EXCLUSIVE: In a new rural plan, Steve Bullock proposes two-year freeze on ag mergers to reset oversight

Source: By Donnelle Eller, Des Moines Register • Posted: Thursday, September 5, 2019

Democrat Steve Bullock, the sitting governor of Montana, spoke Thursday, Aug. 8, 2019, at the Des Moines Register Political Soapbox at the Iowa State Fair. Des Moines Register, Des Moines Register

Presidential hopeful Steve Bullock says he would pause U.S. agricultural mergers for two years, while his administration builds increased protections for farmers and consumers.

The Montana governor said the freeze is needed to reset proper oversight on proposed mergers.

“The Trump administration has been negligent in their oversight responsibilities,” said Bullock, the last Democratic governor in the race for the White House.

The move would enable his presidential administration to ensure “that agencies perform due diligence to protect, farmers, producers and consumers from market abuse by big corporations,” said the 53-year-old.

The freeze is part of Bullock’s plan to revitalize rural America, the presidential candidate released first to the Des Moines Register.

Four firms control 60% of the poultry market; four businesses hold 85% of the beef market; and four companies control 52% of the hog market, Bullock said in his plan.

While consolidation among seed, chemical and equipment manufacturers raises costs for farmers, mergers among corporations that buy their goods reduce the price they receive, said Bullock, who will be in Iowa on Sept. 12 to talk about his “Fair Shot for Rural America” proposal.

Presidential hopefuls U.S. Sens. Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont have promised to break up big agricultural businesses should they become president, while former Vice President Joe Biden, U.S. Sen. Amy Klobuchar of Minnesota and former U.S. Rep. John Delaney of Maryland have vowed stronger enforcement of anti-trust laws.

U.S. Sen. Cory Booker of New Jersey has proposed an indefinite merger moratorium.

Tom Vilsack, former U.S. agriculture secretary, said plans to blow up mergers may have limited impact on reducing costs for farmers. Here’s why: The gene technology used to develop seeds often is patented, requiring any company using it to pay for it, an expense that’s passed onto farmers.

Montana Governor and 2020 Democratic presidential candidate Steve Bullock picks up Fong's pizza to deliver to volunteers at his campaign office who were making calls on Wednesday, June 26, 2019, in Des Moines.

“I understand the politics of it. I think Gov. Bullock understands the practicality of it,” said Vilsack, a former Iowa governor.

Bullock’s plan addresses well-known problems that plague rural America as well as some more unusual challenges. Among his proposals:

  • DRIVE HIGH-SPEED INTERNET ACCESS: Spend $61 billion to connect every school, library and hospital to broadband internet within two years and every home within three years.
  • REDUCE FOOD DESERTS: Create regional food hubs that allow farmers raising meat, milk, fruits and vegetables to sell their goods to local schools, hospitals, grocery stores and restaurants.
  • CUT COLLEGE COSTS: Lower the costs of loans and expand existing programs to cut the education costs for beginning farmers, nurses and other rural professionals.
  • IMPROVE WATER QUALITY: Expand incentives for farmers who add conservation practices that cut runoff contributing to water pollution.
  • BOOST RURAL HEALTH CARE: Increase Medicare reimbursement to rural hospitals that struggle to remain open, expand Medicaid access that reduces the need for more expensive care later on, and increase telemedicine access.
  • GUARANTEE POSTAL SERVICE: Reform the U.S. Postal Service to ensure that postal delivery and post offices remain viable in rural America. Residents rely on the postal service for prescriptions; small businesses, supplies, he says.
  • SPARK INVESTMENT: Create two distinct opportunity zone initiatives: one focused on disadvantaged and low-income communities in urban areas and another focused on rural communities. “Almost 80% of venture capital in 2015 went to four coastal cities,” so the approach should “encourage more balanced investment,” Bullock said.

“You should be able to expect many of the same services and opportunities in a small town as someone in an urban area, whether it’s getting mail or access to health care,” Bullock said.

Vilsack said he likes Bullock’s plan to build on the potential for renewable fuels, which can add to the demand for corn, soybeans and other crops — and boost prices.

About 40% of Iowa’s corn, for example, is use to make ethanol, which is blended into the nation’s fuel supply. It’s supported through a federal mandate called the Renewable Fuel Standard.

MORE: ‘A slap in the face’: Trump’s ethanol waivers are sparking rebellion in farm country

The Trump administration came under fire last month for allowing oil refinery waivers that have eliminated demand for 4.1 billion gallons of ethanol, biodiesel and other renewable fuel since he took office.

The moves have cut the need for 1.4 billion bushels of corn and 825 million bushels of soybeans, industry officials say.

“It’s literally costing us billions of gallons of lost ethanol sales each year, and Exxon and Chevron aren’t exactly” the small refineries the waivers are designed to help, Bullock said.

Wrenching the nation out of its ongoing trade war with China and other countries — and begin rebuilding global markets — is key to stabilizing rural America, Bullock said. The trade disputes cost Iowa’s economy about $2 billion annually, Iowa economists estimate.

The charge that “China has been taking advantage of us on tech and other issues for too long is correct,” he said.

But the president’s approach — using “the blunt instrument of tariffs” — is only hurting American farmers and ranchers, Bullock said.

An important part of the governor’s plan is to create an Office of Rural Affairs that reports to the president, given that his plan requires work for almost all federal agencies, he said.