This story was originally published by the Cedar Rapids Gazette.
Lina Khan, known for trying to stop mergers of Big Tech companies and grocery giants, heard from Iowa farmers Saturday who want her to investigate Koch Industries’ plans to buy one of the state’s largest fertilizer companies, built with state tax credits.
The Federal Trade Commission chair spoke briefly before listening to about 20 people speak about how they’ve been affected by price hikes in the farm sector.
“In order to have a safe and resilient food system, we need to have an agricultural sector and agricultural markets that are fair, open and competitive,” Khan told about 80 people at the Gatherings Event Space in Nevada, Iowa.
Farmers often have been on the front lines against monopolies, said Khan, a legal scholar and former journalist. She described how farmers fought back in 1819 when railroads wanted to pick which crops could ship by rail. Khan got to know the struggles of independent chicken farmers when she was covering the Obama administration’s failed attempts to prevent abuse by big processors.
The Iowa Democratic Party asked Khan to investigate whether Koch Industries’ plan to buy the Iowa Fertilizer Co. violates antitrust laws.
Aaron Heley Lehman, president of the Iowa Farmers Union, read a letter from a member who was too fearful about retaliation from fertilizer retailers to speak publicly. The farmer described a phenomenon that keeps farmers from getting ahead.
“In 2021 and 2022, there was a runup in commodity prices, which had been depressed for the previous six years,” Lehman read. “Higher food prices are good for farmers’ pocketbooks.”
But before farmers could celebrate, the price of fertilizer rose to record levels, snatching any profits the farmers could have made that year from selling their corn. The timing seems suspicious, the farmer wrote.
“I would like there to be a possible investigation into possible market manipulation.”
Farmers’ opinions differ on possible sale
Some farmers fear the cost of fertilizer will go up even more if Koch Ag & Energy Solutions is allowed to buy the Iowa Fertilizer Co., built in 2017 near Wever with more than $200 million in state and local tax credits. OCI Global, an Egyptian-owned firm, announced in December plans to sell the plant for $3.6 billion, pending antitrust review.
Derek England, secretary of the board of the Northeast Missouri Cooperative, who drove up for Saturday’s event, says his coop purchases about 4,000 tons of anhydrous ammonia a year after comparison shopping from primary producers, including CF Industries and Koch, he said.
“We were so happy when the Iowa Fertilizer plant opened to have another source in our local area,” he said, adding that this year the IFC’s prices were about $70 a ton cheaper.
Scott Henry, who took Khan on a tour of his farm near Nevada Saturday, said it may not be a bad thing for Koch — an American company — to buy the Iowa plant from a foreign firm.
“We need to be careful if you want to continue to support American companies, regardless of what I believe or not believe about their political beliefs and practices,” he said.
Koch Industries, based in Wichita, Kan., is one of the largest privately-owned companies in the world. It was founded by Fred Koch, father of brothers Charles and David Koch, who funded the right-leaning political group Americans for Prosperity.
Koch issued a statement Saturday saying they have “received support from many customers and are confident the Federal Trade Commission will allow our transaction to proceed after they have concluded their analysis and customer outreach.”
“Koch Fertilizer is firmly committed to operating and growing production at the Wever facility,” the statement said. “We have been impressed by the Wever employees and look forward to welcoming them to the Koch Fertilizer family.”
Anticompetitive practices in other parts of the ag industry have raised prices for farmers, said LaVon Griffieon, who farms near Ankeny. She said she recently paid $20,000 to replace the tires on her tractor. These costs make it hard for young farmers, like her sons, to get a foothold in the industry, which may cause them to leave rural areas.
“We really need to start paying attention to what is happening to the Heartland,” she said.
FTC can take action if mergers would lessen competition
The FTC, a bipartisan agency that champions the interests of American consumers, has several options for enforcing antitrust laws, which prohibit mergers if they substantially lessen competition. The agency may investigate proposed deals to see if it would harm producers, communities or consumers, Khan said.
“If we conclude it will, we can file a lawsuit,” she said. “We then go to court to try to convince a judge this deal was illegal and it’s ultimately up to the court.”
The FTC last fall sued Amazon over alleged monopolistic practices and in February announced a lawsuit to stop Kroger’s purchase of Albertson’s, two large grocery chains. The agency succeeded in blocking several health care mergers last year.
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