Reader says Koch deal for IFC should be blocked

Dear Editor:

Antitrust regulators should block the proposed sale of OCI Global’s Iowa Fertilizer Co. plant in Wever to Koch Industries. The deal would be outrageous, but we must look back to fully understand why.
Then-governor Terry Branstad and his lieutenant Kim Reynolds offered nearly $550 million in tax giveaways to OCI’s predecessor, Orascom, to build the plant prior to its 2017 ribbon cutting.
That included $133 million in local tax giveaways like Lee County property tax abatement. Another $112 million in state tax giveaways. And an estimated $300 million in federal tax giveaways via disaster bonds created after the floods of 2008.
Now, I don’t fault Branstad and Reynolds for investing money in building a fertilizer plant. Farmers are paying way too much for fertilizer due to issues like excessive industry concentration, and those inflated costs rob farmers of profits, contribute to the hollowing out of Iowa, and increase food costs for everyone. More jobs are always welcome, too.
No, where they got it wrong was giving away the farm to land the project.
At the time, Branstad and Reynolds argued the estimated $300 million in federal tax giveaways wasn’t enough to keep the plant from being built in Illinois, and that’s how they justified an additional $245 million in tax giveaways.
Sorry, but that math ain’t mathing. As former state senator Joe Bolkcom noted, “The flood disaster bonds gave Iowa a $300 million advantage over Illinois from the start.” That’s because none of Illinois' proposed sites qualified for the bonds.
Additionally, Branstad said, “Illinois is the loser…not just because of the incentives,” but rather “…because of the way they have mismanaged their state’s finances for too long.”
If Iowa had a $300 million advantage that Illinois couldn’t match, and Illinois was allegedly so poorly managed that they didn’t pose a real threat to winning the plant, then why did Branstad and Reynolds offer an additional $245 million?
It’s a case of incompetence or corporate cronyism, but either way it’s embarrassing.
Branstad even argued for the project by attacking the same Koch Industries now trying to acquire the plant when he said, “I understand the Koch brothers don’t want the competition… They want to keep out competition. We want competition.”
Fast forward to today. While Koch failed to stop a competitor plant from being built then, they’re attempting to get the last laugh at Branstad and Reynolds now.
If the proposed Koch acquisition is approved, then our tax dollars will have gone toward building a fertilizer plant owned by Koch that project proponents like Branstad and Reynolds argued at the time was needed because there weren’t enough fertilizer plants not owned by Koch.
The more than half a billion in taxpayer dollars offered to build the plant was intended to create jobs, increase competition, and drive down costs. Permitting the Koch deal to go through would achieve exactly the opposite.
That’s why I look forward to seeing now-Governor Reynolds and other Iowa Republicans ask regulators to block Koch’s acquisition of OCI’s Wever plant.
If for some reason they don’t, the U.S. Department of Justice and Federal Trade Commission should protect farmers and consumers anyway and block this deal. The DOJ and FTC are our nation’s antitrust guardians and are required to review deals like these for anticompetitive concerns.
That’s good news because this is Koch’s latest attempt to further consolidate its market power. That includes a 2021 acquisition of Compass Minerals micronutrient assets and a 2022 acquisition in Jorf Fertilizers Company III, the “world’s largest phosphate mining and leading global fertilizer group.”
Koch’s already one of the top nitrogen fertilizer producers, earning a place as one of the companies that comprise Big Fertilizer.
To get a sense of how concentrated the market is, just imagine a Cy-Hawk football game hosted at Kinnick Stadium, but the Cyclones get to control who sits in 52,000 of the 70,000 seats. That’s the reality for farmers today, where Big Fertilizer controls 75 percent of the nitrogen market according to farm group Farm Action. The proposed Koch-OCI deal would hand over control of even more Kinnick seats to the Cyclones.
With such concentrated control of the market, Big Fertilizer price gouges Iowans and forces farmers to operate in a system where the house always wins.
When Big Fertilizer engages in this kind of theft, it increases the amount that the rest of us pay not only for food and fertilizer, but in taxpayer subsidies for farmers, too. Rather than blame farmers for receiving subsidies, we need to redirect anger to the corporate monopolies like Koch that make the subsidies necessary in the first place.
We can start by keeping Koch from gaining even more power over us. Indeed, the only thing more embarrassing than making “the worst economic development deal in state history” would be if our own tax dollars contributed to increasing Koch’s concentration of the fertilizer market too. Concerned citizens should contact the DOJ and FTC and ask them to block Koch’s proposed acquisition of OCI’s Wever plant.

Scott Syroka,
Johnston, Iowa