Farmers fear higher prices, consolidation from Koch fertilizer plant purchase

State Rep. J.D. Scholten, D-Sioux City, a vocal opponent of consolidation in agriculture, talks with Federal Trade Commission Chair Lina Khan in Nevada on April 20, 2024. (Photo by Douglas Burns)

NEVADA, Iowa — Harold Beach, a northeast Missouri farmer who runs a row-crop operation and raises hogs and cattle, traveled to central Iowa last weekend to urge one of the nation’s top regulators to stop a multibillion-dollar takeover of a Lee County fertilizer plant he and other rural advocates say will further erode competition in agriculture and increase costs for one of modern farming’s essential inputs, nitrogen.

“I would like you to be fearless and courageous and be a Teddy Roosevelt,” Beach told Federal Trade Commission chair Lina Khan.

Khan spoke to an audience of about 100 people that featured farmers, rural leaders and some state legislators. But her main mission for the 90-minute session in downtown Nevada, the county seat of Story County and a 15-minute drive from the center of agricultural research in the state, Iowa State University, was to gather facts from the brewing storm over Koch Industries’ planned purchase of OCI Global’s nitrogen fertilizer plant in Wever, a small town in southeastern Iowa.

Over a decade ago, during the administration of Gov. Terry Branstad, the state provided $240 million in tax incentives for the development of the plant — one of the largest economic-development efforts in the history of the state, and one designed to bring jobs and access to more affordable fertilizer for a wide swath of Iowa.

Koch plans to buy the plant for $3.6 billion.

“I am concerned about the greed-flation that permeates everything,” said Susie Petra, an Ames educator who spoke at the event.

Here is how Koch Industries sees it in a news release:

WICHITA, Kan., Dec. 18, 2023 /PRNewswire/ — Koch Ag & Energy Solutions (KAES), a global provider of solutions for the agriculture, energy and chemical markets, today announced an agreement to acquire OCI Global’s fertilizer plant in Wever, Iowa, for $3.6 billion.

The transaction, once finalized, will give KAES 100% ownership of the state-of-the-art facility, which was opened in 2017 and has the capacity to produce 3.5 million metric tons of nitrogen fertilizers and diesel exhaust fluid annually.

“Today’s announcement is an important step forward for KAES as we continue to invest in our fertilizer business,” said Mark Luetters, president of Koch Ag & Energy Solutions. “This investment complements our existing business and we look forward to advancing this transaction with OCI to completion.”

A parade of farmers and legislators urged Khan, one of the more highly visible FTC chairs in history, and a regulator not afraid to drop lawsuits on major American companies, to halt the purchase. The detractors say the Koch takeover is bad for farmers, and is a toss-away of hundreds of millions of dollars in subsidies from the state.

“We are losing it,” David Weaver, who farms in Boone and Greene counties, said of capitalism and democracy itself.

Aaron Lehman, president of the Iowa Farmers Union, said the concern is easily understood: Farmers fear getting gouged on fertilizer costs by a consolidated industry with increasingly less competition.

Added Iowa Falls farmer John Gilbert, “Iowa agriculture is addicted to nitrogen.”

Khan said the direct public input gives her a better understanding of challenges facing farmers. She said the FTC can investigate whether the Koch deal is restricting markets. If so, the government agency can go to court to block it, she said.

“The anti-trust laws prohibit mergers if they may substantially lessen competition or tend to create a monopoly,” Khan said. “So when deals are proposed we can investigate them and try to understand: is this going to eliminate competition in a way that’s going to harm farmers, harm communities, harm customers?”

Bottom line, she said, the Biden administration wants markets to work for regular people.

“If we see monopolistic practices in the marketplace we’re going after them,” Khan said.

Koch Industries is aware of the listening session in Nevada, a Koch Fertilizer spokesperson, Greg Lemon, said in a statement.

“We 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,” Lemon said. “This acquisition builds on the $2 billion in investments we have made in our North American facilities to increase production, enhance safety and reliability, and improve our customers’ access to the products and service they need to feed and fuel the world. ”

This column was originally published by Douglas Burns’ blog, “The Iowa Mercury.” It is shared here through the Iowa Writers’ Collaborative.

Editor’s note: Please consider subscribing to the Iowa Writers’ Collaborative and member authors’ blogs to support their work. 

The post Farmers fear higher prices, consolidation from Koch fertilizer plant purchase appeared first on Iowa Capital Dispatch.