The group, which has more than 6,000 farmer and rural members, alleges fertilizer companies are setting prices “not based on basic supply and demand, but rather on the price the farmer is paid for their commodity crops.”

Global fertilizer prices have reached record highs this year, in part due to soaring prices for the natural gas used to produce them, and severe storms in the U.S. that disrupted production.

But the farm group alleges fertilizer firms could also be hiking prices in response to high commodity prices.

Since the 1980s, consolidation in the U.S. fertilizer industry has shrunk the sector from 46 firms to 13. Two companies, Nutrien and Mosaic Co., control 93 per cent of the North American potash market, according to a 2020 report by the Federal Trade Commission. Other dominant firms include Yara and CF Industries.

“There’s a potential in the way this industry is structured to really exploit farmers,” said Dr. Philip Howard, associate professor at Michigan State University and expert on food industry consolidation.

Ben Pratt, senior vice-president for public affairs at Mosaic, denied that fertilizer companies set prices and said the current spike is due to “curtailed exports from certain nations, including China, and strong global demand, among many factors.”

The other three top fertilizer companies did not immediately respond to requests for comment.

The DOJ also did not immediately respond to a request for comment.

The Biden administration has pledged to take action on agriculture sector consolidation, which farmers have long said squeezes their profits.

The DOJ recently investigated allegations of price-fixing by the largest poultry companies, leading to several indictments, and price manipulation in the cattle market.

Agriculture Secretary Tom Vilsack recently said his department would also look into seed patents.

— Leah Douglas reports on U.S. agriculture and energy policy for Reuters from Washington, D.C.

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A grand jury in Denver indicted Jayson Penn, the president and CEO of Pilgrim’s Pride, which is mostly owned by JBS USA, as well as a former executive at the Colorado-based chicken supplier, the department said in a statement. Two executives from a Georgia chicken producer were also indicted.

“Executives who cheat American consumers, restaurateurs, and grocers, and compromise the integrity of our food supply, will be held responsible for their actions,” said assistant attorney general Makan Delrahim, head of the department’s antitrust division.

Pilgrim’s Pride did not immediately respond to a request for comment.

According to the indictment, the conspiracy ran from 2012 until at least early 2017, the department said.

In addition to Penn, the indicted executives were Roger Austin, a former Pilgrim vice-president, as well as the president of Claxton Poultry, Mikell Fries, and Scott Brady, a vice-president at Claxton.

A spokesman for Claxton declined immediate comment, and a lawyer for the company could not immediately be reached. The individuals indicted also could not immediately be reached.

The charges are the first in a criminal probe of price-fixing and bid-rigging involving broiler chickens.

— Reporting for Reuters by Susan Heavey, Tom Polansek and Diane Bartz.

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The DOJ filed a motion to intervene and stay discovery of evidence in an antitrust lawsuit involving the companies and has convened a grand jury to investigate, according to a court filing from Friday.

Shares of Tyson, Pilgrim’s Pride and Sanderson Farms fell in late afternoon trading.

U.S. food distributors have filed lawsuits against Tyson and other poultry processors, alleging that the companies had colluded since 2008 to reduce output and manipulate prices.

“The civil plaintiffs’ claims as to Sanderson Farms are wholly without merit, and we are committed to defending the case vigorously,” Sanderson Farms said, adding it has not been subpoenaed in connection with the DOJ investigation.

Pilgrim’s Pride Corp, which is mostly owned by Brazilian meat packer JBS SA, said it did not fix prices.

“Pilgrim’s strongly denies any allegations of anti-competitive conduct,” spokesman Cameron Bruett said. “The company welcomes the opportunity to defend itself against these claims through the legal process.”

Tyson, which has previously denied the allegations, did not immediately respond to a request for comment.

— Reporting for Reuters by Uday Sampath in Bangalore.

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The Justice Department reached an agreement in principle with the two companies in recent days, the Journal said, citing people familiar with the matter. Under the deal, Bayer agreed to sell additional seed and treatment assets to BASF and agreed to make concessions related to digital agriculture, the Journal said.

Bayer declined comment on the report, but said in a statement it anticipated closing the Monsanto purchase in the second quarter.

“We remain confident in our ability to obtain all necessary regulatory approvals and look forward to continuing to work diligently with regulators to support that process,” it said.

A spokeswoman for BASF could not immediately be reached for comment. The Department of Justice and Monsanto both declined to comment.

Last week, Monsanto said in its quarterly earnings report that it was confident the U.S. and other needed regulatory approvals would be secured within the second quarter.

Monsanto did not host a conference call with analysts to discuss the earnings, as is its usual practice, because of the pending merger.

European Union antitrust regulators approved the deal in March after the companies agreed to sell a swathe of assets to BASF. China, Brazil and Australia have also approved the proposed merger.

The deal is the third in the sector, preceded by a merger of Dow and Dupont, and a merger of ChemChina and Syngenta.

— Reporting for Reuters by Karan Nagarkatti in Bangalore and Diane Bartz in Washington.

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Earlier this year, the U.S. Department of Justice revoked an Obama administration policy that discouraged federal prosecutors from pursuing marijuana-related crimes in states that had legalized the drug.

While states such as Colorado and California have legalized marijuana, there is sill a federal ban in place. Canada is expected to legalize pot in July.

Canadian securities regulators in October asked U.S.-linked marijuana firm to clearly warn investors about the risks, given the ban.

Leamington, Ont.-based Aphria makes and sells medical cannabis and its U.S. operations are in Florida and Arizona.

On Monday, the company offered to buy rival Nuuvera for $826 million, as it bets on a raft of medical cannabis approvals around the world over the coming years.

Aphria said Thursday it will explore and consider the possibility of selling its U.S. assets to “strategic, long-term and committed investors in the cannabis industry.”

— Reporting for Reuters by John Benny in Bangalore. Includes files from AGCanada.com Network staff.

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The U.S. Department of Justice filed suit in August last year to block the proposed US$190 million deal, alleging the deal would lead to higher prices for high-speed precision planting equipment.

San Francisco-based Climate Corp. on Monday announced Monsanto’s “termination” of the deal, a sale which was first proposed in November 2015.

Closing the deal, the company said Monday, “has been delayed by Department of Justice concerns with the transaction.”

Two related agreements are also halted as a result of the cancelled deal, Deere said, including the ag equipment giant’s “Digital Ag Connectivity” agreement with Climate Corp.

Monsanto said Monday the end of that digital collaboration agreement will have “no impact” on current users of Climate Corp.’s Climate FieldView system who use Deere’s Wireless Data Server (WDS) to stream data into their account.

Climate Corp. had started selling the Climate FieldView system to producers in Eastern Canada last fall for use in the 2017 crop season. Beta testing recently began for a rollout in Western Canada toward year’s end.

A separate agreement last fall with precision ag equipment firm Ag Leader — which would have allowed the Iowa company to make and sell Precision’s SpeedTube line and related tech such as Precision’s vSet, vDrive and DeltaForce systems — is also cancelled, Deere said Monday.

The Ag Leader deal had been conditional on the closing of Precision Planting’s sale to Deere.

“We are deeply disappointed in this outcome as we remain confident the acquisition would have benefited customers,” John May, Deere’s president for agricultural solutions, said Monday in a separate release.

Deere and Monsanto had planned to present their case for approval of the acquisition later this year, the ag equipment firm said.

“With an opportunity to see this to conclusion, we believe it would have been clear the challenge to the transaction was based on flawed assessments of the marketplace,” May said.

A Deere spokesperson last fall told the Reuters news service the DOJ’s antitrust suit followed a protest by an unnamed Deere competitor.

Deere’s position, the spokesperson said, is that the suit was “designed to protect a competitor, not competition.”

U.S. acting assistant Attorney General Andrew Finch, in a release Monday from the justice department’s antitrust division, described the companies’ decision to scrap the deal as “a victory for American farmers and consumers.”

If the deal had gone ahead, he said, “significant head-to-head competition” between Deere and Precision Planting “would have been lost,” as a sale would have combined “the only two significant U.S. providers” of high-speed precision planting systems.

Climate Corp. said Monday it made the strategic decision in 2015 to focus its business “exclusively” on its digital ag platform and that strategy “has not changed.”

Climate still aims to sell the Precision Planting equipment business and has “spoken with several third parties that have expressed interest in purchasing it,” the company added Monday.

For its part, Deere said Monday it “will remain focused on enabling customers to efficiently leverage their data to drive better decisions on their farms through the John Deere Operations Center.” — AGCanada.com Network

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Deere announced its planned acquisition of Precision Planting in November 2015, for about US$190 million. Precision Planting’s parent is The Climate Corporation, a unit of Monsanto.

In August, the Justice Department said the proposed deal would mean higher prices for high-speed precision planting equipment, which allows farmers to plant row crops, such as corn, up to twice as fast as with conventional machinery.

In its response, Deere challenged the Justice Department’s definition of “high-speed precision planting system,” saying it was vague and ambiguous. Deere also denied “that there is any meaningful economic market consisting of ‘high-speed precision planting systems.'”

The Justice Department declined to comment on Thursday.

Deere said the Justice Department initially cleared its proposed acquisition in October 2015 in compliance with the Federal Trade Commission’s Hart-Scott-Rodino Act. Clearance is separate from actual approval of a deal.

Following a protest by an unnamed Deere competitor, the Justice Department opened a new investigation and later filed a lawsuit in August 2016 to block the transaction, Deere spokesman Ken Golden said, referring to legal documents the company filed on Wednesday.

“It is our position that this case is designed to protect a competitor, not competition,” Golden said.

Both Deere and the Justice Department declined to name the competitor.

CNH Industrial and Agco are Deere competitors that have agreements to factory-install Precision Planting equipment on their new planters. Precision Planting equipment and technology can also be retrofit on older planters manufactured by Deere, Kinze Manufacturing, CNH Industrial and Agco.

Deere said the company’s commitments to CNH Industrial and Agco, and its license grants, technology transfers are all “pro-competitive.”

Additionally, Deere entered into an agreement with Ag Leader, an agricultural technology company, to manufacture and sell Precision Planting products if the acquisition is completed, as a possible remedy to the Justice Department’s competition concerns.

Ag Leader will remain an independent competitor in the precision agriculture industry, a statement on the company’s website said.

Deere’s proposed deal is part of a wave of consolidation among agriculture companies as they search for ways to cut costs and improve profits in the face of a shrinking farm economy. Seed and agrochemical producers Monsanto and Germany’s Bayer have agreed to merge, while ChemChina wants to buy Syngenta AG in a US$43 billion deal.

— Meredith Davis is a reporter for Reuters in Chicago. Additional reporting for Reuters by Karl Plume.

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An indictment announced on Friday by federal prosecutors in Chicago charged Luis Martin-Caro Sanchez, 42, of Madrid, with one count of obstruction of justice and two counts of perjury.

The U.S. Department of Justice said Sanchez lied in a July 2011 Securities and Exchange Commission deposition when he denied knowing other people who bought PotashCorp securities before the Saskatoon fertilizer firm revealed Anglo-Australian mining company BHP Billiton’s unsolicited US$38.6 billion takeover bid.

Prosecutors said Sanchez in fact made several calls to two of those people in the days before the offer became public.

They also said he concealed information about a Swiss bank account he maintained, and to which a friend had wired 100,000 euros (C$143,694) of proceeds from selling Potash stock options.

Prosecutors said the SEC did not discover the account and the transfer until January 2014, long after a federal judge in December 2011 dismissed that regulator’s own civil insider trading case against Sanchez.

The Justice Department said it will seek Sanchez’s extradition. He faces up to 20 years in prison on the obstruction charge.

It is unclear whether Sanchez has a lawyer. A lawyer who defended him in the SEC case on Friday said he does not represent Sanchez in the criminal case.

The SEC had accused Sanchez of insider trading after he allegedly made US$496,953, equal to a 1,046 per cent return, in just five days by investing in PotashCorp call options, but the judge found insufficient evidence.

Potash’s share price rose more than 25 per cent on Aug. 17, 2010 when it revealed and rejected BHP Billiton’s takeover bid.

Canada ultimately blocked the takeover on the ground that it did not provide a “net benefit” to the country.

— Jonathan Stempel is a Reuters correspondent covering U.S. legal and regulatory affairs from New York.

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If Monsanto accepts Bayer’s unsolicited offer, experts say, the deal would inevitably trigger a review by federal antitrust regulators. But that review would be slowed down by the fact that two other major mergers of the companies’ rivals are also underway.

Farmers and lawmakers say a Bayer-Monsanto deal could be one too many for an agrochemical and seed market where prices have risen and, say critics, innovation has suffered after it shrank to just six large players.

Jeffrey Golman, vice-president at Mesirow Financial, said the sheer size, scope and number of these deals would inevitably slow regulatory reviews and potentially complicate the process of finding buyers for divested assets.

“I can’t imagine that this could get done before the third or fourth quarter of next year,” he said.

A global downturn in grain prices and a strong dollar have reduced U.S. farm income and prompted farmers to cut spending. That has eaten into sales of the big six agrochemical and seed companies and now they are trying to shore up profits through mergers and partnerships.

DuPont and Dow Chemical agreed in December to an all-stock merger valued at US$130 billion at the time, in a first step toward breaking up into three separate businesses. In February, state-owned ChemChina agreed to pay US$43 billion for Swiss seeds and pesticides group Syngenta.

Late Wednesday, Monsanto confirmed that German drugs and chemicals group Bayer made an unsolicited takeover offer, aiming to create the world’s biggest agricultural supplier.

Analysts at Bernstein say that in order to clear antitrust hurdles to acquire Monsanto, Bayer would likely need to sell part of its cotton and vegetable seeds segments and a category of weed killers called non-selective herbicides.

BASF, the only one of the big six not currently in the deal mix, “looks like the only potentially credible buyer” left for some of these assets after the mergers, said Peter Carstensen, a retired law professor.

Gobbling up

Farmers, too, are unhappy as they have been squeezed by lower commodity prices and high land rents.

“If one or two people control all the traits, there really isn’t a lot of competition there,” said Dean Coleman, an Iowa farmer. “If you have half a dozen strong players it keeps them trying to provide the best for you and trying to get your business.”

The sector’s top companies have been gobbling up smaller players over the decades, a shift initially led by Monsanto’s push to grow its seed business in the 1990s. Collectively, the six companies have acquired more than 200 businesses globally since the mid-1990s, according to Fitch Ratings.

The ChemChina-Syngenta deal faces added scrutiny from the U.S. Department of Agriculture, which is joining a U.S. government panel set up to vet the deal.

Bayer’s bid, which Monsanto confirmed it received late on Wednesday, has already prompted one leading farm state lawmaker to call for the Justice Department to keep a close eye on all of the deals.

“The Bayer-Monsanto talks only heighten the possibility that the industry, farmers and consumers could be adversely impacted by this consolidation trend,” U.S. Sen. Chuck Grassley of Iowa told Reuters.

Now, Grassley said, “The Justice Department’s role to ensure a competitive marketplace is even more critical.”

The U.S.-based National Farmers Union, an industry group that has already come out against a merger of Dow and Dupont, will likely oppose Bayer’s bid for Monsanto, said president Roger Johnson.

Such opposition matters to regulators, as antitrust enforcers by law must focus on the effect of a merger on customers – and farmers are these companies’ customers.

For Missouri soybean farmer Roger Allison, the thought of regulators halting the deals is a hope he clings to. Years ago, when there were hundreds of small seed dealers and suppliers, salesmen clamored to deliver to his farm.

Now he is the one who has to travel far to get the seeds he wants.

“I can’t think of one merger that has ever helped family farmers,” Allison said. “It might have helped the bottom line of these multinational corporations. But it restricts who farms and who doesn’t.”

— Reporting for Reuters by Diane Bartz in Washington, D.C. and P.J. Huffstutter in Chicago. Additional reporting for Reuters by Tom Polansek in Chicago.

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In mid-November, CP disclosed a $28 billion offer for the Virginia-based company, which has rebuffed all advances from the railroad (all figures US$).

CP proposes sending its CEO, Hunter Harrison, to run Norfolk Southern as part of that trust. But the rules of the U.S. Surface Transportation Board require the companies to run independently of each other while it reviews any deal.

The Justice Department said in a statement that it had told the STB that the voting trust would also fail to preserve the companies’ independence during the review.

Calgary-based CP, Canada’s second-largest railroad, has said a merger would result in savings of more than $1.8 billion annually. It did not immediately respond to a request for comment on Friday.

If Norfolk Southern accepts CP’s bid, this would be the first such review by the STB since the regulator’s merger rules were rewritten in 2001. The new rules are tougher and include additional regulatory hurdles.

The letter comes in response to a March 2 petition from CP to the STB seeking a “declaratory order” on its voting trust proposal.

In its statement, the Justice Department said that by effecting a management change in Norfolk Southern, CP’s proposal “is even more pernicious in its failure to preserve competition than a typical voting trust.

“The STB should find that the proposal fails under each prong of the revised regulatory requirement — it creates unlawful control violations and is against the public interest,” the statement said.

Experts had said the voting trust structure CP proposed would face tough scrutiny from the STB.

On Thursday, the U.S. Department of Defense also raised concerns with the STB over CP’s proposed voting trust.

Last Tuesday, Rep. Bill Shuster, chairman of the U.S. House of Representatives’ transportation and infrastructure committee, also stated his opposition to CP’s proposal.

“I do not believe it is in the best interests of the U.S. freight transportation system, railroad employees, rail shippers and the short line railroads,” he said in a statement. “I believe it is time for all parties to move on from hypothetical merger proposals.”

— Reporting for Reuters by Nick Carey in Chicago and Timothy Ahmann in Washington, D.C.

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