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Food sector faces sweeping antitrust investigation

Officials are looking into the gaps between what farmers earn and what shoppers pay at the grocery store. The Justice Department and the USDA pledge an examination of alleged monopolistic practices.

March 12, 2010|By P.J. Huffstutter

Reporting from Ankeny, Iowa — U.S. Atty. Gen. Eric Holder and a team of top federal officials on Friday pledged a sweeping examination of alleged monopolistic practices in the food sector, and promised to bust those who violate antitrust laws.

But it was the issue of competition -- and veiled nods to the government's current probe into seed giant Monsanto Co.'s marketing practices -- that emerged as a dominant theme of the day.

Speaking at a public workshop organized by the Justice Department and the U.S. Department of Agriculture at a community college, Holder told the packed conference hall that "concrete action" would emerge from the unusual coordination between the two federal agencies.

The gathering was the first in a yearlong series of public meetings to examine whether consolidation in the food sector, and alleged monopolistic practices in agriculture, are driving food prices higher.

The government is also trying to ferret out reasons for the sometimes vast gaps between what farmers are paid for the food they produce and the retail prices that shoppers pay at the grocery store. Time and again, federal officials underscored that the government was going to push for more transparency in the food sector's business practices.

Many farmers in the audience expressed concern about rising prices for seed needed to grow crops such as corn and soybeans. The seed industry has consolidated in recent years, leaving just a handful of large players that now dominate the market. Farmers have been pressuring lawmakers to investigate seed pricing, particularly for varieties produced by Monsanto, the world's largest seed company. U.S. farmers spent about $17 billion on seed last year, up 56% from 2006, the USDA said.

None of the federal officials mentioned Monsanto by name. But Assistant U.S. Atty. Christine Varney, Holder's antitrust chief, acknowledged that such consolidation can lead to problems. "Big is not bad," she said, "but with big comes an awful lot of responsibility."

The Justice Department is investigating Monsanto's marketing practices. And at least three state attorneys general have begun probes into whether the St. Louis company has abused its market dominance to undermine rivals and raise prices.

Varney, whom many people here say is spearheading the Justice Department's ramped-up probe into big-business antitrust concerns, promised that the government was undertaking an "unrelenting quest to find the correct balance" within the agricultural industry.

That would mean, she said, ensuring healthy competition in the food sector -- which would allow fair deals for farmers and fair pay for agriculture workers in processing factories, while making sure the public had "food on their table that's safe, healthy and a decent price."

That sentiment was met with cheers in the conference center at the Des Moines Area Community College. Every seat was full, occupied by hundreds of farmers and unionized food workers.

Monsanto officials defended the company's market dominance in the seed industry, saying the firm had done nothing wrong. Its success, they said, was due to strong demand for so-called Roundup Ready seeds it developed to produce crops capable of tolerating its herbicide Roundup. The company's patent expires in 2014.

"That's why we have such a high market share," Jim Tobin, vice president of industry affairs at Monsanto, told the crowd. "It's not because you have to have Roundup Ready to grow soybeans. It's because farmers chose it."

p.j.huffstutter@ latimes.com

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