Representatives from the American Farm Bureau Federation, National Corn Growers Association, and National Farmers Union testified Tuesday at the Senate Judiciary Committee hearing on consolidation in the agribusiness industry, which is poised to cut the number of major companies in the seeds, chemicals and crop nutrients market in half.
AFBF Chief Economist Dr. Bob Young told the committee that farmers and ranchers cannot afford to lose access to technology and innovation through consolidation. “AFBF has had several—and repeated—assurances from the companies involved as to their intent to maintain as strong an innovation arm as they can,” Young said. “We have no reason to doubt, but we also are reminded of the old line: trust, but verify.”
Young asked that regulators review these mergers not only in light of market concentration, but also the structure of the entire industry in a post-merger environment. “Everyone’s knee-jerk reaction is to think that increased concentration will lead to higher prices for these inputs,” Young said. “Knees tend to jerk reflexively, but sometimes they jerk with reason.”
Speaking on behalf of both corn growers and the American Soybean Association, NCGA CEO Chris Novak told the committee that consolidation in the industry is being driven in part by the regulatory climate. “The process of developing and testing new products, and then securing regulatory approval to bring them to market, requires a substantial amount of time and money. As a result, fewer and fewer companies have the resources to be players in the market. This trend toward consolidation will continue unless and until Congress addresses these regulatory hurdles,” Novak testified.
NFU president Roger Johnson asked the panel for more oversight of antitrust enforcement in agriculture. “The hands-off approach we’ve seen in antitrust enforcement has led to the highly consolidated economic conditions prevalent today and the resulting vulnerability of American farmers. We must do more to prevent consolidation that results in a few firms controlling substantial percentage of market share,” Johnson said.
Listen to the opening statements of all three agriculture group representatives here: Judiciary Committee Hearing Ag Group Statements