Indiana corn farmers claim Syngenta’s actions cost them millions

Delaware County farmer Keith Orebaugh saw the price of corn plummet the past two years.

Orebaugh could sell 100 bushels of corn for up to $700 in 2013. Corn fetched about half that price by late 2014. The fourth-generation farmer started cutting back on needed repairs and went without new equipment, he said, because "the dollars just weren't there."

The dramatic drop in price is a big problem for farmers in Indiana, the fifth-largest producer of corn in the country.

Orebaugh and thousands of farmers across the country blame Syngenta, a Swiss biotechnology company and one of the world's leading producers of seeds. Indiana farmers, grain handlers and trade associations have filed lawsuits against Syngenta, joining other Midwest states in what has become a complex and lengthy legal battle. Orebaugh filed a lawsuit seeking class-action status earlier this month.

The lawsuits stem from the company's genetically modified corn seed called Agrisure Viptera, which is designed to resist pests. According to Orebaugh's 101-page complaint, Syngenta sold seeds to U.S. farmers and corporations without first gaining approval from China, a key importer of U.S. corn. Syngenta also is accused of misleading farmers about when the GMO corn could be sold in that country.

China later banned U.S. corn after detecting shipments that had the unapproved GMO trait, halting the country's corn trade with China.

That resulted in a massive surplus of corn, leading prices to drop and causing farmers to lose revenue, said Orebaugh's attorney, Steve Wagner, of Wagner Reese LLP. The Indianapolis firm is leading the litigation against Syngenta in Indiana, representing about 3,000 Hoosier farmers who have filed claims against the company, Wagner said.

"The effect in Indiana is in millions and millions of dollars," he said. Nationwide, the loss is estimated at nearly $3 billion, according to the National Grain and Feed Association.

Syngenta denied the allegations, saying it did not violate any laws when it launched the GMO corn seed in the U.S. market. The company also says the price of U.S. corn dropped before China's rejection. Syngenta's legal counsel, Michael Jones of Washington, D.C.-based Kirkland & Ellis LLP, said the Chinese ban and the drop in prices were caused by other factors, such as China's decision not to import corn because of its own record harvest.

It's common practice for companies such as Syngenta to launch a product before receiving approval from export markets, Jones said. He noted that the U.S. Department of Agriculture, U.S. Food and Drug Administration and U.S. Environmental Protection Agency allowed Syngenta to commercialize and sell the GMO corn seed to U.S. farmers. The corn also gained approval for export to Canada and Japan, he said.

"Up until this point, there was no requirement that you seek Chinese approval before commercializing a trait," Jones said. "The whole idea that there was a misrepresentation ... really rests on a faulty premise that this is something that is required."

Syngenta made the request to sell the GMO corn to China in March 2010. The company told grain handlers and farmers that the company was on schedule to obtain approval by spring 2012. But, according to the complaint, incomplete and delayed regulatory filings by Syngenta meant approval couldn't happen in 2012.

Syngenta shared updates with U.S. farmers and grain handlers, Jones said, adding that China's delay in approving the request was politically motivated. He cited a recent U.S. Trade Representative report, which criticized China as "among the least transparent and predictable of the world's major markets for agricultural products."

The U.S. Agriculture Department projected that China would be the largest importer of corn by 2020. But, according to the complaint, Syngenta misled farmers about the increasing demand for corn in China, saying it's not a key importer. The complaint also says that the company expanded U.S. sales of the GMO corn seed, even with the likely financial loss to farmers.

"Syngenta, however, chose not to inform growers and the grain industry of the growing danger. Instead, it crafted a plan to mislead grain handlers and growers to believe that Syngenta would have import approval from China by the time Viptera was harvested despite all indications to the contrary," the complaint says. "The purpose of this plan was to sell more Viptera."

Jones said China wasn't a key importer of U.S. corn when Syngenta made the request in 2010.

By April 2012, Syngenta already had sold large quantities of the GMO corn seeds to farmers across the country, the complaint says. In November 2013, China rejected shipments of U.S. corn after detecting the GMO trait.

Syngenta received approval from China in December 2014, almost five years after the company made its request.

In September 2014, Cargill Inc., a Minnesota-based company that produces and distributes agricultural products around the world, sued Syngenta in Louisiana state court for prematurely commercializing Viptera. Illinois-based Archer Daniels Midland Co., which buys grains and oil seeds from farmers, followed in November 2014, according to The Wall Street Journal.

Syngenta later fired back and filed a federal lawsuit against exporters Cargill and Archer Daniels Midland Co. and other grain handlers. Syngenta argued these companies are the ones that decide what gets shipped outside the U.S. The two exporters decided to ship U.S. corn "that they knew or should have known contained Viptera" to China, despite knowing it wasn't allowed to be sold there, according to the complaint.

Thousands of plaintiffs, including farmers and grain exporters from Illinois, Minnesota, Iowa, Missouri, Kansas, Nebraska, Wisconsin and Kentucky, have filed lawsuits against Syngenta in federal and state courts. The federal class-action lawsuits have been consolidated in a federal district court in Kansas City. In September, a federal judge dismissed some of the claims against Syngenta but ruled that the lawsuit could still move forward.

The state lawsuits have been consolidated in Minnesota state court, where Syngenta has a subsidiary.

Like Orebaugh, most Indiana farmers didn't use Syngenta seeds, but Wagner said that is not a requirement to file a lawsuit.

"This is a market devaluation claim," Wagner said. "Actions by Syngenta affected all stakeholders. Everybody saw the price of corn drop dramatically while production costs stayed relatively the same."

Proving how much of the price drop specifically resulted from Syngenta's actions will be the challenge in the lawsuit. Market prices are affected by a lot of factors, and it's difficult to determine what single factor caused "any particular movement in prices" at any given time, said Patrick Westhoff, an economics professor and director of the Food and Agricultural Policy Research Institute at the University of Missouri.

A record corn harvest in China and a decision by its government to constrain imports from foreign markets could have significant impacts on the market price of corn in the U.S., Westhoff said.

"Other times, they're more concerned about the high cost of food, so they make sure they have sufficient imports to keep prices down," Westhoff said about China.

Wagner said Indiana farmers lost about 11 cents to $1.20 a bushel over a period of two years because of Syngenta's actions. The price of corn has not rebounded and still remains below $4 a bushel, according to the U.S. Agriculture Department.

Losing revenue isn't new to Orebaugh, a 76-year-old farmer who owns 280 acres about 15 miles south of downtown Muncie, the same land his great-great-grandfather bought in 1832.

Although older farmers already have paid for their equipment and lands, Orebaugh said, he's concerned about younger farmers who are starting up, have debts to pay and were likely hit harder by the dramatic decrease in corn prices.

Because of Indiana's two-year statute of limitations in most civil cases, farmers had until Nov. 19 to file a claim, Wagner said. Nov. 19 was the two-year anniversary of the Chinese ban on U.S. corn.

Orebaugh's decision to file a lawsuit seeking class-action status in Marion County was a procedural tactic to extend the statute of limitations by several months and buy other farmers more time to file individual claims, Wagner said.

By filing the suit, Indiana farmers who have yet to file their own lawsuits now have several more months to do so — until a judge decides whether the case can move forward as a class-action suit, Wagner said.

Orebaugh's case likely will be transferred to federal court in Kansas City, Wagner said. Trials are set to begin in 2017 in state and federal courts.

Call Star reporter Kristine Guerra at (317) 444-6209. Follow her on Twitter: @kristine_guerra.