Farmers oppose Koch acquisition of Iowa fertilizer plant

by Ryan Hanrahan

The Des Moines Register’s Donnelle Eller reported Sunday that “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 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,” Eller reported. “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.”

The proposed sale

The sale — which would see Koch Industries acquire OCI Global’s Iowa Fertilizer Company for $3.6 billion — would give Koch Industries “100% ownership of the facility located along the Mississippi River in southeast Iowa in the town of Wever,” Progressive Farmer’s Todd Neeley reported in January.

“The plant opened in 2017 and has the capacity to produce 3.5 million metric tons of nitrogen fertilizers and diesel exhaust fluid annually,” Neeley wrote. “…The Iowa Fertilizer Company was the first world-scale greenfield nitrogen fertilizer facility built in the United States in more than 25 years.”

Industry consolidation is key concern

Eller reported that farmers told Kahn the proposed acquisition is “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.”

Progressive Farmer’s Chris Clayton reported Monday that “Harold Beach and Derek England drove to the meeting from Edina, Missouri, where they are board members for Northeast Missouri Cooperative Services Inc. Farmers in that area also rely heavily on the Iowa Fertilizer Co. to add some competition to local fertilizer prices. England said Iowa Fertilizer Co. was offering nitrogen products $70 a ton less than other regional suppliers this spring, including CF Industries and a Koch plant.”

“‘The northeast corner of Missouri is pulling a lot of nitrogen out of that plant as well, and it has definitely had a moderating effect,’ England said,” according to Clayton. “He added, ‘Without fail, Koch has always had the highest prices in our area. What is that plant going to be changing once Koch owns it?’”

On the other hand, Eller reported, “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.”

FTC non-committal on response

Clayton reported that, at the meeting, “Kahn would not say whether the FTC is investigating the Iowa Fertilizer Co. sale, but she did indicate that holding a public listening session is one of the typical steps the FTC takes when looking into anti-competitive moves.”

“‘If we see monopolistic practices in the market, we’re going after them,’ she said,” according to Clayton. “Kahn said the FTC typically files a federal lawsuit if its investigation finds antitrust problems in a sale.”

Farmers oppose Koch acquisition of Iowa Fertilizer Plant was originally published by farmdoc.