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June 19, 2015
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Joe Beach
Carl Sampson
opinions@capitalpress.com Online: www.capitalpress.com/opinion
O ur V iew
Monsanto, Syngenta merger needs close scrutiny
I
t’s a given that anything
Monsanto does will produce
howls from its numerous critics,
so it surprised no one that when the
company proposed buying rival
Syngenta the chorus quickly found
its voice.
While it’s too early to be certain
what a combined company would
look like, the prospects of a merger
between two companies that each
have such large footprints in the seed,
genetics and ag chemical businesses
raises legitimate questions for
customers and regulators.
Monsanto has offered Syngenta a
stock-and-cash deal worth nearly $45
billion and recently upped the offer
with a $2 billion reverse break-up
fee if the deal is nixed by regulators.
Syngenta turned down both deals,
describing Monsanto’s offer as
“paltry.”
Rueters reported last week that
Syngenta officials are leery of the
potential regulatory hurdles any deal
would face, and are worried about
the negative feelings many hold for
its suitor. But for the right price —
another $2.5 billion on the breakup
fee, Bloomberg says — those
concerns could be put aside.
The similarities between the two
companies’ businesses naturally
raise anti-trust concerns. Both are
dominate seed companies with
significant genetic trait businesses
and popular pesticide brands.
Sara Miller, a Monsanto
spokesperson, said the proposed
combined company would be an
even stronger partner to farmers.
“The combination would offer the
opportunity to accelerate innovation,
putting meaningful technology and
additional choice into the hands of
farmers faster than what any in the
industry are doing today,” she said.
There is that. The company would
have tremendous assets to leverage
into new products. That could be
good.
Critics point out that the resource
advantage could just as easily be used
to control the market.
Farmers are worried that a
combined company that controls
such a significant share of the popular
seed varieties, genetic traits and
chemical inputs would pretty much
have them at their mercy.
“If there were further
concentration, they may dominate the
market in a way that’s not desirable,”
Jean-Paul Chavas, an agricultural
economist specializing in the
biotech industry at the University of
Wisconsin, said.
Monsanto said it would sell off
Syngenta’s seed and genetic traits
businesses after the merger, along
with any overlapping chemical lines.
But the deal would nonetheless
eliminate one of the major three
biotech companies.
No doubt federal regulators would
examine the competitive landscape
before approving any deal. That
means a buyer or buyers for the cast
offs will have to be lined up and
ready to go as part of the deal.
We’re willing to concede that a
combined company could spur new
advances that could be beneficial
for farmers. It’s also possible some
spunky up-and-comer could use the
cast offs as a basis for innovation.
At the same time, we can’t shake
the nagging feeling that as good as
all this could be for customers, there
could also be down sides.
We’ll withhold final judgment
until there’s an actual deal to ponder,
and regulators have had time to give
it a thorough examination.
Farmers in the Northwest
need access to affordable
crop insurance
By KENT WRIGHT
For the Capital Press
W
Rik Dalvit/For the Capital Press
O ur V iew
FSA computer system shows reverse MIDAS touch
T
he federal government put a man
on the moon, but 46 years later it
can’t come up with a computer
system for the USDA Farm Service
Agency.
Such is the plight of the federal
government in the 21st century. When
it comes to computers, Uncle Sam is —
how should we say it — a few bauds
short of being online.
The Affordable Health Care
Act overwhelmed the federal
government’s best and brightest,
delaying Obamacare’s debut and setting
into motion a cascade of delays and
missed deadlines that embarrassed the
president.
Add to that embarrassment the FSA’s
recent giga-catastrophe. An audit by
the USDA Office of Inspector General
found that the agency had overspent its
original budget by $140 million. The
project was halted two years after it was
supposed to be completed and never
fully implemented. Auditors faulted how
the agency managed the project and how
contractors handled the workload — in
short, nearly everyone.
“These cost and time overruns
were caused by ineffective project
management and oversight,” the auditors
wrote.
They found that participants were
working at cross purposes and pursuing
different strategies for accomplishing the
same goals. “Thus, these two teams were
working toward a similar goal using two
separate and unique solutions, leading
to an ‘us versus them’ mentality among
MIDAS and other staff members,”
according to the auditors.
In the process, they spent $444
million in taxpayer dollars and
accomplished only a tiny fraction of the
goals.
Ouch.
FSA and USDA managers have now
put the project on hold until they figure
out whether to try to salvage it or cut
their losses and start over.
What makes the FSA project
especially ironic is its name — MIDAS,
the acronym for Modernize and Innovate
the Delivery of Agricultural Systems.
Maybe it should be renamed Reverse
Midas, since it started with gold and
converted it into something else entirely.
Something that reminds us of fertilizer.
Which would be funny if it weren’t
so sad. The federal government —
which we all fund through our taxes
— doesn’t have a penny to spare these
days, let alone $444 million. The thought
of such a huge and costly failure during
these times is unthinkably depressing
and defeating.
We can only hope at least some that
money can be salvaged through lawsuits
or other means.
It is interesting that the federal
government has yet to embrace this Age
of Computers. Private industry boasts the
finest computer scientists and engineers
in the world, but the government seems
to bungle its way through many of its
projects.
Even NASA, which led the way
to the moon in the 1960s, is now
contracting with private companies
such as Space X to transport astronauts
between earth and the International
Space Station.
Obviously, NASA knew something
that FSA didn’t.
In Rancho Santa Fe, the drought is for others
fficials in Sacramento have
touted how Californians have
come together to reduce water
consumption in the face of the fourth
year of drought.
In April, the state’s residents
reduced water consumption by
13.5 percent. But then there’s
Rancho Santa Fe, a well-heeled
enclave in San Diego County. Water
consumption there actually jumped 9
percent.
Ranch Santa Fe uses five times
the water per capita as the rest of the
state, according to the Washington
Post. The Post found no shortage of
O
residents on the ranch — as the town
is known by residents — who are on
record that the drought is for the little
people who can’t afford the water.
Steve Yuhas says no one should be
forced to live with brown lawns, or
golf on brown courses.
“We pay significant property taxes
based on where we live,” he said.
“And, no, we’re not all equal when it
comes to water.”
Apparently not. Farmers are
expected to let their crops turn brown
and leave their fields fallow. But, they
don’t like that any more than Yuhas
enjoys dry fairways.
Gay Butler, an interior designer,
told the Post that all the “drought
shaming” of Rancho Santa Fe is
unfair.
“It angers me because people
aren’t looking at the overall picture,”
Butler said. “What are we supposed
to do, just have dirt around our house
on four acres?”
The drought will cost the farm
economy $2.7 billion and almost
19,000 jobs. Livelihoods are being
lost, but in Rancho Santa Fe it’s about
brown yards and golf courses.
Who isn’t looking at the overall
picture?
hen the 2014 Farm
Bill became law, it
marked a pivotal
moment in the history of U.S.
farm policy. The new Farm
Bill eliminated direct pay-
ments and reduced some of
the price support policies of
the past in favor of expanding
crop insurance,which allows
farmers to purchase varying
levels of protection for their
crops.
Gone are the days when
farmers got a check every year
regardless of weather or mar-
ket conditions. Gone are the
days when large-scale natural
disasters would trigger wildly
expensive disaster bills aimed
at helping farmers get back on
their feet. From here forward,
farmers who want risk protec-
tion will receive a bill, not a
check, when they sign on the
dotted line every year.
This is a good thing for
several reasons. First, crop in-
surance ensures farmers have
a risk management plan in
mind early in the year. In ad-
dition to that plan, they must
put their money towards pur-
chasing a crop insurance pol-
icy. This is no small amount
of money for many farmers,
who in 2014 spent roughly
$3.8 billion on crop insurance
premiums.
All told, those policies
protected 295 million acres
of farmland valued at $129
billion. Today, 90 percent of
planted cropland is protect-
ed by federal crop insurance,
which protects 128 different
varieties of crops in all 50
states.
The evolution to crop in-
surance has effectively moved
risk management away from
the public sector, funded ex-
clusively by taxpayer dollars,
and toward the private sector,
where farmers and crop insur-
ance companies help shoulder
part of the cost of natural di-
sasters. This is good for tax-
payers because it takes them
off the hook for the entire bill
when disaster strikes, good
for farmers who must always
keep their risk management
plan in mind, and good for ru-
ral America because farmers
are the engines that generate
economic activity.
Crop insurance has been
around since 1938, but it
Guest
comment
Kent Wright
wasn’t until Congress decid-
ed to make it affordable and
ubiquitous that farmers really
began to sign up. And when
disaster struck — as it does
nearly every year somewhere
here in the Northwest —
farmers turned to their crop
insurance policy and their
agent, not their member of
Congress, for help.
The demographics of farm-
ing can be rather scary, with
the age of the average age of
the nation’s farm operators at
58 years old. For young and
beginning farmers, access to
affordable and reliable crop
insurance is honestly a make-
or-break issue. For those just
entering farming, the costs
are high and their ability to
sustain a loss is very limit-
ed. For them, purchasing a
crop insurance policy not
only protects their crops,
but their careers paths as
well.
Crop insurance is very
popular here in the North-
west, with farmers and
ranchers in Washington, Or-
egon and Idaho spending
more than $96 million out of
their own pockets last year to
purchase the peace of mind
offered by crop insurance.
Those policies protect the re-
gion’s apples, potatoes, sugar
beets and a long list of oth-
er crops from the ravages of
Mother Nature and volatile
market swings.
In the old days, farmers
largely relied on disaster
assistance from the federal
government in times of crisis.
According to the Congressio-
nal Research Service, some
42 ad hoc disaster assistance
bills cost taxpayers $70 bil-
lion since 1989.
With access to affordable,
available and viable crop
insurance policies, farmers
have the backstop they need
to bounce back when our rap-
idly changing climate throws
them a curve ball. That’s
good for farmers, good for
consumers who eat their pro-
duce, and good for the rural
economy, which is largely
supported by local farmers
and ranchers.
Kent Wright is president of
Northwest Farmers Union.
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