Farmers ask FTC chair to block acquisition
Koch Industries aims to buy Iowa Fertilizer Co.
NEVADA, Iowa – Iowa farmers want federal officials to try to block the $3.6 billion sale of the Iowa Fertilizer Co. to Koch Industries, saying it will further consolidate the industry and drive prices higher.
Several of the roughly 100 Iowa, Minnesota and Missouri residents attending the Iowa Farmers Union listening session Saturday told Lina Khan, the Federal Trade Commission chair, that consolidation within the agriculture industry – from fertilizer to seed to farm chemicals – is squeezing already slim profits from their operations.
The southeast Iowa plant received about $545 million in local, state and federal economic development incentives and tax benefits a dozen years ago to encourage its construction.
Iowa lawmakers and residents have criticized the sale.
“Iowa invested about a half billion dollars in this plant, and at the time, the stated goal was to provide more competition within the fertilizer industry,” specifically because of Koch Industries’ dominance, said Aaron Lehman, the Iowa Farmers Union board president.
The sale is a “huge step back for competition,” he said.
OCI Global, the Dutch parent of the Iowa Fertilizer Co., announced in December that it’s selling the Iowa plant to Koch Fertilizer, a company owned by Koch Industries, pending regulatory approval.
Nationally, four companies account for 75% of the supply of nitrogen, a key fertilizer component, according to the U.S. Department of Agriculture, which announced in 2022 it would invest $500 million to expand fertilizer production.
The move was part of President Joe
Biden’s plan to drive competition across several industries.
Khan told farmers that Biden is focused on creating fair markets after “huge waves of mergers and acquisitions.”
“All too often, we hear ... our markets are not working for people, for regular people,” she said.
While declining to say what action the FTC is taking, Khan said the agency can investigate proposed mergers like OCI Global and Koch’s to understand if they’re “going to eliminate competition in any way that’s going to harm farmers, harm communities or harm customers.”
”If we conclude that it will, then we can file a lawsuit ... go to court and try to convince the judge that this deal is illegal. And then it’s ultimately up to the court,” Khan said.
A Koch Industries spokesman said in a statement that the Kansas-based company is confident the FTC will allow the purchase to proceed after concluding its analysis. Koch is committed to “operating and growing production at the Wever facility,” the spokesman said, adding that the purchase builds on a $2 billion investment in North America to increase production and improve safety and consumer access.
In central Iowa, farmer Lavon Griffieon told Khan her family must negotiate prices with giants like Bayer, a St. Louis seed and chemical company; Deere & Co., the Moline, Illinois, farm equipment manufacturer; and Nutrien, the Canadian fertilizer company.
Farmers’ ability to pay seems to drive prices, Griffieon and others said, not demand and production costs. “Every time crop prices go up, their prices go up,” said Griffieon, who farms about 1,100 acres with her family north of Des Moines.
“We have land to get our sons started farming. But we really can’t provide them with much” more, she said.
Iowa farmer David Weaver said he’s lived in about 20 different countries and he appreciates the competitive markets of the United States.
“Being a farmer here, in a capitalistic industry, is wonderful. But we are losing it on a very daily, yearly, annual basis,” said Weaver, adding that his local ag retailer buys Iowa Fertilizer’s products because it’s “competitive, even traveling over halfway across the state.”
Lehman, the Farmers Union president, read a letter from a member who said he paid 50% more for fertilizers 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 wasn’t provided because he feared retaliation for criticizing the industry.
“I should also mention that shopping for a better price for fertilizer does not exist. When we call different distributors, the price is almost always the same,” read Lehman, noting that prices have declined as corn and soybean prices have tumbled in recent months.
Farmers who run an independent ag cooperative in Edina, Missouri, said the Iowa Fertilizer Co.’s opening in 2017 cut costs for its members.
“This is bigger than Iowa,” said Derek England, a Northeast Missouri Cooperative Service board member. Before Iowa Fertilizer Co. opened, the cooperative could purchase fertilizer from Koch and CF Industries, another large fertilizer provider, which has a plant near Sioux City, Iowa.
This spring, England said, the Iowa Fertilizer nitrogen was $70 a ton cheaper than from CF Industries. Koch doesn’t often provide pricing, he said, but when it does, it’s typically close to CF Industries’ costs. That makes the planned Iowa Fertilizer sale to Koch “quite worrisome,” England said.
Scott Henry, who farms with his family near Nevada, said federal officials should consider that Koch is a U.S. company while OCI Global is Egyptian. While based in Amsterdam, the company was originally based in Egypt.
“I do want to continue to support American companies, regardless” of their political beliefs, said Henry, whose family gave Khan a farm tour.