OSA Advocacy Intern Will Gallagher recently unpacked what a July 2021 White House Executive Order on consolidation in agriculture could mean for stronger antitrust enforcement under the current administration and how it could impact the seed industry. Will’s piece, which is excerpted below, was recently published by our friends over at Daily Yonder. We encourage you to read it in full and to share it with your colleagues and friends!
The White House on July 9 issued an ambitious Executive Order tackling consolidation in agriculture and several other key industries. The order reasserts the government’s authority to challenge deceitful and harmful corporate practices in an era of extreme monopolization in agricultural markets, including seed, farm equipment, and livestock. Consolidation reduces choices and drives up prices for seeds and other farm inputs, allowing the handful of top industry players to push products and polices that perpetuate an unsustainable system with little to no concern for public or environmental health.
Antitrust is governed by a patchwork of hundred-year old laws: mainly the federal Sherman, FTC, and Clayton Acts. The Sherman Act outlaws any “contract” or “conspiracy” that unreasonably restrains trade, the Clayton Act prohibits monopolistic mergers and acquisitions, and the FTC Act established the Federal Trade Commission as the major antitrust watchdog alongside the Department of Justice (DOJ). Consolidation in agricultural markets was such a potent driving force behind these laws that Congress devised especially strict restrictions to combat anticompetitive behavior in the livestock industry. This law, known as the 1921 Packers and Stockyards Act (PSA), has been minimally effective, despite the USDA and DOJ jointly holding five public workshops on competition in 2010, one of which was focused on strategizing avenues for stronger enforcement.
After decades of delay and a legislative rider defunding all efforts to move forward with rulemaking, USDA announced in June that it would finally breathe new life into the PSA. The proposed rules will more clearly define the contours of illegal behavior, do away with the “tournament” pricing structure—where poultry growers are pitted against their peers and paid based on a ranking system—and allow plaintiffs to bring lawsuits without needing to demonstrate industry-wide harm. USDA Secretary Tom Vilsack praised the initiative, arguing that the agency’s interpretation of antitrust law “needs to take into account modern market dynamics” rather than continue “to be used as a safe harbor for bad actors.”
While certainly a step in the right direction, the enhanced antitrust protections envisioned by the PSA should be extended to all agricultural sectors, not just livestock. The problems inherent in livestock farming abound in crop farming as well, in both cases largely due to unequal ownership of resources and exploitative contracts that squeeze out most of the profits and pin nearly all of the liabilities on the farmer. Farmers who grow patented seed—over 90% in the U.S.—must do so in a highly controlled manner or risk beaching the contract with their seed supplier. These agreements bar any and all research, replanting, and other off-label uses of seed, including breeding projects to develop new and regionally adapted varieties. The vast majority of patented varieties developed by the big corporations only contain genetic modifications that grant them resistance to an herbicide or pesticide that is also sold by the same company, trapping farmers in a revolving door of dependence on a single supplier for many, if not all, of their inputs. To make matters worse, these farmers are routinely investigated for patent infringement — for saving these proprietary varieties. Farmers’ time-honored right to save a portion of their harvest for re-planting is now illegal due to corporate patent rights and the egregious contracts protecting them.
Biden’s plan acknowledges these dangers and duly targets patents as a driver of consolidation, directing the USPTO to investigate and prepare a report outlining the anticompetitive effects of seed patents and potential solutions. The body of precedent supporting the practice of granting utility patents on seeds is surprisingly thin: the legislative histories of the Plant Patent Act and Plant Variety Protection Act show that Congress expressly considered—and twice rejected—overly restrictive grants of power over new varieties. Seeds became patentable thanks to a novel interpretation from a narrow majority of justices on the Supreme Court, who in 1980 decided that GMOs were not “products of nature” but rather human inventions.
How can Congress best remedy the problems caused by consolidation in the seed industry?