USDA Extends Deadline to June 15, 2022 for Public Comments on Agri-Competition Issues
This is a golden opportunity to be heard on very important issues affecting the U.S. Agricultural sector in advance of the upcoming Farm Bill.
The USDA is asking for public comments regarding market competition challenges in (i) fertilizer, (ii) seed and agricultural inputs, and (iii) food retail and distribution markets. We should also point out that the current Federal Farm Bill is set to expire in September 2023. Thus, policy makers and constituents are already gearing up to shape the federal government’s single largest financial commitment to the U.S. Food and Agriculture sector.
Written comments can be posted online at regulations.gov or mailed to Jaina Nian, Agricultural Marketing Service, USDA, Room 2055-S, STOP 0201, 1400 Independence Avenue SW, Washington, DC 20250-0201.
Anonymous comments will also be accepted.
Below we’ve posted the USDA’s questions for the three areas of inquiry.
Seeds and Other Agricultural Inputs
Below are USDA’s 25 questions on this sector:
Concentration and Market Power in Agricultural Inputs
(1) Please describe challenges, concerns, and any other views (including relating to any benefits) with market concentration and market power in the agricultural input industries, including, as applicable, effects on farmers, competitors and related markets; pricing; availability; transportation and delivery; quality; research and innovation; economic growth, labor markets, and inequality issues; supply chain resiliency; and any other factors.
(2) Please share your views on access, availability, pricing, quality, and related matters relating to seeds. In particular, are seed companies offering an adequate variety of types of seeds and traits that meet your needs as a grower? Are seed companies regularly providing new and improved varieties for growers? Have gains in yield or net returns resulting from use of new varieties been adequate to compensate farmers for the cost of seeds? Are regional needs, tribal and underserved communities, climate concerns, and product-specific needs, such as organic seeds, being appropriately served by the seed marketplace?
(3) For agricultural inputs other than seeds, please share similar responses to those solicited for seeds in Question 2, above, relating to access, availability, pricing, quality and related matters. Please respond as to whether companies are offering adequate product varieties to meet producer needs, whether there are new and improved varieties or products, and whether there are gains in yield or other producer benefits, including net returns. Are regional needs, tribal and underserved communities, climate concerns, and product-specific needs, being appropriately served by the marketplace?
Intellectual Property
(4) Please share your views on whether, and if so how, the existing IP system—including plant patents, utility patents, and plant variety protection certificates—appropriately balances the need to incentivize innovation with the goal of ensuring public access to new and improved products at reasonable cost. Please explain why or why not, and discuss in context of seeds or the particular agricultural input of concern. If you have concerns, please explain the concerns and provide suggestions on how the IP system can be improved to address those concerns.
(5) For seeds in particular, is the patent side of the plant-related IP system appropriately reserving its grant of statutory patent monopolies to inventions that are of significant utility, novelty and non-obviousness? Do you have concerns about patent quality in the area of plant-related IP or plant-related technologies? If you have concerns, please explain.
(6) Does the existing IP system, as relating to seeds and other agricultural inputs, effectively meet the statutory goal of rewarding invention through protection from competition for a fixed term? Does it fairly and effectively promote competition and innovation, or does it inappropriately suppress competition and innovation? Please explain. If you believe the IP system inappropriately suppresses competition or insufficiently rewards innovation, please explain and provide concrete examples where possible.
(7) Do farmers, ranchers, and other stakeholders have sufficient access to off-protection and generic options? If not, are regulatory tools, systems, or practices being utilized to inhibit access? For example, do you believe there is evidence of inappropriate strategies to extend the life of patents? Please explain and provide examples.
(8) Please share your views on whether and how the different forms of IP protection for new plant varieties appropriately promote access to germplasm for the development of new varieties. Please share specifics where possible and provide suggested improvements to ensure farmers’ and breeders’ access to germplasm for variety development.
(9) Please comment on IP enforcement. Do you believe farmers, breeders and small and medium sized enterprises face challenges concerning enforcement of their plant related IP rights? If so, please provide concrete examples. Do you believe farmers, breeders and small and medium sized enterprises face challenges from other companies asserting their IP rights against them? If so, please provide specific examples. Please also offer recommended solutions for mitigating those challenges.
(10) Are there other ways in which the IP system, including copyrights and trademarks, may positively or adversely affect choice, quality, and other aspects of competition in seeds or other agricultural inputs? For example, what role does IP play, if any, in farmers’ and ranchers’ ability to repair and maintain equipment? [11] Please provide examples.
Business Practices and Other Competition Matters
(11) What role do contractual or sales practices in seed and other agricultural input markets play with regard to a farmer’s or business’s autonomy, innovation, or ability to compete? How have contractual or sales practices changed over time? Do some firms’ contracts require farmers to buy inputs from or sell exclusively to one or a few firms? What impacts do these contractual requirements have on competition?
(12) Is there evidence of contracting or sales practices locking a farmer into a mode of production and inhibiting them from entering other farm enterprises? To what extent do requirements or inducements to buy a main product ( e.g., seed) with a second product ( e.g., pest management chemical), bundle, stacked trait, or service impact the farmer or other agricultural input competitors? For instance, does such a practice lock a farmer into or out of certain product choices? Please offer specific recommendations for reforms.
(13) What role do marketing and labeling practices have on competition in seeds or other agricultural inputs? Do labeling and naming practices provide sufficient notice that the seed or other agricultural input in question is protected by IP or not protected? Please explain.
(14) Please comment on implications, negative or positive, of mergers in the seed industry and in industries that sell other agricultural inputs. Have certain mergers changed contracting or sales practices? Have certain mergers allowed the acquisition of rivals or technologies or companies that competitor firms rely on? Have mergers delivered efficiencies? Please offer recommendations for specific actions where appropriate.
(15) Please comment on the presence of, and any concerns around, licensing restrictions in seeds or other agricultural inputs. Please comment on cross-licensing practices, including restrictions or exclusive cross-licensing permissions, and any related concerns. Do fees on the same type of license vary and if so under what circumstances? Do licensees have access to information on comparable licenses? Are some companies or organizations denied reasonable access to licenses and on what basis? What further guidance, if any, on appropriate licensing practices would be helpful? [12]
(16) Please comment on any other concerns relating to competition matters. For example, do you have concerns relating to manufacturer restrictions on aftermarket competition, preferential pricing schemes that may favor one farmer or competitor over another, or contractual arrangements such as tying or exclusivity arrangements? Do you believe there is evidence of attempts to fix prices, allocate markets, or to restrict from where a farmer buys inputs and sells product? Do you believe there is evidence of agricultural input firms using their market power to price below cost and run losses to undercut and eliminate competitor or potentially competing firms? Is monopsony—where sellers are harmed from market power abuses by buyers—relevant in these industries and supply chains, and if so how? What role, if any, does financing or financial markets play in any of the issues addressed above? Please provide examples for concerns raised.
Information Resources
(17) Do you believe farmers, breeders and other stakeholders have appropriate access to information, education, and support services around seeds and other agricultural inputs, including information on IP protection and IP-related risks covering seeds they buy and the varietal identity of those seeds? If not, what are the most effective means for improving access to such information? What about other agricultural inputs?
(18) Do farmers, breeders, and other stakeholders have access to adequate information on new applications for plant IP, prior to the award of plant patents, plant variety protection certificates or utility patents to the applicants? Are there improvements that could be made to information accessibility for applications prior to the granting of IP protection? What about for other agricultural inputs?
(19) Please comment on any concerns or challenges related to data— e.g., collection, privacy, accessibility, control, market power, or any other aspect—as it affects competition in seeds or other agricultural inputs. To what extent does the expanded application of site-specific crop management using data from sensors, climate readings, or mechanical systems in agriculture impact competition and farmers’ access to seeds and other inputs? What mechanisms would safeguard a farmer’s control of data and enhance competition and fair access, while appropriately promoting the effective use of new technologies and data analytics? Are there relevant changes to the IP system that would facilitate innovation, competition, and fair access to data? Please comment on any benefits and opportunities for farmers relating to data and consolidation, as appropriate.
Additional Matters
(20) Please share any information relevant to regional needs, tribal and underserved communities, climate concerns, and product-specific matters, such as organic seeds, in relation to any of the concerns raised above.
(21) Please comment on any international policy or risk implications related to any of the above matters. Do one or more of the currently available IP forms of protecting plant-related technologies have particular challenges or benefits in the international context in terms of ensuring fair competition and providing farmers access to improved varieties, and quality, affordable seeds? What about for other agricultural inputs?
Policy, Programs, and Solutions
(22) Please comment on the strengths, weaknesses, effectiveness, and gaps in current USDA policies and programs to facilitate access to affordable seeds and other agricultural inputs for farmers, plant breeders, ranchers, and other stakeholders. Are information services, grow out services, and access to seed varietals that are not subject to IP protections sufficiently available? Do farmers, plant breeders, ranchers, and other stakeholders have sufficient voice within relevant agency decision-making, and if not, how could it be improved? How could labeling practices be improved? Please suggest actionable steps that USDA could take to help address any identified concerns.
(23) How could the IP system be improved to address any concerns highlighted?
(24) How could Federal or state antitrust enforcement better address any concerns highlighted?
(25) What other policy changes, tools, investments, or programs could USDA or other agencies deploy to enhance the competitiveness of seeds and other agricultural input markets in relation to any of the concerns highlighted by your responses to the aforementioned questions?
Fertilizer
Below are USDA’s 15 questions on this sector:
(1) Please describe challenges and concerns with market concentration and power in the fertilizer industries, including the extent of control by any firms over farmers’ and business’ access to fertilizer, pricing, availability, transportation and delivery, quality, and any other contract terms or other factors. Please describe how these challenges have developed or evolved over time, and any details on geographic or other divergences within various regions of the United States or between the United States and international markets for fertilizer.
(2) Please comment on both long and short-term trends in fertilizer prices. What role have fertilizer, crop prices, or availability of key raw materials and manufacturing played in any changes? Has price volatility increased and if so, what accounts for this increase in volatility? Please comment on any trends and the relationship of fertilizer prices to prices of relevant crops, such as corn and soybeans.
(3) Please share your views on whether the existing fertilizer market is sufficiently competitive. If you believe it is not, how do competition problems manifest themselves? For example, is there evidence of collusion, market manipulation, or other anticompetitive practices among competitors, buyers of farm products, commodity traders or related financial firms to fix or alter prices, allocate markets, or restrict from where a farmer buys inputs and sells product? Is there evidence of private or public communications by fertilizer companies relating to price, output or supply that appear to go beyond those necessary to communicate important information to customers?
(4) What effect have these mergers had on a merged firm’s market power and the ability to squeeze farmers or squeeze out competitors? Are there indications that firms have made it harder for new fertilizer firms to start up and grow? Is there evidence that firms have controlled or reduced supply to keep supply low and prices high? Have certain mergers allowed the acquisition of technologies or businesses that produce, transport, or retail fertilizer that competitors rely on, with the effect of lessening competition? Is there evidence of merged firms using their market power to price below cost or run losses in certain segments to undercut competitors or potential new market entrants?
(5) What role do contractual or sales practices in fertilizer play with regard to producer access or prices paid to fertilizer? Have contractual or sales practices changed recently, or over time? Has the duration of these contracts changed over time and if so, how? Do some contracts require farmers to buy or use fertilizer from one supplier? Is there evidence of fertilizer companies preferentially pricing products differently for some farmers or dealers and not others? To what extent and in what ways do buyers of farm products influence farmers’ use of fertilizer?
(6) Please describe any requirements or inducements to bundle a main product (fertilizer) with another product or service, and any impacts on competition. For instance, does such a practice induce a farmer’s lock-in or allow the firm offering the main product (fertilizer) with the secondary product ( e.g.,: pest management chemical or seed) to exclude competitors from offering the second product? What impacts do any of the contractual requirements listed above or any other contractual or sales practices have on competition?
(7) How do transportation and delivery affect fertilizer competition and access to fertilizer? For instance, the U.S. receives imports of fertilizer derivatives through the Gulf of Mexico, and ships fertilizer product up the Mississippi River. To what extent does market power by fertilizer or applicable firms over these or other key transportation channels affect competition and farmer’s access to fertilizer? What risks relating to supply chain, labor or other disruptions are most relevant?
(8) Please comment on the U.S. agricultural system’s reliance on foreign supply of some fertilizers and global supply chain risks that could result from trade disruptions. Please comment on how the conflict in Ukraine may be impacting fertilizer markets. If other supply chain or trade disruptions have been experienced, please describe the effects and challenges in dealing with such events. Would greater availability of domestic or North American options mitigate risks? Would reducing dependence on suppliers from any one country or region mitigate risks? What tools might be deployed to achieve those ends?
(9) Please comment on sustainability, climate, and other environmental concerns and risks relating to fertilizer markets. Have market concentration and power exacerbated these challenges and risks? Have they facilitated sectoral adjustment for climate and sustainability purposes? Would shifting fertilizer production to countries with high standards on labor and environmental protection improve competition, better manage sustainability risks, or otherwise improve public interest outcomes? What other strategies may exist to raise sustainability standards along supply chains?
(10) What obstacles exist to the financing and development of new fertilizer capacity that would enhance the competitiveness of fertilizer markets? Would new or expanded domestic manufacturing, mining, processing, or alternative fertilizer production capacity help promote access to and affordability of fertilizer for agricultural producers? Are there existing “shovel ready” manufacturing, mining, or other processes that could or should be adjusted to facilitate new fertilizer production? Are there other potential new entrants in the near or medium-term? How might USDA best support investment in new fertilizer capacity in the U.S.?
(11) How can USDA further support more efficient use of fertilizer? Are current precision agriculture tools effective at reducing fertilizer application rates without impacting yield? Could sub-field management of application rates improve economic resiliency of farms? Are there tools that USDA could support to facilitate better application rates, timing, and appropriate use of existing fertilizer sources? How could risk management tools such as crop insurance help with yield gaps from reduced nitrogen application rates, for example? How could USDA’s working lands and other conservation programs better support more target and efficient use of fertilizer? How might adverse community, labor, and environmental costs arising from the production fertilizer in certain geographies be better factored into USDA grants, loans, or regulatory programs? Are there ways USDA could support more effective use of other fertilizers ( e.g.: manure) from livestock? Could considering these factors improve competition in certain markets? Please share your views.
(12) Are there concerns or challenges related to data— e.g., to collection, privacy, accessibility, control, concentrated market power, or any other aspect—as it affects affordability, accessibility, and use of more targeted application of fertilizer? For instance, to what extent does the expanded application of targeted site-specific crop management using data from sensors, climate readings, or mechanical systems in agriculture impact competition and farmers’ access to fertilizer or other agricultural inputs? Is there evidence of firms with market power using information obtained regarding farmers’ farming practices to adversely affect farmers or competitors? Are there ways that USDA or other agencies can safeguard a farmer’s control of data and enhance competition and fair access?
(13) Please comment on the availability and accessibility of market information and data for fertilizers. Which public or private sources do you rely on to receive information on fertilizer prices and other related markets? Are you able to access timely, accurate, and comprehensive information on spot prices of fertilizers in local, regional, and national markets? If not, how can USDA further facilitate price reporting information and transparency for market participants? Beyond price reporting, what other market related information would be helpful that is currently limited or not accessible?
(14) In what other ways can USDA support farmers’ ability to adapt to variability in fertilizer costs? How might USDA assist small producers in hedging or otherwise mitigating sudden, unexpected jumps in the spot price of fertilizer? How might USDA better support modes of production that rely less on fertilizer, or support access to markets that may pay a premium for products relying on less fertilizer? How can USDA further facilitate appropriate conservation of land, and/or support farmers’ flexibility in starting up and sustaining other farm enterprises?
(15) What other tools, investments, or programs could USDA or other agencies deploy to enhance the competitiveness of fertilizer markets? Please suggest any other actionable steps that USDA or other agencies could take to help address any identified concerns.
Food Retail and Distribution Markets
Below are USDA’s 20 questions on this sector:
Competition and Impacts
(1) Are market concentration and power, and lack of competition, problems in food retail and distribution markets? If so, where and in what ways? What practices in the food retail and distribution markets are most concerning from a competition standpoint? Are there particular practices that exclude or disadvantage new market participants or potential market participants, unfairly transfer risk, or otherwise abuse market power or make it harder to compete? Please describe specific experiences and challenges, if possible.
(2) How do concentration and size in the food retail and distribution markets affect the ability of agricultural producers and new, SME food processors to access the retail marketplace? Are agricultural producers and SME food processors that serve local and regional markets affected differently? Are there regional and other demographic variations to any of the impacts? Please describe specific experiences and challenges, if possible.
(3) How does competition and concentration among distributors and other parts of the wholesale food market relate to food retail concentration and competition? How do distribution and wholesale food market competition and concentration affect access to markets for agricultural producers and SME food processors? Does buying power of some retailers at the wholesale level make it difficult for some producers or SME processors to access distribution within these channels?
(4) How are SME grocery retailers specifically affected by concentration and potentially anticompetitive practices in food retail markets? What about distributors that may serve them? Do any of those challenges affect agricultural producers and SME food processors? Please describe specific experiences and challenges, if possible.
(5) How are smaller food service businesses, schools, hospitals, and other institutional food buyers affected by concentration or potentially anticompetitive practices in food processing and distribution? What effects do concentration and potentially anticompetitive conduct have on food prices, quality and safety, distribution and availability of healthy foods that meet nutrition standards, or other needs specific to these buyers and food providers?
(6) How are workers, consumers, other small businesses, communities, and others along the food supply chain affected by concentration or potentially anticompetitive practices in food retail and distribution markets? What effects do concentration and potentially anticompetitive conduct have on food prices, quality and safety; distribution and accessibility to healthy foods, and food and nutrition security; and worker empowerment, equity for underserved producers, and environmental sustainability? Are challenges with food deserts aggravated by concentration or competition issues in the food and agricultural supply chains? Do impacts to any of these concerns vary by region, commodity, or by other demographics?
Business Practices
(7) Please describe the role that exclusive dealing arrangements play in the food retail and distribution marketplaces. Do they facilitate, inhibit, or otherwise affect opportunities in the industry for SME processors? How do they affect the development of new products and the growth, diversity, or resilience of the industry? Do they facilitate, inhibit, or otherwise affect product quality and risk management? Do differences in commodity, product, or region affect the practices, risks, barriers, or outcomes? Are tribal businesses and enterprises and underserved communities affected differently? Does the size, scale, or market power generally of the companies involved in such an arrangement matter for how these arrangements affect competition?
(8) Please describe the role that slotting fees, category captains, and other preferential access or discounts play in retail food markets, including but not limited to meat and poultry. Are certain segments, such as organic or value-added products like grass-fed meats, affected differently? What affect do such behaviors have on access to the retail marketplace? How are preferential relationships in the marketplace manifested, and do those relationships limit new market entrants from accessing the marketplace? Do those relationships improve risk management or otherwise enhance market access in certain circumstances? Should any of these practices be limited or changed to support new market entrants, and if so, how?
( 9) If you are a small or mid-sized producer, have you had to change any business or marketing practices in order to effectively navigate required slotting fees to gain market access? Have these changes negatively impacted the overall profits of the products you sell? Do you believe that slotting fees are adversely or unfairly deployed against small or mid-sized producers or otherwise affect market access and what is the basis for your belief?
(10) Please share any concerns relating to predatory pricing by incumbent food processors, threats of retaliation by incumbent food processors against retailers for offering new or different products, or other practices designed to exclude competitors from the marketplace. When and where have they occurred? Were antitrust enforcement tools able to address the challenges in a timely and effective manner? If not, why not?
(11) Please comment on implications, negative or positive, of mergers in the food retail or distribution sectors. Have certain mergers changed contracting or sales practices? Have certain mergers allowed the acquisition of rivals or technologies or companies that competitor firms rely on? Have mergers negatively or positively impacted workers? Have mergers delivered efficiencies?
Information and Supply Chain Market Structures
(12) What roles do control and access to retail data play in competition and access for farmers and SME food processors? Are there significant imbalances in access to information among producers, packers, distributor, and retailers, and how do those imbalances affect choices and outcomes in the market? Describe the role that data sharing between food retail companies and larger food processors, such as packers, plays in the market environment, if any. How do any differences affect competition and market access, and should any of these be limited, and if so how?
(13) Describe the role that retailer ownership, including financing, of livestock and packing play in supply chain competition and access to retail for producers and SME processors? Are competition concerns, if any, similar in other agricultural commodity markets? Have these practices reduced or eliminated the need for, or competition among, certain suppliers to some retail firms? Are certain segments, such as organic or value-added products like grassfed meats, affected differently? Should ownership, financing, or other forms of vertical integration be promoted, limited, or otherwise changed, and, if so, how?
(14) Please discuss how transportation—including rail and ocean shipping—and delivery systems may affect competition in food retail and distribution. Are certain ownership structures, business relationships, or business practices of particular concern? How do transportation costs, fees, or levels of service affect the competitiveness of downstream businesses? Has concentration in transportation industries led to negative service outcomes or other potentially unfair practices? Have contractual arrangements that penalize suppliers, including transportation companies, for not delivering in sufficient quantities or on other particular terms become more prevalent? Have they become problematic as market power has grown, or in certain circumstances?
(15) Describe the role that label claims and labeling standards play in access to retail markets for agricultural producers. Are public or private resources sufficiently available for smaller agricultural producers seeking to develop or use labels? Do labels standards, verification, and enforcement appropriately support access to markets for agricultural producers and SME processors? Are there any instances when a larger supplier used, including potentially misused, a label to gain market access or advantage over smaller producers or SME processors? Please share concerns and recommendations, if any.
(16) What role, if any, does financing or financial markets play any of the issues addressed above?
(17) Are there any other aspects of the regulatory environment that affect retail market competition and access to retail for producers and SME processors? Are there specific elements of these requirements that could be more effectively tailored? What types of resources would be helpful to assist SMEs with compliance?
Policy Responses
(18) How can antitrust and market regulation and enforcement, including relating to mergers, unfair practices, and price discrimination, do more to address competition concerns in food retail and distribution markets? Should Federal and state antitrust enforcers place greater emphasis on adverse consequences of buyer power? Should greater attention be paid to information asymmetries and preferential access to data? How could USDA utilize its regulatory and enforcement authorities more effectively?
(19) How can predatory pricing by entrenched market participants be better identified and acted upon by relevant enforcement authorities? Can laws that prohibit discriminatory or preferential pricing, such as the Packers and Stockyards Act and the Robinson-Patman Act, play a greater role in preventing predatory pricing schemes, or otherwise promote greater food market access for agricultural producers and SME processors? Please explain.
(20) How could other USDA programs, services, and authorities be further deployed to enhance access to retail markets for agricultural producers and SME food processors?