(Posted Tue. Sep 20th, 2016)
Regulatory barriers facing agriculture are a major driver of agriculture industry consolidation, National Corn Growers Association Chief Executive Officer Chris Novak testified today at a Senate Judiciary Committee hearing on consolidation and competition in the U.S. seed and agrochemical industry.
“Domestic regulatory hurdles for crop protection chemicals and delays in international approvals for new seed traits represent significant barriers to market entry,” Novak testified.
“These barriers slow down innovation and drive up the cost of seed and chemicals. 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 told the Senate Committee.
Novak testified on behalf of both the National Corn Growers Association and the American Soybean Association. Together, NCGA and ASA represent more than 500,000 corn and soybean farmers nationwide. Novak told the Senate panel that the two associations have a vested interest in ensuring a competitive marketplace for crop production inputs.
“We do want to preserve market competition, but that doesn’t mean preserving the status quo. Just as farmers need to change and innovate, so do the companies that provide our inputs,” Novak testified. In written testimony submitted to the Committee prior to the hearing, NCGA and ASA argued that a competitive marketplace is measured by not only the number of competitors, but also their relative size and ability to compete.
“True competition is not based solely on the number of players within a given market. Strong competition can result from having several evenly-matched companies fighting for market share within the seed, chemistry and trait development markets,” NCGA and ASA stated in the written testimony.
During his testimony to the Committee, Novak noted that one advantage of industry consolidation is increased access to research.
“In an era of declining federal and state agricultural research funding, these agribusiness research investments are vital to the future of food production,” Novak testified.
Earlier this year, NCGA and ASA joined forces to conduct an analysis of the Dow-DuPont merger, and used the analysis to make sure the best interests of corn and soybean farmers would be represented while the Department of Justice reviewed the merger.
NCGA and ASA called on government and industry to work together to maintain farmers’ access to tools and technology during the wave of consolidations.
“We’ve seen a significant decline in the number of small-to-medium sized family farms. Fewer farmers means that the agribusiness industry that supports the farm community has fewer customers—resulting in consolidation beyond the farm gate,” NCGA and ASA wrote. “The speed at which the industry continues to consolidate, and the tenuous state of our farm economy, dictate that we work diligently to ensure that our farmers will still have access to a range of technologies without suffering higher costs.”
Click here to read the full written testimony.