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Business of buying

Golden Harvest lawsuit

A new lawsuit threatens to remove one member from the Golden Harvest Seeds group of seed companies. A lawsuit filed by Golden Harvest asks the court to allow it to remove The J.C. Robinson Seed Co., the largest company in the group, from Golden Harvest. The lawsuit was filed by Golden Harvest board members who represent the Illinois companies of Golden Seed Co., Sommer Bros. Seed Co. and Thorp Seed Co.

Doug Robinson, senior vice president of J.C. Robinson, says, “We believe that this lawsuit is without merit and we intend to vigorously and passionately defend our rights to create a positive outcome for the company.”

John Deere cuts production

Anticipating a flat market, Deere & Company is scaling back its production of agricultural and construction equipment. The company reports first quarter sales to be flat and sales up just 4% for the year. Earlier, it had anticipated first quarter sales to be up 5% and up 7% for the year.

Although retail sales of John Deere combines and hay, seeding and tillage equipment were up the first quarter from a year ago, sales of row-crop tractors were not. This prompted the company to shut down its Waterloo, IA, tractor manufacturing plant for a week.

Pioneer loses license

A U.S. district court recently ruled that Pioneer Hi-Bred International's license to sell Monsanto's Roundup Ready (RR) herbicide-tolerant technology ended when the company merged in 1999 with DuPont. Therefore, all sales of RR soybean and RR canola seeds by Pioneer as a subsidiary of DuPont were unauthorized. Pioneer is expected to appeal the ruling and will continue to market the products during the appeal.

Crop-science division for sale

Aventis announced it will seek buyers for its crop-science business instead of seeking a stock sale, as earlier reported. Aventis Crop-Science, recently renamed Agreva, markets the products StarLink, LibertyLink, Balance and Regent. Reuters reports Aventis sent sale proposals to Monsanto, DuPont, Dow, Bayer and BASF. The company states it wants to concentrate on pharmaceuticals now. Aventis was formed from the merger of Rhone Poulenc Agro and AgrEvo.

Tyson backs out

Tyson Foods' controversial offer to purchase IBP hit the news again when Tyson backed out of the $3.2 billion deal in late March. Citing “misleading information in determining to enter into the merger agreement,” Les Baledge, Tyson's executive vice president, stated that Tyson had the right to terminate the agreement. He reported the company did not know about undisclosed Securities and Exchange Commission (SEC) comments regarding IBP until after it extended the offer to buy.

In response, IBP filed a lawsuit to force Tyson to honor its agreement. IBP claims it did disclose all information to Tyson during merger discussions, and the company calls the SEC comments a “smoke screen.” The company states, “The SEC comments did not represent a material change to IBP's financial condition.”

Vertical coordination grows

Farmers know it. Now a report documents it.

Vertical coordination is increasing in agriculture, according to a report from the Council for Agricultural Science and Technology (CAST). The vertical trend grows as farmers seek alliances with food processors for capital, technology and markets. The alliances lower risk for farmers but put traditional family farms at a disadvantage to large-scale operations that operate with more formal business structures.

The CAST report suggests that the future farm landscape will consist of livestock-processing plants at hubs with livestock-feeding operations in close proximity. Located near the livestock farms will be feed mills that will be supplied through transportation spokes. The wedges between the spokes will be large areas of crop production. Farmers located in the wedges will require less labor and local inputs. Marketing contracts, production contracts and integrated ownership will be common in this type of agriculture, the CAST report states.

The report also considered electronic commerce's potential to link rural areas to global markets. But the lagging access to broadband fiber optics has limited rural communities' adoption of the digital marketplace. “At best, rural communities will be only catching up with the technology already available to both urban and suburban communities,” the report states.

Cost of the full report “Vertical Coordination of Agriculture in Farming-Dependent Areas” is $25. To order, call CAST at 515/292-2125 or e-mail

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