Canada’s Competition Bureau is looking into an allegation that agribusiness giants Bayer, Corteva, BASF, Cargill, and others tried to crush an online ag retailing startup, the California-based Farmers Business Network (FBN), according to court filings reviewed by The Wall Street Journal. FBN submitted a complaint to Canada’s antitrust enforcers that these dominant seed and agrichemical providers stopped supplying products to FBN’s recently acquired Canadian business.
The allegation represents an abuse of market power by leading agribusinesses to maintain control over seed
and agrichemical markets in an era of retail disruption. As purchasing shifts online and as farmers rely on data-driven analysis for product and planting recommendations, agriculture corporations and startups are in an arms race for platform supremacy. The question is, who will sell farmers their seeds and chemicals and tell them what and how to plant in a digital farming future?
FBN’s online marketplace poses a threat to Big Ag players who want to corner access to critical farmer data and to channel purchases through either their own digital platforms or traditional ag retailers, where they have a competitive advantage. “These companies have no interest in a third party using data to potentially promote a product that is not theirs or to undercut the price of a trusted retailer on their own product,” says Jason Davidson,
food and agriculture campaigner at Friends of the Earth.
Bayer, Corteva, BASF, and Syngenta (which is not under investigation) control much of the market for seeds and agrichemicals, selling 76% of all agrichemicals globally and 76% of all soybean, 85% of all corn, and 91% of all cotton seeds in the U.S. Seed and treatment costs have only gone up as the number of sellers decreases, and many farmers feel like they cannot find competitive, affordable options.
Startups such as FBN address this concern by promising to save farmers money on inputs. Farmers pay an annual fee to join FBN’s online marketplace and their farmer-sourced database, where farmers compare seed and chemical prices
alongside their performance. Founded by former Google executives and funded by Google’s venture capital arm, FBN aims to cut costs by removing traditional seed and chemical retailers and selling generic versions of popular chemicals directly to farmers. FBN has also started a seed line.
FBN, and other startups, such as Indigo and Farmobile, also compete with Big Ag in the growing digital agriculture industry. Startups and leading agribusinesses are
fighting to create integrated digital platforms where farmers can buy their inputs and receive data-driven farm management advice tailored to their operation (such as identifying which fields may need less fertilizer, based on data from soil sensors). Corporations aggregate many farmers’ soil, weather, production, and yield data to create predictive algorithms that guide farming recommendations.
Naturally, Big Ag wants farmers to buy products and get management advice from their platforms, where the giants can promote their own products. BASF, for instance, offers farmers rebates for buying its inputs with its ag-tech platform.
Big Ag also wants to corner access to farmers’ production data, because more data mean more accurate software. Information on who is buying which products and when is also essential for marketing, and Big Ag corporations do not want competitors encroaching on this information.
“For a startup to collect data not only on how effective their products are, but who’s buying them – that is essentially taking super valuable marketing data and putting it into an outside company,” explains Davidson. “I think they’re really scared.”
Seed and chemical corporation officials have said that they prefer to work with traditional ag retailers for their local expertise and
service, according to the Journal. However, brick-and-mortar ag retailers are economically dependent on large rebates from agribusiness tied to sales goals. Pushing the Big Four’s products is baked into the traditional ag retailing business model. “It’s certainly a much less level playing field at these brick and mortar stores because of these relationships,” says Davidson.
By comparison, FBN crowdsources seed and chemical
pricing from farmers, to help them sort through opaque pricing schemes and find the best deal, which could be a generic product. FBN alleges that major seed and chemical purveyors tried to squash its marketplace by refusing to sell FBN their products. In the case under Canadian investigation, FBN acquired a Saskatchewan-based agriculture retail business, to expand its business into Canada. After the acquisition, seed and agrichemical companies stopped selling products to the retailer, FBN says.
FBN says this isn’t the first time that agribusiness corporations have cut it off. “We’ve faced an extreme amount of resistance from the industry at being able to bring what should be very basic services to growers,” Charles Baron, FBN’s co-founder and chief innovation officer, told the Journal. Without leading
brands, FBN relies on selling generic agrichemicals, and it’s even started to develop its own seeds.
Canada’s Competition Bureau requested correspondence from Bayer, BASF, Corteva, Cargill, which does some crop inputs retailing in Canada, and chemical distributor Univar, among others, related to FBN’s Canadian business. Antitrust officials also requested the corporations’ online sales policies and supply arrangements with other Canadian
Agency officials already have some documents that suggest a coordinated effort among the corporations to block FBN, according to court filings reviewed by The Wall Street Journal.
Representatives from Bayer, Corteva, and Cargill told the Journal that their conduct did not violate antitrust law, and a representative from Univar said the distributor ended business with FBN because of unaligned objectives.
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