Too late to curb crop input mergers

One of the oldest truisms agriculture offers is the simple, rock-solid advice that the time to close the barn door is before the cows get out. Closing the door afterward, as everyone knows, is pointless because the cows are already long gone.

Everyone, except of course, the United States Congress which, in September, hosted a Senate judiciary committee hearing on “consolidation and competition in the U.S. seed and agrochemical industry.” It arrived just one week after Bayer announced its $66 billion buyout of Monsanto.

A better time to have had a congressional hearing on Big Agbiz competition would have been a year ago before the world’s re-maining seven agri-chemical cows began to pair off and leave the barn.

First out the door last December were DuPont and Dow in what they described as a “merger of equals” — as if anything worth US$130 billion has an equal.

Next went Syngenta and ChemChina who locked horns, then eyes, in February for $43 billion.

Then, in mid-September, Mon-santo finally allowed Bayer to take the lead and out the door they went, head-to-tail, into the brave new world of what Diana Moss of the American Antitrust Institute calls the “Big 4”—Bayer-Monsanto, Dow-DuPont, ChemChina-Syngenta, and, last and truly least, BASF.

Together those formerly seven, now just four, firms have a virtual stranglehold on the global ag-chemical market, combining for $67 billion in sales (2014 figures). Two of the biggest, however, Bayer-Monsanto and Dow-DuPont, command 70 percent of the world market, Moss said in Senate testimony Sept. 20.

ADVERTISMENT

If any of Moss’s worrisome antitrust numbers troubled the hearing’s participating senators and panelists, most whistled right past that graveyard to get to their promised land — how American corporate taxes are too high, its regulations too heavy, and its overall business climate too spiteful for any company to survive long in this beloved, star-bangled land.

Several senators at the judiciary hearing attempted to link today’s ag-chem merger fever with an American tax code filled with what they see as anti-corporation potholes.

Time and again, however, when asked directly about uncompetitive American corporate taxes as a key factor in the moves, company officials explained that their deals were not based on any kind of tax manoeuvres.

The direct, straight-up replies made no difference; the senators weren’t after answers. They were after votes.

In amongst all this sudden Capitol Hill antitrust concern, some facts did emerge. Moss, the only antitrust expert invited to the hearing, explained how the two giants of these deals, Bayer-Monsanto and Dow-DuPont, “are likely to adversely affect competition in three ways.”

“First, they will eliminate head-to-head competition in markets for certain crop seed and chemicals,” she said.

ADVERTISMENT

Next, these marriages will “eliminate competition in agricultural biotechnology innovation markets and reduce opportunities for pro-competitive … collaborations.”

And, finally, “the combinations would create substantial vertical integration between traits, seeds and chemicals.” These “platforms” will likely not “interoperate” with rival products.

All this evidence, testified Moss, points to “less innovation, higher agricultural input prices and less choice for farmers, and higher food prices for consumers” if these deals go through.

Overwhelming odds favour just that, though; nothing was said in the Senate hearing to indicate even a hint of a hurdle for any of them.

Which leaves just you and me with the perfectly pointless job of closing the barn door.

Alan Guebert is an Illinois-based agricultural commentator.

ADVERTISMENT

  • Cobra

    how do they they arrive with higher food prices for consumers…that would mean they would have to pay more for the crop…the mergers will do nothing to change our end prices….they will charge for our inputs what the market will bear and if we have no competition that leaves us no choice but to pay whatever they demand…farmers are screwed

    • richard

      I had the same thought….except one thing…..Farmers are only “screwed” if they buy into the prevailing mythology that these behemoths actually have a vision for agriculture beyond “more cheap food” or “grow more get less”…. Out where the rubber hits the road, this monothematic doctrine is getting more than a little old with producers suffering ongoing twenty sixteen costs and nineteen seventy five prices…..ouch! So much for the rising tide raising all boats…..The mergers are nothing more than the vain notion that if we create an even bigger rope that somehow we will now be able to push rope… The hope lies with growers taking back their power, with their seeds, plants and animals, on their land……Its about choosing self direction versus that of monolithic corporate carpetbaggers…..

      • Bruce

        Yes, you are right Richard. Farmers receive decades old prices for a grain such as wheat. But pay input costs of the present year. Mergers or Monsanto or GMO crops are only concerned about their own profits.

  • Denise

    Maybe this will be the last pesticide- laced GE straw for many farmers in Canada. As input costs go up and more and more chemical products are needed to fight off superweeds. The environment is sick with so much toxic residue,as well as people and animals.
    38 countries have banned GMOs!
    We still have a chance for a better quality of life for our families,if farmers stop enabling the The Big Ag Chemical corporations,by buying into their mythology of farming and their fear tactics of the last 30 years. Poisoning everything but the GE crop lacks common sense. Farmers used to have a lot of common sense and that was a good quality.
    sustainablepulse.com/2016/10/12/pesticide-experts-release-shocking-review-of-global-glyphosate-damage/#.WBleJRSwkYU

    • Harold

      The trial of Monsanto, charged with crimes against humanity and the environment (ecocide), is over (Oct 14-16) and the decision of the court (the Hague) will be addressed to Monsanto and the United Nations possibly before December 10, of this year. December 10, is a day declared – the International Day of Human Rights. Seems a weather forecast is more news worthy.
      Perhaps the sale to Bayer was timely, but Bayer is now a more powerful Monsanto.