Farmers tell FBI they’re selling Iowa Fertilizer Co. to block Koch Industries

NEVADA — Iowa farmers told a federal trade chief this weekend that the agency is suspending the sale of Iowa Fertilizer Co. to Koch Industries worth $ 3.6 billion, because it will further consolidate the sector and drive up prices.

Several of the roughly 100 residents of Iowa, Minnesota and Missouri who attended Saturday’s Iowa Farmers Union listening session told Lina Khan, chairwoman of the Federal Trade Commission, that consolidation within the agriculture industry — from fertilizer to seed to agricultural chemicals — could worsen the already squeezes small profits from the agricultural sector. their activities.

Iowa lawmakers and residents have criticized the sale, which 12 years ago provided about $545 million in local, state and federal economic development incentives and tax breaks to encourage construction of the plant in southeastern Iowa.

“Iowa invested about half a billion dollars in this plant, and the goal at the time was to create more competition within the fertilizer industry,” specifically because of the dominance of Koch Industries, said Aaron Lehman, board chairman of the Iowa Farmers Union.

The sale is a “huge step back for the competition,” he said.

OCI Global, the Dutch parent company of Iowa Fertilizer Co., announced in December that it is selling the Wever plant to Koch Fertilizer, a company owned by Koch Industries, pending regulatory approval. Farmers told Khan this is just the latest in a series of mergers that have limited the number of companies they can buy farm supplies and equipment from and to whom they sell crops and livestock.

Nationally, four companies are responsible for 75% of the supply of nitrogen, a key component of fertilizer, according to the U.S. Department of Agriculture, which announced in 2022 that it would invest $500 million to expand fertilizer production.

The move was part of President Joe Biden’s plan to boost competition in various sectors.

More: With Koch’s purchase of fertilizer plants in Iowa, farmers and consumers lose

Fed Trade Chief is without obligation; Koch is confident that the purchase will go through

While he declined to say what action the Federal Trade Commission may take, Khan said the agency may examine proposed mergers such as those of OCI Global and Koch to understand whether they are “going to eliminate competition in a way that harms farmers, harms communities or harms harms the competition.” customers.”

“If we conclude that this is the case, we can file a lawsuit… go to court and try to convince the judge that this deal is illegal. And then ultimately it is up to the court,” said Khan.

On Saturday, a spokesperson for Koch Industries said in a statement that the Kansas-based company is confident the FTC will allow the purchase to proceed after the analysis is completed. Koch is committed to “operating and growing production at the Wever plant,” the spokesperson said, adding that the purchase builds on a $2 billion investment in North America to increase production and improve safety and improve access for consumers.

In Nevada, LaVon Griffieon, a farmer from central Iowa, told Khan that her family had to negotiate prices with giants like Bayer, a St. Louis seed and chemical company; Deere & Co., the Moline, Ill., farm equipment manufacturer; and Nutrien, the Canadian fertilizer company.

Farmers’ ability to pay appears to be driving prices, Griffeon and others said, not demand and production costs. “Every time crop prices go up, their prices go up,” said Griffeon, who farms about 3,000 acres of land north of Ankeny with her family.

The shortage makes it difficult for her family to build wealth for future generations of farmers, she said. For example, her family recently purchased new tractor tires, which cost $20,000. That’s close “to what my parents paid for 80 acres in 1964,” Griffeon said.

“We have land where our sons can start farming. But we can’t really offer them much more, she said.

Farmer says American capitalism is losing its competitive markets

David Weaver, a farmer near Perry, said he has lived in about 20 different countries and appreciates the U.S.’s competitive markets. “It’s great to be a farmer here, in a capitalist industry. But we are losing it on a very daily, annual, annual basis,” Weaver says, adding that his local agricultural retailer buys Iowa Fertilizer products because they are “competitive and even travel halfway across the state.”

Lehman, the president of the Farmers Union, read a letter from a member who said he paid 50% more for fertilizer in 2023 than in 2021 as commodity prices rose. “2023 was the most expensive crop farmers put in the ground,” wrote the Farmers Union member, whose name was withheld because he feared reprisals for criticizing the sector.

“I should also mention that there is no such thing as shopping for a better price on fertilizer. When we call different distributors, the price is almost always the same,” Lehman said, noting that prices have since dropped as corn and soybean prices have fallen in recent months.

Farmers who run an independent agricultural cooperative in Edina, Missouri, say the opening of Iowa Fertilizer Co. reduced costs for its members in 2017.

“This is bigger than Iowa,” said Derek England, board member of the Northeast Missouri Cooperative Service. Before Iowa Fertilizer Co. was opened, the cooperative was able to purchase fertilizer from Koch and CF Industries, another major fertilizer supplier, which has a plant near Sioux City.

This spring, England said, Iowa Fertilizer nitrogen was $70 per ton cheaper than CF Industries. Koch doesn’t often quote prices, he said, but when he does, they’re usually close to CF Industries’ costs. That makes the planned sale of Iowa Fertilizer to Koch “quite concerning,” England said.

Scott Henry, who farms with his family near Nevada, said federal officials should remember that Koch is an American company while OCI Global is Egyptian. Although the company was based in Amsterdam, it was originally based in Egypt.

“I want to continue supporting American businesses, regardless of their political beliefs,” said Henry, whose family gave Khan a tour of the farm.

The Koch brothers have been Republican megadonors

Koch operates a plant in Fort Dodge that employs about 85 people and underwent a $140 million expansion.

Charles Koch, the company’s chairman, and the late David Koch, have been megadonors to Republican candidates and issues.

Harold Beach, another member of the Northeast Missouri Coop board, said Saturday’s meeting is “window dressing.”

“You already know what to do,” Beach said. “I want to encourage you to be fearless, courageous and do the right thing.”

Khan told farmers that Biden is focused on creating fair markets after “huge waves of mergers and acquisitions.”

“We hear all too often that our markets don’t work for people, for everyday people,” she said.

Even with products that consumers want, “your success in the marketplace is not a function of how well you can compete,” but a “function of how a handful of giants choose to exercise their power,” Khan said. told reporters she heard from farmers that they are concerned about losing competition after the state invested heavily in creating it.

The fertilizer factory received over half a billion dollars in subsidies

In 2012, OCI received approximately $112 million in state incentives, approximately $130 million in local property tax exemptions and an estimated $300 million in tax benefits from the sale of Midwest disaster bonds.

Iowa agricultural groups supported the project, saying it would lower the cost of nitrogen fertilizer in the Midwest for corn and other crops.

The project, which created 260 permanent jobs and 3,500 construction jobs, was “one of the largest private sector construction projects in Iowa history and the first global greenfield nitrogen fertilizer plant built in the United States in more than 25 years ,” says OCI. said.

Iowa Reps. J.D. Scholten, Elinor Levin and Megan Srinivas, all Democrats who attended Saturday’s event, were among about 30 other Iowa House Democrats who sent letters to the U.S. Federal Trade Commission, the U.S. Department of Justice’s Antitrust Division and Iowa Attorney General Brenna Bird. , requesting that the sale be investigated.

OCI said it sold the plant to significantly reduce the company’s debt, “unlock shareholder value” and enable the company to continue building lower carbon ammonia and green methanol platforms . Projects include a blue ammonia project in Texas.

Donnelle Eller covers agriculture, environment and energy for the Register. Reach her at [email protected] or 515-284-8457.