scientific innovation is not hampered by
unjustified regulatory obstacles. Second, and I'll hit this
very quickly, but most important is our investment in
agricultural research, not only from the private sector but
from the public sector. Our partners in our land grant
institutions and our research institutions are vital in this
process as we go forward in discovering the genetics-based
science, and that needs to continue, and they're stressed as
all of you know right now. Research at the land grant
institution is even more important as we look at our lower
acreage crops. Fruits and vegetables, forages, grasses, turf is
very important to help in that public/private partnership to
bring improved varieties to the marketplace.
So, in closing, from seed to table, the entire agricultural
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. Seed producers are weathering it alongside
them while working to deliver the high-quality, professionally
produced seed U.S. farmers expect season after season. And when
farmers buy that bag of seed, they're investing in yield
potential, resilience to pest and weather, and the ability to
produce more with less. They're investing in better seed for
better crops for better quality of life. Thank you, Chairman
Grassley, Ranking Member Durbin, and Members of the Committee.
I look forward to answering the questions.
[The prepared statement of Mr. LaVigne appears as a
submission for the record.]
Chairman Grassley. Thank you, Mr. LaVigne. Now, Dr. Moss.
STATEMENT OF DIANA MOSS, VICE PRESIDENT AND DIRECTOR OF
COMPETITION POLICY, PROGRESSIVE POLICY INSTITUTE, WASHINGTON,
DC
Dr. Moss. Thank you, Chairman Grassley, Ranking Member
Durbin, and Members of the Committee. It's an honor to be here
today. I am Diana Moss, director of competition policy at the
Progressive Policy Institute.
Seeds and fertilizers feature highly concentrated markets
with only a few firms, high prices, and little choice. Both
sectors have been the subject of massive consolidation and
strategic business practices. In the late 2010's, the six large
agricultural biotechs merged to form the Big Three. Today, two
firms control 72 percent of the corn seed market and 66 percent
of the soybean market. Three firms control 83 percent of the
cotton seed market. Fertilizer markets are also highly
concentrated. The four-firm ratio for nitrogen in the U.S. is
about 77 percent, and the four-firm ratio for potash and
phosphates is 100 percent. These are big numbers. Highly
concentrated markets are far more conducive to anticompetitive
coordination rather than the hard-nosed competition that lowers
prices, lowers licensing fees, tech fees, and royalty rates.
So, what does high concentration mean for input costs and
food prices? To be sure, they are affected by the dynamics of
supply and demand, shocks to supply chains, such as weather and
disease and U.S. trade policies. But as seed and fertilizer
markets have become more concentrated, it is hard to dispute
that consolidation and business practices have played a major
role. U.S. farmers struggle with the high cost of intermediate
inputs, such as seeds, pesticides, and fertilizers, which
account for almost 40 percent of their total intermediate
production costs. In the last 30 years, the average price
farmers paid for genetically modified seed rose by almost 450
percent, while their commodity prices increased by only 50
percent. In fertilizers, prices for phosphorus, potash,
nitrogen spiked dramatically in 2008, again in 2012, and again
in 2022, raising concerns about the potential for collusion
amongst global fertilizer producers. All of this puts the
squeeze on farmers' margins.
The Crop Farm Index for prices farmers receive for their
commodities has remained consistently below the index for
prices paid by farmers for feed, fuels, seeds, and fertilizers.
These supra-competitive input prices initially harm farmers,
but they quickly translate into high food prices for consumers
who are already grappling with a high cost of living. Consumers
spend 13 percent of their limited budgets 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, I believe we need to
widen the lens on competition and agricultural inputs.
Antitrust's role has been less than exemplary as concerns over
excessive consolidation in ag biotech and potential price
fixing in fertilizers has gone largely unpursued. 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. Antitrust has also ignored the loss of
stability and resiliency in supply chains that are created by
market power bottlenecks. These issues now transcend
traditional competition policy concerns.
U.S. farmers should be able to count on fair commodity
prices, input costs, and sustainable margins. Consumers should
be able to count on low food prices. Both farmers and
consumers--most important--should be able to count on having
choice in what they buy and who they buy it from. A more
coherent policy approach is to strengthen antitrust
enforcement. Another approach is to require more or better
coordination between the DOJ, the FTC, and USDA, including
better data collection to promote price transparency. 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 a lack of choice risk the permanent loss of U.S.
agricultural productive capacities if farmers hang up their
hats and close down their farms. This all means that promoting
competition should garner broad bipartisan support.
I appreciate the opportunity to appear here today and look
forward to your questions.
[The prepared statement of Dr. Moss appears as a submission
for the record.]
Chairman Grassley. I compliment all of you for staying
within the 5 minutes. We're going to have 5-minute rounds of
questioning. You'll see Members in and out because there's two
votes on the floor, so we'll take turns questioning.
Mr. Rosenbusch, in 2014, the Obama administration
discontinued annual reports on the fertilizer industry. Since
then, prices have become more and more opaque, making it harder
for farmers to know if they're getting a fair deal. My
Fertilizer Research Act seeks to fill in these reporting gaps.
So, could you tell us what measures are being taken to ensure
transparency and pricing mechanisms so farmers aren't unfairly
penalized by last-minute price increases?
Mr. Rosenbusch. Mr. Chairman, thank you for that question,
and we fully support your efforts to provide transparency to
growers. We believe them having information about what's going
on in the marketplace is very critical. We've been working with
your staff, your team, as well as on the House side to
reinstate the position at the United States Department of
Agriculture that has been vacant for more than 20 years now
that was focused on fertilizer pricing and transparency. We
believe growers having that independent source at USDA would be
of tremendous benefit to growers and to farmers to be able to
recognize and understand all of these dynamics that are going
on and help them make decisions.
Chairman Grassley. Would that also cover price transparency
that you're talking about?
Mr. Rosenbusch. Yes. They would also be doing research on
prices globally, United States. They would be looking at a
variety of different factors. Iowa State also did a research or
a report on this a couple of years ago, but we believe that
position would be helpful long term.
Chairman Grassley. Okay. Dr. Moss, in your opinion, what
types of public reporting could provide the necessary
transparency in fertilizer markets for farmers looking for a
fair price?
Dr. Moss. Thank you for the question, Chairman Grassley. I
think, first and foremost, increasing price reporting to
promote transparency would be incredibly helpful not only for
members of the industry, but for organizations like mine, think
tanks, and university researchers to be able to do analysis of
the markets and the prices that are emerging from highly
concentrated markets. Price transparency remains a problem in
agricultural inputs, but also in cattle and ranching, so I
think that, in fact, the starting point is to improve and to
promote coherent, efficient price collection data bases so that
we can have better tools to work with.
Chairman Grassley. For Mr. Latham, Mr. Coppess, major
mergers and business transactions over the last decade reduced
the Big Six ag companies to only four. U.S. Department of
Agriculture Economic Research Service reports that Bayer and
Corteva together account for more than half of the U.S. sales
of corn, soybean, and cotton seed. What impact does this have
on your business? Has there been an impact on the number of
corn or soybean varieties available to farmers?
Mr. Latham. Thank you for the question, Senator. It's been
a huge impact on our business, especially in the last 5 years.
My brother and I, who's with me today--Chris--we were looking
at prices over the last 5 years. Five years ago, 42 percent of
a bag of seed went to seed royalties. Now 70 percent of a bag
of seed goes to seed royalties, and, unfortunately, there's
been no new innovation. These are the existing products that we
had 5 years ago. There's been no new innovation, no upgrade.
There are some new products but, overall, from 42 percent to 70
percent has risen prices tremendously, and they did it because
commodity prices were good at the time a few years ago, and
they said, well, farmers can afford it now. So, the prices went
up significantly, and now, unfortunately, commodity prices are
down, and those prices haven't gone down at all.
Chairman Grassley. Mr. Coppess.
Mr. Coppess. Thanks for the question, Senator Grassley. On
our farm, when we purchase seed, I have a relationship I enjoy
with a company and a seed person that we work with, and I'm not
looking to change that relationship, but we have very little to
no price bargaining. The price is the price, and it's
consistently gone up every year with some slight changes. If a
product doesn't perform, it might be a little cheaper the next
year, but we've seen no relief in pricing of our seed
commodities.
Chairman Grassley. Okay. Dr. Moss, in your opinion, if a
trade owner conditions access in ways that predictably raises
rivals cost or limit stacking with competing traits, is that a
problem and should it trigger enforcement?
Dr. Moss. Yes, I do believe that is a problem. One of the
biggest issues that we face right now is with the large ag-
biotech mergers. We now see highly integrated, engineered
systems of traits development, traited seed, agrochemicals, and
now digital farming. It is very, very difficult for smaller
innovators--say, independent seed companies or independent
trade innovators--to penetrate markets, to get into a market,
get a foothold, and to compete and effectively distribute their
technologies when they are facing an enormous castle wall of a
vertically integrated platform. And if companies hold a
dominant position in any of those markets, that makes the walls
even higher to scale.
Chairman Grassley. Yes. Senator Durbin, before you go, has
the vote started yet? Well, we'll wait and see. If we do, then
Senator Lee's going to take over. Go ahead.
Senator Durbin. Thanks, Senator Grassley. I'd like to say a
word and get your reaction on the question of agricultural
research. Since the 1930's, U.S. Government-funded ag research
has helped to boost our farm output by 170 percent, according
to the USDA. Today, most agricultural research in the U.S. is
funded by large private sector companies, not the Government.
Agricultural research funded by the U.S. Government has
plummeted in the past 30 years, while Chinese Government
investment in ag research has risen 8 times, surpassing the
U.S. 10 years ago. Today, China is the world's biggest funder
of government-funded farm research. The Trump administration
and the DOGE cowboys want the USDA to close and consolidate a
federally funded laboratory at the University of Illinois, the
Soybean Germplasm Collection, which is the genetic seed bank
whose scientists, since the 1940's, have cured soybean disease,
improved soybean yields, and developed new varieties and uses,
again, creating new markets for farmers. If this lab and its
resources are closed or diminished, there is only one other
remaining lab. You want to guess where it is? China. Is there
anyone on this panel that thinks that's a good idea?
[Nonverbal responses.]
Senator Durbin. Obviously not. Mr. Latham, that kind of
resource in agri and Federal research has to be part of your
calculation as well when you talk about innovation, is it not?
Mr. Latham. Yes. I would love to see more investment in ag
research from public universities. That'd be very helpful.
Senator Durbin. Well, I hope you'll all express that to
your Members of Congress and the people you talk to.
Dr. Moss, over the last decade, as you've noted and others
as well, a series of mergers and acquisitions produce Big Three
companies that dominate different sectors. In the seed sectors,
it's Bayer, Corteva, and Syngenta. A similar trend produced the
Big Three in fertilizer, Mosaic, Nutrien, and CF. Should
antitrust enforcers at the FTC and Department of Justice have
done more to block these mergers that produces the Big Three in
seed and fertilizer?
Dr. Moss. Thank you, Senator Durbin. The answer is an
unequivocal yes. These massive mergers, which have completely
restructured our seeds and fertilizer industries, are now
responsible for high prices, limited choice, and less effective
innovation. The major problem with antitrust today, especially
in food and agriculture, is a very narrow view that antitrust
takes in defining markets. The divestitures that were taken in
the Bayer-Monsanto and the Dow-DuPont mergers were very
targeted, very small, and there was a lot of deference to
giving companies their mergers so that they could innovate
better or innovate faster. We now know that high levels of
concentration are not necessary to drive innovation, and these
mergers, on balance, produced more harm than good.
Senator Durbin. Do you believe the FTC and DOJ need new
legal tools to stop the anticompetitive practices of these
dominant firms, or is it simply a matter of stepping up
oversight and enforcement?
Dr. Moss. I think antitrust plays a very important role
given the limited set of tools, but powerful tools antitrust
works with. The consumer welfare standard can approach concerns
about high prices, about lower quality, about less innovation,
but the bottom line is most of antitrust enforcement just
focuses on prices. The kinds of problems we see in food and ag
are bottleneck supply chains, loss of resiliency and stability,
a delay of generic entry. These are all things that are much,
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.
Senator Durbin. Mr. Rosenbusch, how do you respond to those
observations?
Mr. Rosenbusch. Thank you, Senator, for that question. We
believe we need a strong domestic fertilizer industry to
compete in a global marketplace, especially when you're looking
at countries that are often State-owned enterprises producing
fertilizers. We think the FTC has taken a close look at this.
As a matter of fact, in the last 2 years, the two acquisitions
in this space were carefully studied by the FTC and reviewed,
and we've also seen the USDA, 2 years ago, go through a
competitive analysis of the industry to ensure that we are
competing on a global level and global supply and demand for--
--
Senator Durbin. Excuse me for interrupting, but I have just
20 seconds left. The farmers who are buying your product say
you're killing them. You've consolidated, so they have few
choices, take-it-or-leave-it choices, and your prices are
killing them. When you say you're competitive globally, it
doesn't help the farmer in Illinois and Iowa to know that the
global market is competitive. How do you respond to that?
Mr. Rosenbusch. We need the farmers to succeed. They need
access to fertilizer----
Senator Durbin. But you're killing them with your prices.
Mr. Rosenbusch. And those are all driven by global supply
and demand. A lot of these geopolitical events and reliance on
some of that foreign supply coming in is a huge impact on that.
Senator Durbin. Thank you.
Senator Lee [presiding]. Mr. Latham, I'd like to start with
you, if that's okay. Where are the main barriers that
independent seed companies face when licensing or stacking
patented traits in this industry?
Mr. Latham. Where do I begin? There's a long list, a lot of
areas that I could go into. You know, one thing that I think
has hurt the industry in general, we have these restrictive
rebates that we're under, which really stifle competition
because if a new breeding company comes into the market and if
the whole industry is under a rebate, that if they go to that
new innovator, they're going to lose their rebate and could
fall off a cliff there. So, I think that's one thing that's
really impacting the whole industry, and there's a whole longer
list, and I know you have short time.
Senator Lee. Now, when we think about intellectual property
laws, they're kind of a paradox because, on the one hand, the
whole point of intellectual property laws is to give someone at
least a temporary monopoly in something, but on the other hand,
they are pro-competitive to the extent that it fosters
innovation. In your view, how does our current intellectual
property framework either help or hinder competition or
innovation?
Mr. Latham. Yes. I think I'm all for patents and
intellectual property protection. Obviously, that can create
innovation. You have to have that to have innovation, but,
unfortunately, we see some of these patents where the products
get stacked with some new product only to be able to use to
extend that patent, and so the patents go from 20 years to many
more years. And unfortunately, in 2014, a lot of different corn
traits went off patent, and we still don't have any market now
for off-patent technology on the corn side of the business, so
something needs to fundamentally change.
Senator Lee. What about consolidation? When there's
consolidation among the major players in the seed industry and
among trait owners, how does that influence your research and
development strategy internally?
Mr. Latham. Yes. Unfortunately, on the corn side, and you
mentioned the stat, too--90 percent--and that includes
licensing as well as their own brands. But when you have that
big of consolidation, it makes it very difficult for any new
innovator to get into the market. Especially if they want to do
traited or just even conventional, it makes it very difficult,
so, we've seen. Since 2016, when the Committee met last, we've
seen massive consolidation, we've seen less innovation, and
we've seen much higher prices, unfortunately, for our farmer
customers.
Senator Lee. Those two things naturally lead one to
another, right? I mean, diminished competition pretty much
always is going to result in higher prices----
Mr. Latham. Absolutely.
Senator Lee [continuing]. Or at least diminished quality,
sometimes both.
Mr. Latham. Absolutely.
Senator Lee. And there's no exception to that here and the
more consolidation you see, regardless of what the cause of
that is. But let's suppose if it's prompted by an excessive
Federal regulatory footprint, that can do it, but regardless of
what the cause is, there are fewer competitors. There is often
less competition, and, always, when you see less competition,
that causes other problems. Mr. Coppess, have you noticed
reduced competition or consolidation among local dealers or
fewer independent options over time?
Mr. Coppess. Thank you for the question. Yes, the
independent seed companies, when somebody retires, moves on,
oftentimes that doesn't get replaced by a younger person or a
new person taking on that business. That dealership just goes
away oftentimes.
Senator Lee. Okay. That's helpful. And, Mr. Ragland, how
does dependence on imported potash and imported nitrogen affect
the U.S. growers' resilience and planning?
Mr. Ragland. Well, as we mentioned in our testimony, it's a
global market, requires a lot of planning ahead. There's global
forces at work, and we have a very limited number of options
where we can purchase, and the less competition, oftentimes the
higher the prices are.
Senator Lee. Right.
Mr. Ragland. And we have some data we provided that shows
that since the Ukraine War, in particular, prices spiked up
drastically when that started. They came back down, but they
have plateaued at a much higher cost than they were before.
Senator Lee. Than they were before the war.
Mr. Ragland. Yes. Yes.
Senator Lee. They never fully retreated.
Mr. Ragland. No, not anywhere close, and that has had a
major impact across all of production and agriculture.
Senator Lee. Right. Somewhat reminiscent of what happened
during COVID.
Mr. Ragland. Yes.
Senator Lee. And finally, Mr. Rosenbusch, how did dealer
incentive programs work in practice, and did they inadvertently
limit fair competition?
Mr. Rosenbusch. Thank you for that question, Senator Lee.
On the fertilizer side, we do not have dealer incentive
practices. That's more of a crop protection practice.
Senator Lee. Okay. Thank you. My time has expired. Senator
Klobuchar is up next.
Senator Klobuchar. Okay. Thank you very much, Senator Lee,
and thank you to the Chairman and Ranking Member for holding
this hearing. I'm used to seeing many of you. I'm Ranking
Member, as you know, on Ag, especially you, Mr. Ragland. I know
you've testified before. I also note that Gail Slater is here,
the head of antitrust for the Justice Department, who has had
widespread support on this Committee.
So, one of my farmers, a soybean farmer actually, described
this situation right now as a perfect storm of ugly. He talked
about the input costs, some of which are caused by
consolidation that we've been so well talking about today,
talking about what's happening with labor and the fact that we
are missing some ag workers right now, and I think there's
another way this could be handled. Talked about the tariffs and
IEEPA, and I note that with soybeans, and I am, you know, glad
that there's discussions going on, but even if that somehow
that market came back immediately, as you know, Mr. Ragland,
which it won't do, it's still a horror 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.
And so, I just think that if you look at this as a whole,
and not just with soybeans, but for other crops, and what's
happening with machine parts, as you point out, that this is a
really hard thing that's going on right now, and I would like
to see a reversal of these tariffs. I think that would be the
quickest way to solve many of these problems, but let's start
with market consolidation, and I'll start with you, Mr. Latham.
What would it mean to you to have real competition in the seed
market?
Mr. Latham. Thank you for the question, Senator.
Senator Klobuchar. Yes.
Mr. Latham. It would mean everything to us, I think, if you
had no restrictive rebates. The rebates are very punitive for
independent companies. If you had broad licensing, I think you
could see a flood of new breeding companies into the market,
which is vastly needed. I think with gene editing, there's a
whole host of new technologies we could take advantage of, but
right now, when you've got a couple different companies that
are controlling the whole market, it makes it very difficult
for our company----
Senator Klobuchar. Okay. Thank you.
Mr. Latham [continuing]. To invest in new technology.
Senator Klobuchar. Thank you. That's helpful. Ms. Moss,
quickly, how does consolidation affect the resiliency of the ag
system?
Dr. Moss. Thank you, Senator Klobuchar, for the question.
Consolidation is now responsible, in many food ag supply chains
as well as in healthcare, for creating enormous market power
bottlenecks where you have powerful companies, oligopolies, or
dominant firms controlling prices paid to producers, but then
also controlling prices that consumers have to pay in the
grocery store. These bottlenecks are really susceptible to
instability. If a supply chain is hit by some sort of exogenous
shock, like weather or disease as we saw with COVID, then there
are very few other competitors to step in, and so supply chains
go down, and that is not only a national security issue, but a
health and human safety issue.
Senator Klobuchar. And just a quick answer on this because
I called you as a witness many times when I Chaired the
Antitrust Subcommittee, now working with Senator Blackburn on
the Tech Subcommittee. Would reform to our antitrust laws with
either the CLARITY bill or the bill that Senator Grassley and I
have introduced, which is just beyond specific industries,
would that be helpful when it comes to these issues?
Dr. Moss. Absolutely, yes.
Senator Klobuchar. Okay.
Dr. Moss. Anything to strengthen, modernize, and clarify
our laws.
Senator Klobuchar. Okay. Thank you. Mr. Ragland, could you
talk about the market for soybeans outside of China and what's
happening with some of that as well because I think all the
focus gets on China, but there's a lot of other countries.
Mr. Ragland. Well, those markets outside of China are
roughly half of our exports. China's the other half of our
exports, and those markets are fairly strong, but they're only
a limited amount of the demand for our product, and that gaping
hole that is left by the lack of the China involvement is----
Senator Klobuchar. Mm-hmm.
Mr. Ragland [continuing]. Very detrimental on our prices
right now.
Senator Klobuchar. And is the tariffs under IEEPA affecting
all of these markets?
Mr. Ragland. Yes.
Senator Klobuchar. Mm-hmm. That's what my----
Mr. Ragland. Yes.
Senator Klobuchar. So, in my State, about 60 percent of the
soybeans are exported, which is pretty high. Do you want to
talk about, just in general, the export market, which we
cherish, and not just for soybeans, but corn and other things,
why that's such an integral part of American agriculture
because we're not going to eat everything we make.
Mr. Ragland. Yes. Soybeans are the largest ag export from
this country, and it's so vital to the economy, not just of
agriculture, but of rural America.
Senator Klobuchar. Mm-hmm.
Mr. Ragland. And that gaping hole that is left by the lack
of the China involvement right now is going to trickle down to
our rural communities and rural economies----
Senator Klobuchar. Mm-hmm.
Mr. Ragland [continuing]. And have a very detrimental
impact because rural America agriculture is the backbone of
rural America.
Senator Klobuchar. Right. I think we make about 20 percent
more than we use here, and that is what allows us to keep going
and why this is such, as my farmer called it, a perfect storm
of ugly. Thank you.
Mr. Ragland. Thanks.
Senator Grassley. Senator Britt is next, but I hope we can
keep this hearing on [off mic] competition and price
transparency. Go ahead, Senator Britt.
Senator Britt. Thank you. Mr. Chairman, thank you for
holding this hearing on this critical and timely issue.
Agriculture is the bedrock of Alabama's economy. So, 1 in 5
jobs in our State are tied to the agriculture industry. I am so
proud of our farmers and what they do, knowing that they feed
and clothe people, not just coast to coast, but across the
world, you know, ranking in the top States in the country,
Alabama does, when it comes to poultry, when it comes to
catfish, peanuts, cotton, and we are really proud of the work
that our farmers do. And Alabama farmers are acutely familiar,
though, with the impact of skyrocketing input costs and what
that's done on the bottom line. When we look at, like, the last
4 years, knowing that input costs, I mean, have gone up across
the board, but that our agriculture community has been hit the
hardest, and just knowing that farmers are experiencing record-
breaking yields, but yet losing hundreds of dollars an acre.
And so, when you try to square these things up, you know that
we have to do something. In fact, based on historical yields,
every major row crop, from peanuts to cotton to soybeans, will
be produced at a loss in 2025.
And so, food security is national security. We say that all
the time, but we also know that our agriculture community and
our farmers are the bedrock of our rural communities, and if
farmers are not thriving, our rural communities are not either,
and so there is so much at stake in making sure that we get
this right. There are real concerns with the limited number of
companies that provide seed, fertilizer, and crop protection
products to our farmers, but that consolidation doesn't stop
with inputs. We also see the same consolidation in packers, in
equipment manufacturers, and in farms to a certain extent. Crop
input suppliers, manufacturers, and farmers have generally been
forced to grow larger to achieve economies of scale and
increase productivity while attempting to decrease costs.
I want to start with Mr. LaVigne. It's clear that the
primary driver of consolidation across the industry is a desire
to lower costs. We've seen the consolidation, but instead of
prices going down for our farmers, we've actually seen the
opposite. Can you speak to some of the outside pressures that
have prevented the industry from achieving true economies of
scale?
Mr. LaVigne. Senator Britt, thank you for that question
very much. As we've continued to innovate in the agriculture
industry, especially on the seed side, the cost of the
regulatory compliance, especially in the GM or the biotech
arena, has increased dramatically, and working with the grain
industry to ensure that the markets that we export to, or our
farmers export to, are open and have transparent processes to
review those new products that come to market has been extreme.
We've seen that in China, and we share the Chairman's comments
that we hope to see good news come out of that this week
because we were supposed to have those approvals in a phase one
deal with China, and now we don't have those. So, the
regulatory costs have become extremely high and challenging as
we try to bring new products to market.
But I think we've got 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
30 years under the Coordinated Framework, that has not evolved.
We've not changed that process to make it more efficient for
new companies to come into the marketplace as well as new
products, and it's become harder and less science-based. The
same with new varieties. As we look at, as John mentioned, gene
editing as a tool, how is FDA, EPA, and USDA going to manage
those policies coming into the marketplace? If they're too
burdensome, it will be restricted to large companies that can
afford the regulatory process.
Senator Britt. Thank you so much for that, and I want to
stay on that theme. Look, I've been encouraged by many of the
things that Administrator Zeldin has done and the things he is
looking at doing in the future. My question, Mr. Rosenbusch,
is, in what ways do Federal regulations impact your member's
companies' ability to bring innovation and affordable products
to market?
Mr. Rosenbusch. Thank you, Senator Britt, for that
outstanding question because it is a huge impact on our
manufacturers that are wanting to innovate and bring new
products or even grow supply domestically. As we look to expand
mining operations or build a new ammonia plant, you've got
environmental permitting that needs to be streamlined. You also
have new products. That you know, it's difficult to know where
they get regulated, and so as you think about some bio-
stimulant products that we're looking at or even tools that
help nitrogen be more efficient, getting through the process at
EPA or ensuring that it's regulated to the State level, which
is where most fertilizer is regulated, is critical to giving
farmers additional tools, especially in these difficult market
times.
Senator Britt. Thank you so much. Thank you, Mr. Chairman.
Chairman Grassley. Senator Booker.
Senator Booker. Mr. Chairman, as always, I'm grateful for
the deference. I want to thank all the witnesses. Your
testimony was very, I would say, frankly, invaluable.
Mr. Latham, I'd like to start perhaps with a question for
you. Despite two court orders in 2020 and 2024 banning dicamba
use because of its damage to neighboring farms, causing
millions of acres of crop loss, the Trump EPA, headed by a
former industry lobbyist, recently proposed to reauthorize the
herbicide. What impact would it have on your rural community
and the farmers that you serve if EPA again approves dicamba
for over-the-top use?
Mr. Latham. Yes. Thank you very much for the question,
Senator Booker. I, frankly, believe, I mean, we've seen enough
issues that I think the technology is good and is needed
because we need to be able to fight against weed resistance,
but yet over-the-top causes so many issues that I don't think
that it should be approved for over-the-top use.
Senator Booker. That's great, because if it was, what would
happen to the communities if it was again approved for over-
the-top use?
Mr. Latham. I mean, unfortunately, we've seen
volatilization, we've seen drift into other crops, and, you
know, and vineyards and different things, so it's become an
issue in rural areas.
Senator Booker. So, knowing what you know, what you just
stated about how harmful it is and would be, as a practical
manner, if it's once again approved, would your seed company
have any discretion in whether or not to sell dicamba-tolerant
seeds?
Mr. Latham. You know, unfortunately, probably with the
rebates, we would probably have to sell it to be able to make
our rebates, unfortunately.
Senator Booker. I mean, that seems stunning to me that
something that you know should not be used in this way, but
just to stay competitive in the market, you would have to sell
it. Does that strike you as indicative of free market
capitalism?
Mr. Latham. It does not, and I don't like it either. I
mean, I think we should be able to sell what our customers want
and the best value for them.
Senator Booker. Yes, and it really strikes me as not just
an assault on free market capitalism, but something almost akin
to an authoritarian system where you're told what you have to
do, what you have to plant, what chemicals you have to use, and
that's something that is very un-American to me. Would you
agree?
Mr. Latham. I agree.
Senator Booker. Dr. Moss, I'm going to soon be introducing
legislation to not only require--excuse me--not only place a
moratorium on any new Big Ag mergers, but also require the DOJ
to do a lookback at the biggest mergers over the last 20 years
in the food and agricultural sectors to unwind any mergers that
the DOJ finds caused material harm to competition, or to
farmers, or to workers or consumers. Dr. Moss, do you think
that this type of lookback 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?
Dr. Moss. Thank you, Senator Booker, for that really good
question. Yes, I think the value of retrospective studies for
consummated mergers is really critical and invaluable. We in
the economics community have agitated and urged and encouraged
enforcers to spend more time doing lookbacks. Of course,
they're resource intensive, and I know there are a number of
pieces of legislation that would fund those types of efforts. I
think at the stage we are at in food and ag, with the high
levels of concentration and demonstrable evidence of high
prices and slower innovation, the lookbacks would be really
important. Ultimately, it's really up to the agencies to
enforce very strong structural presumption against highly
concentrative mergers. Unfortunately, we're still not there,
and in the Dow-DuPont and the Bayer-Monsanto mergers, those
structural presumptions for high concentration did not get a
lot of attention, and now we're paying the price for that.
Senator Booker. I mean, we consumers are paying the price
for it, but our farmers are paying a tremendous price as this
concentration of these very powerful companies, who now,
frankly, thanks to Citizens United, poured millions and
millions of dollars advocating for their mergers down here in
Washington, but the real people being harmed are consumers,
but, frankly, are our farmers themselves. And that brings up a
final question, and I'm hoping Noah, I really appreciated your
testimony, but given the extreme consolidation within America's
agricultural industry, do you have any flexibility to purchase
seeds or fertilizers from firms other than the Big Four?
Mr. Coppess. Thank you for the question, Mr. Booker. We
have retail locations that serve the needs for the fertilizer.
We don't have the on-farm storage to handle some of those
products. It's unclear often who the wholesale manufacturer is
for that product, but you can tell when you go from retail to
retail to retail and the price is the same, that we're coming
from the same place.
Senator Booker. Thank you. As the Chairman knows, I spent a
lot of time in Iowa and met a lot of farmers from across the
political spectrum. This gentleman here moved me when he said
five generations on his farm, and I still remember sitting with
farmers who still had that original deed going back to the
1800's 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, and
suddenly, the economics that worked for five generations just
barely add up. There's a nobility, sir, about what you do for
America. You are great patriots, and I know how much you care
about American farmers, sir. So, I'm really hoping we can find
some bipartisan work to do together and keep people, like Noah
and his family, at the center of our thought process because we
can do something. This is not inevitable. This is un-American.
This is a perversion of the free market. If we give them a
chance to compete, I promise you that family will have another
five generations of success on their farm.
Chairman Grassley [off mic]. Senator Moody.
Senator Moody. Thank you, Mr. Chairman, for holding this
important hearing. I don't know that many people across the
country have an understanding of how American agriculture
touches not only their everyday lives, but their security. And
I think this hearing is so important, whether they live in Iowa
or Florida's heartland, which is where I am from, Plant City,
Florida, the winter strawberry capital of the world--proud to
hail from them from there--and also now represent Florida as
their newest U.S. Senator. But agriculture is so important to
our cities and States, indeed our Nation, and if there is one
takeaway from everything that we're hearing and what every
witness, I think, would agree with is that our food supply
chain, its success, its security, is a matter of national
security.
COVID-19 really put this into focus for us as a country.
For a long time, we never really thought about food, where it
came from, many people, but then suddenly we were facing
shortages in, certainly, many areas--PPE, other products--and
we had to start looking to China. So, the same country that was
responsible for COVID, we then had to import products from them
to protect Americans. We faced medicinal shortages. Where did
we have to look? China. I mean, there were so many places when
it came down to a crisis point that we had to go back to our
foreign adversaries when we determined we had weaknesses in our
supply chain, and there is risk that comes with relying on a
foreign country for critical supplies.
Corporations, over time, have focused more and more on
lowering costs by offshoring, relying on foreign inputs,
minimizing their inventories, and we're now seeing how that
affected jobs here in America, certainly. And there's interest
in making sure we have fair markets, both domestically and
internationally, but we can't lose focus of the effects of that
on our domestic supply and security and America's interest, and
it took that one pressure test in 2020 to see how vulnerable we
are now.
So, one event can jeopardize our access to PPE, formula for
infants, essential medicine, so imagine how important it is for
American agriculture to prosper and be resilient so that we
have a food supply that withstands foreign interference.
Florida is a big part of that. Not many people think of
agriculture when they think of Florida. They think of
flamingos, beaches, weather, all kinds of things, but they
don't think of agriculture, but it is truly the lifeblood of
our Nation's agriculture. So much of the supply chain that goes
to supporting growth in our farms comes from Florida. When it
comes to phosphate and the natural resources we need to put
food on the table, Florida leads the way, and truly Florida
feeds the world in that sense.
It's in the best interest of American farmers in our State
and our country to pursue a balanced approach. That is one that
unleashes the full potential of American mineral production and
American products that support agriculture and our food supply
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, 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,
and 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 agriculture stumbles, if fertilizer production is
overburdened and neglected, our adversaries profit. We will
become more and more reliant on those adversaries. I hope to
avoid all conflicts. I think that should be every American's
interest, but should a conflict occur, we will start weakened
at the gate if we rely on our adversaries for food. We don't
need the Art of the War to tell us that that is common sense.
I want to start with and ask a former national FFA
president, which I have great respect for being from Plant City
and from FFA, Mr. Rosenbusch. Thank you for being here. Is
phosphate essential to growing food?
Mr. Rosenbusch. Well, thank you, Senator, for that
question, and Plant City has had more national FFA officers
than any other city in the United States, so congratulations on
that.
Senator Moody. I didn't know that. You just taught me
something.
Mr. Rosenbusch. Yes, you do.
Senator Moody. Go, Plant City.
Mr. Rosenbusch. Yes. Phosphate is one of the critical
minerals. You cannot grow half the world's food on this planet
without phosphate, and, of course, as you know, Florida is the
center of that phosphate production, and we have tremendous
opportunities in this country to expand if we can remove some
of the regulatory burden around mining and manufacturing.
Senator Moody. And ahead of the United States in terms of
natural reserves--China, Russia--so if, in fact, we do not
support and ensure that we have domestic production, we will
become more and more reliant on China and Russia. Is that
correct?
Mr. Rosenbusch. Absolutely, and, Senator, China has
restricted those exports, and they produce 40 percent of
phosphates, which is one of the nutrients that's really
challenging growers right now. And frankly speaking, one of the
reasons they're doing so is to invest in lithium phosphate
battery production, and so they definitely have policies that
are impacting our growers here.
Chairman Grassley. Senator Welch.
Senator Moody. At the same time--if I might just finish
this one question, Mr. Chairman----
Chairman Grassley. Yes.
Senator Moody. At the same time that we're making sure
policies are supporting American growers and American products
that support those growers, in order to keep input costs low
for our farmers, we also have to ensure there's a fair global
market. Is that correct?
Mr. Rosenbusch. Yes, Senator.
Senator Moody. All right. Thank you, sir.
Chairman Grassley. Thank you. Senator Welch.
Senator Welch. Thank you very much. I missed some of the
testimony, but I have reviewed it and saw some of it. I just
want to start with Mr. Coppess and Mr. Latham, and I also want
to say to us, much of what the farm community is facing is a
result of policies that have been allowed to take place by this
Congress, and we all revere the hard work of our farmers, but
we've got to do some work of our own and address these
policies.
Both of you talked about the high input cost, and what I
understand is that it used to be about 10 bucks a bushel a few
years ago. It is now $11 or $12. The selling price used to be
$13 or $14 a bushel, and it's now about 10 bucks a bushel. Is
that right? So, you're losing money on every bushel, right? And
of course you lost markets. We sold $12 billion to China. How
many bushels of soybeans have you sold, either of you, to China
this year?
Mr. Coppess. Well, when I drop it off, I'm not sure exactly
where it's headed, but to my knowledge, we haven't sold very
many.
Senator Welch. None.
Mr. Coppess. Right.
Senator Welch. The market is absolutely destroyed, and that
is directly a result of the tariffs. So, you have more patience
than I do about these tariffs, but this is killing these guys,
and we've got to acknowledge that and get their markets back.
There is discussion right now about taking some of that tariff
money and sending it to farmers, and God knows I support
getting some aid to farmers, but let me ask you this question.
Do the soybean and corn farmers in Iowa, would they prefer to
work hard and sell their product to a market or get a
government handout?
Mr. Coppess. Thank you for the question. We don't want to
live by the Government's hand. We're fine being the tip of the
sword if we can correct the greater problems and have a better
long-term future, okay?
Senator Welch. Okay, but the point----
Mr. Coppess. We're okay with that, but----
Senator Welch [continuing]. Is you want to be self-reliant.
You want to sell. You want to produce. You want to work hard.
You don't want a government handout, right?
Mr. Latham. Absolutely.
Mr. Coppess. We would like to have fair trade.
Senator Welch. Well, I am totally with you. You've got some
supplemental income in your State on agricultural land. It's
wind turbines, right? Those help the farmers?
Mr. Coppess. We have wind turbines in our State. It's a
discussion amongst different landowners whether it's a positive
or negative thing.
Senator Welch. Okay, but the farmer makes the decision. If
we as a Congress take away the help for wind, that takes away
some income for farmers. Is that correct or not?
Mr. Coppess. On the farmland that has wind turbines, that
would be correct.
Senator Welch. Right, and, you know and what I know, we
have dairy. That's our big farming in Vermont. Farmers are good
at a lot of things, but one of the things they're astonishing
at is fixing things. A headlight goes wrong on their tractor,
they fix it, right? Something goes wrong, you don't have the
right to repair your equipment and it costs a ton, and
sometimes you lose production time because your tractor's down
and you got to wait for the dealer to come out. I am
introducing today a Right to Repair. So, if you buy a tractor--
what do they cost, $250,000 now--you can fix it.
Mr. Latham. Or more.
Senator Welch. You can turn the screw, or do whatever it is
or get the software you need. What's your view on Right to
Repair?
Mr. Latham. Thank you for the question. The farmer needs an
option to either repair himself or go to an independent repair
shop if he doesn't have a relationship with his dealership.
Senator Welch. Well, I agree with that.
Mr. Coppess. We need that technology.
Senator Welch. And I want to tell you something. I just
came from Vermont. Our farmers across the country--it's
Vermont, it's Iowa--you guys all work hard, okay, and you have
to face all kinds of things. They're completely beyond your
control. The things we've been talking about here--the tariffs,
the high input prices, the concentration, so you can't do seeds
on your own--those are political decisions. Vermont right now
is facing a crisis, our worst drought in 55 years, and our
dairy farmers don't have the hay crop and the feed crop. You've
got a lot of soybeans that are spilling over. Would you have
any problem with USDA buying your soybeans to help us get
through the winter and feed our animals in Vermont, one farmer
helping another?
Mr. Latham. I would have no problem with that, Senator.
Senator Welch. In fact, you'd like it, right?
Mr. Latham. Right.
Senator Welch. You'd be selling----
Mr. Latham. Right.
Senator Welch. You'd be selling your surplus and helping
our Vermont dairy farmers, who are just getting crushed by the
drought that's really killed them. Well, I thank you about
that. You know, we've got the phosphate, as you mentioned.
That's everywhere. 14 percent increase in price in Vermont for
our farmers. They have no control over that. We mostly import
it from Canada. Is that an input cost that is also going up in
Iowa?
Mr. Coppess. It is. On our farm, we've minimized the use of
phosphate down to an absolute necessity where we have to have
it.
Senator Welch. Right. Any----
Mr. Coppess. It's simply a negative return to----
Senator Welch. Any thoughts on what I understand is going
to be the administration position that we should start
importing cattle from Argentina? That going to help out?
Mr. Coppess. Thank you for the question. On my farm, we
have 10 cows. It's a small part of our farm. What I can tell
you is I'm not a fan of the Government dramatically changing
the price of something we have. I've got a 16-year-old and a
14-year-old that are two cows each into starting their cow
herd, and it's a tough day for them to realize the calves they
have to sell to go buy more replacement heifers today are worth
quite a bit less than they were 2 days ago when they're ready
to go to market next week with them. So, that's a tough lesson,
but there again, we're not a fan of the Government making those
large swings for us.
Senator Welch. Well, I'm with you. Mr. Chairman, you are
our best farmer on the Committee, probably in Congress. You are
patient with the President and I respect you for that, but I
just want to say that I don't know him like you do, but the
tariffs are really hurting us in Vermont. My dairy farmers and
this drought, which they don't complain about, it's just
something they've got to deal with. We'd love to be able to get
some of your surplus, a grain, to help our farmers who lost
their crops. So, they can't control the weather, they can't
control a lot of things, but we can control some policies
that'll make it possible for another five generations to keep
going. So, I really appreciate this hearing, and I appreciate
your leadership on ag issues, Mr. Chairman. Thank you.
Chairman Grassley. Well, I hope you know, Senator Welch,
I've consistently expressed my views to the President's Cabinet
about the impact of tariffs. I hear that all the time from
Iowans, farmers and non-farmers alike, and I've expressed my
views to them a bit.
I'm going continue to ask questions. I don't think
anybody's coming back, and just as soon as I get called for
this last vote, this will be the end of the meeting, unless
somebody comes in that didn't get a first round. So, I'm going
to ask Mr. Latham, across corn and soybeans today, are there
still contractual or technical barriers that keep you from
offering a seed where the competitor's trait stacked alongside
another? Could you describe the specific clauses and data
obligations?
Mr. Latham. Yes. Thank you, Senator, for the question. Yes,
there are restrictive rebates that we fall under as an
independent seed company, and it happens a lot to farmers as
well. But if we use an alternative and if we fall below, let's
say it's usually 85 or 90 percent, and we could fall off,
basically, a cliff and could lose our whole profitability for
the year.
Chairman Grassley. And, Mr. Coppess, farmers report rebate
clawbacks, delayed allocations, and audit threats after trying
rival products and services. Could you give us some details of
the recent incidence where a supplier or retailer used rebate
leverage or allocation delays to punish switching?
Mr. Coppess. Thank you for the question, Senator.
Oftentimes, our pricing structure on our farm is the more we
buy, the cheaper it gets. I haven't personally experienced a
rebate clawback, but it is very clear when we're purchasing
products, that the more we buy, the cheaper the product gets,
driving us down into, you know, we need to try and stack that
to stay profitable limits our options.
Chairman Grassley. Mr. LaVigne, your organization says on
its website that your membership includes 85 percent of all
private U.S. seed companies operating in the United States,
both big and small. Is there a disagreement among your members
regarding antitrust and intellectual property issues, laws, and
enforcement?
Mr. LaVigne. Thank you for that question, Mr. Chairman.
We're pretty consistent with respect to intellectual property
laws. It's a key pillar for our strategic plan, and it feels
like that's 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. We don't judge those by the companies. That's not
our position as an association. So, whether they choose
patents, or PVPs, or licensing, or just trade secrets, those
are all tools that all innovators in the U.S. have available to
them.
Chairman Grassley. Yes. This question would be to Moss,
Rosenbusch, and LaVigne. Only 1 of the 4 largest companies
controlling the ag market is U.S. owned. In your opinion, does
this represent any national security risk to our country?
Dr. Moss. Thank you, Chairman. I'm happy to chime in on
that. Having a concentrated market with just a few firms
operating in that market, or a dominant firm, absolutely
represents national security risks. Especially in food and
agriculture, we've 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. So, we have to be extra vigilant in food and
agriculture to enforce our antitrust laws to ensure that we
have competitive markets and the ability for smaller innovative
entrants to get in and to have a go of it.
Chairman Grassley. Yes. If you want to add to that or
express your own view, I invite the two of you to do that as
well.
Mr. LaVigne. Thank you again, Mr. Chairman. When we look at
this, we obviously have antitrust respect for the U.S. laws and
for our own antitrust policies with the association, so we
don't have a position with respect to how contracts are done or
pricing is done, anything along those lines. From the member
standpoint, we want very strong intellectual property rights.
We know that the American market is one of the most competitive
in the United States, and we would like to continue that
process. This is where the innovation in our industry is done,
and that's why we're the leaders globally. So, we would like to
continue that as we go forward, and, hopefully, that
competition continues to stay strong.
Chairman Grassley. Do you have anything to add, Mr.
Rosenbusch?
Mr. Rosenbusch. Thank you, Chairman Grassley. I would just
say that on the fertilizer side, most of the U.S. producers are
U.S. owned.
Chairman Grassley. Okay. For you, Mr. Rosenbusch, when a
single foreign supplier dominates an essential input, and
commerce and ITC-imposed duties that may choke off that source,
what specific safeguards would the Fertilizer Institute support
to prevent a de facto domestic monopoly and keep farmers
supplied?
Mr. Rosenbusch. Thank you, Chairman Grassley, for that
question. The trade cases that you're referring to, they are
complex and have been adjudicated through the International
Trade Commission. At the Fertilizer Institute, we have both of
those members on both sides of that case, so a wise man once
told me, when you have two members on both sides of the issue,
go with the member, and so we don't have an official policy on
any of those trade remedy cases. I will tell you that there
were many factors when that case came forward in 2020 that
impacted the market and impacted the supply. A lot of those
tons ended up being filled by Saudi Arabia and other countries.
Chairman Grassley. We have some statements here from people
that want to get into the record, statements and letters from
several groups, including the Iowa Corn Growers Association. I
am going to ask unanimous consent that those statements be put
in, and there's nobody here to object.
[Laughter.]
[The information appears as submissions for the record.]
Chairman Grassley. Dr. Moss, in plain English, where's the
line between licensing that speeds innovation and licensing
that walls off rivals, especially for stacked traits? Do you
support narrowly tailored measures similar to the fair,
reasonable, and nondiscriminatory agreements? If so, why?
Dr. Moss. Thank you, Chairman Grassley. So, I think two
things quickly in response to that question. Antitrust does a
very difficult dance with intellectual property law. Our
intellectual property laws are extremely important for spurring
incentives to engage in R&D and to innovate products. But as
we've seen in the pharmaceutical industry, there can absolutely
be trouble ahead when firms use intellectual property rights to
shape or to control how competition develops. We've seen that
with product topping and generic seeds where generics have been
kept out because of small changes in patents and another 20
years of patent protection. So, that's the first answer. 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 complex
and difficult process, given how much trait stacking there is.
And determining what is a fair price for a license, of course,
would be even more complex, and that will require a good deal
of government oversight, and I would expect it would generate
an enormous amount of controversy.
Chairman Grassley. My last question will be to Mr. LaVigne
and Dr. Moss. I want to understand why generic, insect-
resistant traits haven't materialized despite patent
expiration. I understand that there does not appear to be a
single generic insect-resistant trait available to growers,
notwithstanding frameworks touted as solutions. Why is this the
case?
Dr. Moss. My first response would be, again, the ag-biotech
industry has borrowed a page from pharmaceuticals, filing for
new patents based on very minor modifications, which then locks
in another 20 years of patent protection and the ability to
charge monopoly prices. The FTC currently has a case looking
into loyalty discounts in pesticides. That is another way to
lock farmers into cropping systems and limit the ability of
farmers to switch. Lack of interoperability exacerbates this
problem. So, we are nowhere near on top of these types of
abuses of intellectual property that are really designed to
stifle and to control competition.
Chairman Grassley. Mr. LaVigne.
Mr. LaVigne. Thank you, Mr. Chairman, and as we look at it,
just to reiterate, we're not in the practice of collecting what
the practices of the members are or how they license or charge
fees. It's against American antitrust law, so I will make
comment from the respect that 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 after that expiration. You're looking at a lot of
products where it may be the BT product, but you're also
looking for stacks of other products with that. And then also
newer varieties as they come along, is somebody going to want
to stack that on a 20-year-old variety that's off patent, or do
they want a new variety that is more resistant and has disease
resistance in it? So, the plant-breeding process and the track-
development process is an evolving process as we go along, and
it's not just static. We're not planting the same seed
varieties we did 20 years ago. We're trying to bring that
newest product to the farmer. The asset has been involved in
driving the ag accord to try to give that platform for generics
coming to the marketplace, but it's been a challenge, and it's
one that we need to continue to work with Congress and work
with the administration, EPA, and USDA to try to provide that
pathway for companies that choose to go to the generic traits
and varieties.
Chairman Grassley. Before I adjourn, I thank all of you for
your contribution to this debate, and if you got anything you
didn't get a chance to say, we'll 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 for the record for 1
week from today, and I'll ask the witnesses to answer and
return the questions to the Committee within 2 weeks after you
receive them.
Chairman Grassley. Thank you very much. Meeting adjourned.
[Whereupon, at 12:20 p.m., the hearing was adjourned.]
[Additional material submitted for the record follows.]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
A P P E N D I X
The following submissions are available at:
https://www.govinfo.gov/content/pkg/CHRG-119shrg62935/pdf/CHRG-119shrg
62935-add1.pdf
Submitted by Chairman Grassley:
ACT | The App Association, letter................................ 2
INARI, statement................................................. 6
Mueller, Mark, statement......................................... 8
[all]