Merger mania in the agricultural seeds and chemicals sector

With the Bayer-Monsanto merger, power in the agrochemicals sector is being concentrated into fewer and fewer hands. Simon Ferrigno, a freelance researcher and writer on sustainability and cotton, asks what impact this trend might have on the millions of farmers buying seeds, fertilisers and pesticides every month.

In a recent deal worth $66 billion, the German chemicals giant Bayer has agreed to purchase Monsanto, the GM seeds business. This record-breaking acquisition is the latest of three mega-mergers in the agrochemical and seed sectors, following the merger of Dow Chemicals and DuPont and ChemChina’s purchase of Syngenta (awaiting regulatory approval).

These deals, if they are allowed to go through, represent an unprecedented concentration of power in the seeds and chemicals sectors, and have profound implications for the future of global agriculture and by extension for billions of farmers, workers and consumers around the world.

Bayer-Monsanto will create the world’s largest agricultural seed company, comprising 30% of the market, as well as a 24% share of global agrochemicals trade. The Pesticide Action Network (PAN) highlights that the ‘big 6’ already hold 75% of the world’s high-tech seed and pesticide business, with Monsanto, DuPont and Syngenta controlling 55% of commercial seed sales, and Syngenta, BASF and Bayer controlling 51% of pesticide sales. This consolidation of power is nothing new, and PAN go on to note that since the introduction of GM seeds 20 years ago, the same companies have bought up 200 other seed or pesticide companies.[1]

There are some immediately apparent problems with such a situation. Basic economics tells us that, without government intervention, healthy competition is the only way to keep prices low. For farmers already living on the breadline, paying more for their seeds could push them out of business. Additionally, the dominance of mega-companies that control the supply of a whole range of agricultural inputs could limit the options available to a farmer and introduce requirements to buy many inputs (seeds, chemicals, services) as part of one package. In this scenario, it is ever more difficult for farmers to keep their costs low, and these concerns are further articulated by the ETC group in their December 2015 report.[2]

Once in a dominant position, corporations go to great lengths to retain their dominance. Monsanto is known to have committed vast resources to suing farmers who may unwittingly infringe on their patents: by 2003, they had allocated a team of 75 employees (with a $10 million budget) to filing patent infringement lawsuits against farmers. By 2012, these lawsuits had brought in $23.7 million.[3]

There are also grave implications for research and development in the sector. Big companies, with a stranglehold on the market, will have little incentive to invest in research to improve their products and therefore fail to drive the progress that is needed if global agriculture is to meet the mounting challenges of global warming. Intellectual property rights can be used to prevent plant breeders from using protected seeds in the development of new varieties, further stifling innovation and skewing the market against new entrants. Additionally, private money is increasingly influential in setting the agenda for academic and publicly-funded research, and so the mega-corporations are able to bring public research into line.

The Bayer-Monsanto merger, although the biggest in history (with Morgan Stanley making $120 million for their advisory role), is simply the latest headline in the move towards the corporate capture of global agriculture. In other words, the problem is not whether the ‘Big 6’ become the ‘Big 3’. Rather, it is that if this trend is allowed to continue we will be left with a single narrative of what agriculture looks like, so that choice in how to farm becomes an illusion.

Simon Ferrigno is a consultant specialising in sustainable and organic agriculture. A version of this blog appeared as a longer article in Ecotextile News No 75 October/November 2016 (pp42-44), http://www.ecotextile.com

[1] http://www.panna.org/blog/who-owns-our-food-system

[2] http://www.etcgroup.org/sites/www.etcgroup.org/files/files/etc_breakbad_23dec15.pdf

[3] http://www.centerforfoodsafety.org/files/seed-giants_final_04424.pdf

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