Should we be concerned over a Monsanto - Bayer merger?

Concerns Over a Monsanto - Bayer Merger

Commissioner for Competition, Margrethe Vestager, has until 5th April to reach a final decision as to whether or not to approve the takeover of Monsanto by Bayer. If the company wins conditional antitrust approval for its $62.5 billion bid, the merger would create a company with a share of more than a quarter of the world’s seed and pesticides market.

The consideration of the merger has already been a lengthy process. Bayer has moved to resolve some of Vestager’s main concerns after she opened an in-depth probe into the deal in August. To placate opposition voices, the corporations have divested some key assets (such as Bayer’s LibertyLink) to reduce the appearance of monopolistic market control but the deal may be permanently blocked unless Bayer makes more significant concessions.

It is generally assumed that if approved, the merger would create a risky consolidation of corporate power that could make life more difficult for farmers using pesticides and manufactured fertilisers. These mergers could threaten food sovereignty around the world by limiting the ability of farmers to make independent choices for themselves, and lock them into damaging and detrimental contracts. It is certainly essential that EU regulators properly investigate before it’s too late.


Complete Monopolistic Control                                            

The corporation spawned from the merger between Monsanto and Bayer creates concern about consolidation for the company’s customers – farmers using pesticides or producing GM crops. Following the merger, the company would control nearly three quarters of the seed on cotton-growing land in the US, giving them near-monopolistic control. They would additionally control large swaths of the GM and non-organic seed market, including GM 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 some farming technology.

The merger between Bayer and Monsanto is one in 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 particularly visible, this trend towards agribusiness consolidation has been happening for years. For 30 years, major agribusiness companies have been acquiring small companies 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”. It is worth noting that waves of consolidation are not necessarily signs of strength, but weakness. Large companies can look for mergers for many reasons, including cost-cutting when markets start to suffer from slower growth or contraction.

Public opposition and practical failures have more-or-less halted the expansion of GM crops worldwide. Growing condemnation of pesticides and the potential for EU-wide ban, in particular of glyphosate (the most widely sold herbicide) and neonicotinoids (the most widely sold insecticides), has damaged market-share and thrown doubt on future sales. In comparison, the strong growth of organic sales, in markets like the USA, Germany and China (albeit from a small base), has highlighted the public move towards a more sustainable vision of agriculture, and generated questions over whether big agribusiness can continue to expand – indeed in key territories they face a shrinking market.

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. That said, some developing countries have shown remarkable determination to challenge this monopolistic control. For example, Burkina Faso  withdrew  permission to grow genetically modified cotton from 2018 onwards due to the dramatic decline in cotton quality and subsequent economic damage following the introduction on GM cotton.

Nevertheless, the impact of these mergers may be particularly felt by smallholder farmers who would have few alternative options. The agribusiness corporations could continually increase input prices for farmers, which farmers would have little option but to accept. Small, family farms that use pesticides and manufactured fertilisers are unlikely to be able to survive endless price hikes when they are already struggling. Financially-strapped and on the edge of bankruptcy, many might opt to sell out to big, agribusiness operators who can shoulder higher costs, as opposed to struggling on. Those farmers who are organic, or who convert to organic systems, would escape this trap, which may explain the hostility large agri-chem companies often display towards organic farming and food.

Data and Privacy

If the merger is completed, Bayer-Monsanto will be poised to be a major player in agricultural Big Data. Friends of the Earth US recently published a report of the potential risks. Through this merger, Bayer-Monsanto will be primed to combine data across its businesses to create a platform that would have the capability of leveraging the sale of one product into another, even if that other product is lower quality or more expensive than a similar product produced by a rival. It is potentially a method to engage in price discrimination and push more expensive products to farmers. Without careful examination by regulators, the merger may give Bayer-Monsanto the ability effectively to micromanage vast swathes of farmland and limit farmer choice and competition— all at the price the company sets, free from competition.

Environmental Concerns

These mergers could result in more powerful political and economic arguments for the industrial agricultural model. Consolidated agri-corporations could further expand large-scale, chemical-based monoculture farming to devastating ecological effect. Industrial farming systems supported by agri-chemicals are  recognised as major contributors to climate change, soil degradation and biodiversity loss, problems that pose significant threats to long-term food security.

The other environmental concern is over the consequences for the control of seed since these large agribusinesses have heavily invested in proprietary seed. By limiting competition in the seed market, buyer options could become restricted and corporate control could be make it difficult for farmers to secure conventional seed that is not patented and not genetically-edited. However, the collapse of the market for GM cotton seed in India, and the return to traditional seeds shows how quickly big corporations can lose a market. Read our report into GM cotton in India here.

Public 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.

Since organic farms are not dependant on the chemicals produced by these agribusinesses, organic farmers have less immediate concern over with these mergers. In fact, one might argue that these mergers will benefit the organic movement since the press attention will increase public awareness and lead to a wider rejection of industrial agriculture. With increasing scrutiny over the safety of neonicotinoids and glyphosate, expanding pesticide resistance and the necessity to reduce dependence on artificial nitrogen fertilizer (a key driver of climate change), industrial agriculture is failing and we’re seeing a steady growth in organic farming.

However, despite not being directly impacted by the Bayer-Monsanto decision, organic farmers should still have concerns over these mergers. All farmers and growers should oppose corporate control of our food systems. If our goal is a future for food and farming that is healthy and sustainable, these mergers cannot be allowed to go through without sufficient oversight and scrutiny.

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.