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#mergerfromhell

Agrichemical mega-merger

Last month, the European Commission issued formal objections to Bayer over the planned takeover of Monsanto. The objections from European Commissioner for Competition Margrethe Vestager represent a stark ultimatum for the agrichemical giant, which has spent at least 12 months trying to appease EU regulators to approve the mega-merger.

The Commission, which has until 5th March to reach a final decision, has the power to either block the merger or demand divestments by the companies. Bayer already moved to resolve some of Vestager’s main concerns after she opened an in-depth probe into the deal in August but the deal may be permanently blocked unless Bayer makes more significant concessions.

If approved, the merger would create a risky consolidation of corporate power and potentially threaten food sovereignty around the world. It would increase Bayer’s global market share dramatically and open up new opportunities. It is therefore essential that EU regulators properly investigate before it’s too late.

Complete Monopolistic Control                                            

The corporation spawned from the merger between Monsanto and Bayer would create concern about levels of consolidation. The company would control nearly three quarters of the seed on cotton-growing land in the US, giving them almost complete monopolistic control. They would additionally control large swaths of the seed market, including biotech varieties of canola (oilseed rape), soybeans and corn (maize). The merger would also increase Monsanto’s control over other areas in which it is already a dominant player, including fertilisers, pesticides and farming technology. To placate opposition voices, the corporations have divested from key assets (such as Bayer’s LibertyLink) to reduce the appearance of monopolistic market control. 

However, the merger between Bayer and Monsanto is one is a growing trend of agribusiness mergers. There is a $130 billion proposed merger of Dow Chemical and DuPont and ChemChina has proposed a $43 billion purchase of Syngenta.

A Third Wave of Consolidation

While these three global mergers are the most visible and concerning examples, this trend towards agribusiness consolidation has been happening for years. For 30 years, major agribusiness companies have been acquiring small companies, consolidating the marketplace and increasing their market share. The American National Farmers’ Union noted in their letter to the U.S. Federal Trade Commission (FTC) critiquing the merger that, “we are currently in the midst of a third wave of consolidation”.

This wave of consolidation within transnational agri-corporations is of deep concern for both economic and environmental reasons.

Consolidation in the agribusiness industry tends to simultaneously concentrate political power. Agri-corporations have considerable resources to lobby governments to shape the rules of the food system in ways that support their interests. Changes in government policies that favour big corporations’ desire for more large-scale industrial agriculture would directly threaten small farmers’ livelihoods.

Consequently, the impact of these mergers would be particularly felt by smallholder farmers who would have few alternative options. The agribusiness corporations could push prices up for farmers, which would ultimately end in increased food prices for consumers, too. Small, family-owned farms farming with pesticides and manufactured fertilisers are unlikely to be able to survive yet more price increases when they are already struggling. Financially-strapped and pushed to the edge of bankruptcy, many might opt to sell out to big, agribusiness operators who can shoulder higher costs.

Environmental Concerns

Further spread of the industrial agricultural model backed by agri-corporations is also likely to have devastating ecological effects. Large-scale, chemical-based monoculture farming is recognised as a major contributor to both climate change and biodiversity loss, problems that pose significant threats to long-term food security.

The other environmental concern would be over the prevalence of genetically modified (GM) seed. These large agribusinesses have heavily invested in GM seed and are actively promoting GM in countries around the world. By limiting competition in the seed market, buyer options could become limited and corporate control could be make it difficult for farmers to secure conventional seed that is not proprietary and not genetically-edited.

US Food Sovereignty

The implications to US food sovereignty are of additional concern in the context of the SygentaChemChina deal. ChemChina’s proposed $43 billion purchase of Syngenta would give the Chinese government control of the world’s largest manufacturer and distributor of agrichemicals and pesticides. The deal would be the largest Chinese purchase of any foreign firm in history and is larger than the next four largest deals combined.

Objections

Objections are being raised against the mergers worldwide. Citizens and politicians alike are calling for more in depth investigations into their impact on competition, food security, and economic independence. It is only through in-depth analysis of the potential long-term consequences of these mergers will we be able to adequately protect our farmers and food security.

The consolation for organic farmers, and all those world-wide converting to organic to meet ever growing demand for organic food, is that they have little or no interest in any of the agricultural products these companies sell. The world’s largest selling weedkiller (glyphosate) and most used insecticides (neonicotinoids) are both under renewed safety scrutiny.  With concerns rising about manufactured Nitrogen fertiliser’s impact on climate change, pesticide resistance growing world-wide, and the steady growth of organic markets, especially in the USA, Europe and China, it could be argued that consolidation in the agro-chemical sector is driven as much by shrinking markets and an uncertain economic future as anything else.

To read more about our vision for the future of sustainable food and farming that values and supports smallholder producers while protecting our environment, please visit our Policy Hub.

 

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