Mergers reduce competition, innovation

Producers have a right to be concerned that the mergers of Monsanto with Bayer and PotashCorp with Agrium, if they go through, will eliminate competition and drive up input prices.

If you compare farm cash receipts in Manitoba with the federal government’s Farm Input Price Index, starting in 2004 (which is the base line year), you’ll see that when cash receipts go up, input prices also go up. However, when cash receipts fall, input prices stay the same.

The commodity spike in 2013 perfectly illustrates this. We were told that fertilizer prices followed the price of natural gas, but when gas prices dropped, fertilizer continued to rise in sync with higher commodity prices. Producers had no choice but to shell out.

If there was more competition in the marketplace, then agribusinesses would have to offer prices and products to attract customers.

Producers are also concerned about the effects these mergers will have on innovation. Without the pressure of competition, input conglomerates have no incentive to spend the large sums of money needed to develop new products that can enter into existing product lines.

In the case of the proposed Agrium-PotashCorp merger, which are both Canadian companies, Keystone Agricultural Producers can address this at the federal level.

We will be providing input to the Competition Bureau, stressing that meaningful mechanisms must be put in place to encourage competition and protect farmers when there is a lack of competition.

With the Monsanto-Bayer merger, the course of action is not as easy. Because they are international companies, we must work together with global farm groups to create a strong lobby. KAP has approached the Canadian Federation of Agriculture, our national body, to lead this.

I plan to attend a CFA board of directors meeting in October, and we will be meeting with representatives from these companies so they can hear directly from farmers what our concerns are.

Dan Mazier is president of Keystone Agriculture Producers. He produces grains and oilseeds near Justice, Man.

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