Farmers seek to block Iowa Fertilizer sale

Tell FTC chief $3.6B deal would erode competition

NEVADA — Iowa farmers told a federal trade leader this weekend that the agency should block the $3.6 billion sale of the Iowa Fertilizer Co. to Koch Industries, saying it would 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.

Iowa lawmakers and residents have criticized the sale, which received about $545 million in local, state and federal economic development incentives and tax benefits a dozen years ago to encourage the southeast Iowa plant’s construction.

“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 Wever plant to Koch Fertilizer, a company owned by Koch Industries, pending regulatory approval. Farmers told Khan that it’s just the latest in a series of mergers that have limited the companies they can buy farm supplies and equipment from and those they sell crops and livestock to.

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.

Fed trade chief is noncommittal; Koch is confident purchase will proceed

While declining to say what action the Federal Trade Commission 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.

On Saturday, a Koch Industries spokesman said in a prepared 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 Nevada, LaVon Griffieon, a central Iowa farmer, 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 Ankeny.

The squeeze makes it hard for her family to build wealth for future farm generations, she said. For example, her family recently bought new tractor tires, which cost $20,000. That’s close “to what my parents paid for 80 acres in 1964,” Griffieon said.

“We have land to get our sons started farming. But we really can’t provide them with much” more, she said.

Farmer says U.S. capitalism is losing its competitive markets

David Weaver, who farms near Perry, said he’s lived in about 20 different countries, and he appreciates the competitive markets of the U.S. “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 since 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.

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.

Koch brothers have been Republican mega-donors

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

Charles Koch, the company’s board chairman, and the late David Koch have been mega- donors to Republican candidates and issues.

Harold Beach, another Northeast Missouri coop board member, said the meeting Saturday was “window dressing.”

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

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.

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

Fertilizer plant received over a half-billion dollars in subsidies

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

Iowa ag groups supported the project, saying it would lower Midwest nitrogen fertilizer costs 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’s history and the first world-scale, greenfield nitrogen fertilizer plant built in the United States in more than 25 years,” 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, asking them to investigate the sale.

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