Last month, President Joe Biden signed an Executive Order (EO) on Promoting Competition in the American Economy. This EO is exciting in many ways, from the sheer scope of its ambition to its acknowledgment of some of the many ills that have plagued American farmers, from unfair contract farming to retaliation. More on that EO can be found here.

One of the most exciting facets of the Order, however, only received a few sentences’ worth of attention.

The Order charged the Secretary of Agriculture, in conjunction with the Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office, with submitting a report to the White House outlining the problems posed by patent-protected seeds.

These seeds challenge regulators to protect them as intellectual property, while still ensuring fair competition in the agricultural industry. Patent-protected seeds cause tension between carrying out the Packers and Stockyards Act, which seeks to reduce monopolies and increase competition, and the Patent Act, which seeks to reward innovation by financially protecting intellectual property. 

While instructing bureaucrats to submit a report may not sound like exciting government action, that the Biden administration has acknowledged patent-protected seeds as a potential detriment to competition is a sign of progress. 

Anti-Trust and Seed Competition

Competition in the seed industry is in real danger. Larger seed companies have been buying up smaller firms since the introduction of genetically engineered seeds, consolidating property rights in the seeds. Now, just four companies control 60% of global proprietary seed sales (see Howard’s seed chart here). 

Consolidations in the seed industry mean higher prices and fewer choices for farmers. Farmers who use proprietary seeds also have to comply with restrictions on their use, including restrictions on seed saving. Decreased competition in the seed market also means less biodiversity in our soils and potentially, fewer tools as farmers look to adapt to an ever changing climate. 

This industry consolidation is the kind of practice the U.S.’s antitrust laws are meant to prevent. Nevertheless, we also have robust intellectual property protections, under which these genetically engineered seeds are patented. These protections are rooted in protections going back to 1930, when the Plant Patent Act allowed the patenting of asexually reproduced plants (excluding tuber-propagated plants).

The patenting of plants continued to expand over the next fifty years, when in 1980 the first utility patent– these are the quintessential patents, granted for new inventions– was granted for a genetically engineered bacterium. Patent protections continued to expand as GE crops were rapidly developed throughout the 90s. Patents prevent others from making, using, or selling a protected product for a set period of time. Patents thereby grant the owner a limited period of exclusivity– the enemy of competition.

Biden’s Executive Order has charged the Secretary of Agriculture with a difficult task: assessing how to ensure compliance with our robust patent laws, while also breaking up the consolidation of the seed industry and increasing competition. Notably, there is no deadline in the Order for when this report must be submitted, nor any measures of success. However, the Biden administration has acknowledged seed competition as a concern, and the report will be a tentative first step toward what needs to be a vigorous solution.

This blog is the second in a series of two guest posts by OEFFA policy intern, Eliza VanNess.

On July 9th, President Biden signed an Executive Order (EO) on Promoting Competition in the American Economy, which covers a variety of industries including the agricultural sector.

The Order identifies consolidation as a threat to the survival of small family farms and proposes a number of antitrust measures to bolster support for these farmers. 

This EO is the latest in a long tradition of antitrust regulations spurred on by the agricultural industry.

The most sweeping regulation was the Packers and Stockyards Act (PSA), enacted in 1921. At the time, the industry was controlled by only five large meatpacking companies, who together were engaging in anti-competitive practices such as restricting the flow of food and controlling prices to manipulate the market. The PSA was passed to clamp down on these activities, to ensure fair business practices and competitive markets. The PSA, enforced by the U.S. Department of Agriculture (USDA), still provides these protections today,

While the Packers and Stockyards Act was an important measure in providing antitrust protections in agriculture, it proved insufficient in addressing such a broad problem. Biden’s July EO seeks to beef up the PSA, to protect small farmers trying to compete with ever-growing agribusinesses. 

The July EO seeks to address the following crucial issues: 

1. Reducing the burden on litigants suing under the Packers and Stockyards Act

In order to sue under the Packers and Stockyards Act, courts in the past have required that litigants prove not just that a practice has harmed them personally, but that the practice has resulted in industry-wide harm. This is a difficult standard to prove, and the requirement has made it difficult for individual farmers to take advantage of the Act’s antitrust power. The new EO clarifies that proving industry-wide harm is not necessary to establish a violation of the Act, increasing the usefulness of the law to farmers. 

2. Bolstering antitrust protections for poultry farmers

Chicken farmers are often subject to the costs of contract farming, in which contractors or dealers have inordinate control over the factors that determine how much the farmers are paid, while leaving the farmers to assume the risks of factors over which they have little control and require the highest cost investments. The EO seeks to clamp down on this system, “prohibiting unfair business practices related to grower ranking systems.”

 3. Providing anti-retaliation protections 

Farmers who’ve spoken up about exploitation at the hands of their contractors have too often experienced retaliation, placing farmers in the unfortunate position of choosing to stay silent about unfair business practices and facing potentially ruinous financial punishment. The EO instructs the Secretary of Agriculture to adopt anti-retaliation protections “so that farmers may assert their rights without fear of retribution.”

4. Clarifying food labels and ensuring access to markets

The EO bolsters food labeling, mandating labels that allow consumers to choose products made in the U.S. The Order instructs agencies to consider implementing a “Product of USA” voluntary label for meat products. The Order also instructs the Secretary of Agriculture to submit a plan to the White House Competition Council, outlining measures to promote competition in agriculture, as well as to support value-added agriculture and alternative food distribution systems. The Order suggests increasing price transparency in agriculture markets, increasing transparency to allow consumers to choose products that support fair treatment of farmers, and creating model contracts to help farmers negotiate fairer deals as measures the Secretary can include in the plan.

5. Protecting competition in seed markets

Finally, the EO identifies patent-protected seeds as a potential danger for competition in agriculture. These seeds cause tension between the Packers and Stockyards Act, aimed at increasing competition in agriculture, and the Patent Act, aimed at protecting intellectual property. Patent-protected seeds challenge regulators to protect them as intellectual property, while still ensuring fair competition in the agricultural industry.

To figure out how to rise to this challenge, the Order instructs agencies to submit a report to the White House Competition Council, laying out the potential problems. Biden’s Executive Order is sweeping in scope, aimed at addressing a host of long-standing problems in the agricultural industry. However, the Order only provides instructions for agencies, who are ultimately charged with implementing the policies and rule makings proposed by the administration. Only time will tell how well these agencies implement the ambitious policies outlined in the Order.

This blog is the first in a series of two guest posts by OEFFA policy intern, Eliza VanNess, a second year law student at the Ohio State University.