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BASF defrauds farmers with market segmentation

by Robert Schubert
CropChoice editor

(Monday, Nov. 18, 2002 -- CropChoice commentary) -- An agro-chemical company taking advantage of farmers is nothing new. But for one to do it so blatantly and maliciously is stunning.

That is what BASF Corp. did by marketing Poast and Poast Plus -- different names for the same herbicide -- for different crop varieties at widely varying prices. When faced with competition from less expensive soybean herbicides, company executives responded by segmenting the market. They charged soybean growers less money for Poast Plus than they did fruit and vegetable growers for Poast. The company succeeded in large part by depriving consumers, in this case farmers, of some important information: The Environmental Protection Agency had registered the essentially identical weedkillers for all the same crops, including soybeans.

Records show that BASF brass discussed the risk of farmers and regulators discovering the truth about the EPA registrations and worried whether the company could control farmers' future pesticide purchasing decisions if someone discovered its actions.

Someone did find out, and they sued. After years of litigation, a Minnesota jury decided in December that BASF had defrauded thousands of farmers with its scheme. Judge- and jury-awarded damages together stand at $54 million.

Despite this precedent-setting case, you can be sure that other pesticide purveyors have and will continue to segment markets to charge higher prices. They just don't carry on as blatantly, making their actions harder to prove in court.

This reality could cause "farmers to lose confidence in the regulatory system," says Colorado farmer David Dechant. "We'll think that regulations exist more for market segmentation than for safety."