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Bigger and bigger and …

Two years ago March 12, trumpets blasted in Ankeny, Iowa, as America’s new gladiators for agricultural justice — U.S. Attorney General Eric Holder, Jr., his antitrust chief Christine Varney, U.S. Department of Agriculture boss Tom Vilsack and hundreds of farmers — gathered for a day-long discussion on “competitive dynamics of the seed industry; trends in contracting issues, marketplace transparency and buyer power; and agriculture enforcement and co-operation at the federal and state levels.”

This first-of-its-kind hearing was the start of a year-long, five-meeting examination into what many farmers and ranchers considered was the growing dysfunction of agricultural markets.

Many farmers and ranchers believe markets for inputs like seed and fertilizer have so few players that competition is non-existent. Livestock producers, especially cattle and poultry growers, have long complained about paper-thin, contract-driven slaughter markets dominated by vertically integrated meat packers.

Two years hence, however, nothing — not one major regulatory or ag antitrust case — has been brought. In fact, there’s been more backing up than moving forward.

  • USDA’s efforts to strengthen rules and increase market transparency over meat packers — showcased by its politically charged, 18-month battle to update the Grain Inspection, Packers and Stockyards Administration (GIPSA) — has been a well-documented bust.
  • And, in a show of pure political power, meat packers and “their lackeys,” as Iowa Sen. Charles Grassley calls them, have lobbied Congress to drop all livestock market concentration provisions in the rewrite of the 2008 Farm Bill.

Why not? DOJ’s Antitrust Division, with its comparatively puny $160-million budget, 360 attorneys and 55 economists, is easily outgunned by global ag players.

Ag concentration expert C. Robert Taylor, the Alfa Eminent Scholar and professor of ag economics at Auburn University, gave presentations to USDA, DOJ and the Federal Trade Commission on the size and scope of global fertilizer cartels. Each, he recalls, led to lengthy discussions.

“But when it came time to talk about what to do,” recalls Taylor, “most said that if they proceeded to investigate they’d get a phone call from Capitol Hill in 10 minutes telling them their agency’s budget was being slashed.”

That pressure continues to ensure the big will get bigger. Proof arrived March 20, when Viterra Inc., a $12-billion grain merchandiser that handles 45 per cent of all Western Canada grain, announced it was selling itself to Glencore International, a $186-billion global giant.

As part of the deal, Viterra will sell its agri-products division to Agrium, Inc., a $15.5-billion-per-year company that labels itself “the largest global provider of agricultural crop input products and services.”

Reuters news service viewed the Viterra deal as the opening salvo in “a second wave of consolidation” for new agbiz players like Noble ($57 billion in 2010 sales) and Wilmar International ($44 billion in 2011 sales) to challenge the old “ABCD” lions — Archer Daniels Midland, Bunge, Cargill and Dreyfus — in world food markets.

Some fight. Three of ABCDs (Dreyfus, a private firm, doesn’t report sales) posted $146 billion in collective revenue last year.

Or about $120 billion more than the entire budget of the U.S. Justice Department.

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