Monsanto oblivious to reality until far too late
It seems Monsanto is finally out of its misery. What was once arguably the most detested company in the world likely will cease to exist with its acquisition by Bayer.
Monsanto’s attempt to acquire Swiss-based Syngenta last year not only failed, but was rejected with extreme prejudice. Now, with Bayer’s acquisition of St. Louis-based Monsanto, the latter (or at least its brand) will slowly disappear into the sunset.
Many suspect it was Monsanto’s intended objective to kill its own brand and leave the environmentalists looking for a new foe. After many years, it realized it had to become someone else’s prey, rather than the hunter.
We have seen several acquisitions in the agrifood sector recently, but this is different. Germany’s Bayer AG and Monsanto Co. announced the acquisition at nearly $130 (U.S.) a share, more than $65 billion in total, creating an agricultural behemoth. Combining them creates the market leader on the three largest continents: North America, Europe and Asia. Both companies are of significant size and both generate revenue from different streams. The deal comes after months of discussions.
From a business perspective, the acquisition makes sense.
New markets can be developed for Monsanto’s current products while Bayer gains access to considerable intellectual property in crop science and seeds. This acquisition gives Bayer a comprehensive portfolio of chemicals and products to help farmers increase yields. Bayer’s brands likely will dominate this portfolio as it is hard to see how the Monsanto brand will survive over the long term.
Obviously, there are some risks with this acquisition, but many argue the Bayer-Monsanto marriage has a better chance of succeeding than last year’s attempt to to acquire Syngenta. Then, it was North America buying a company in GMO-hating Europe, which likely would have been politically impossible to get through regulators. Now, it’s now the other way around.
A backdrop to this was the ever-increasing public outcry against Monsanto’s agricultural tactics. For many years, its leaders thought their science-based approach was good enough to validate what they were trying to achieve. They failed to properly engage the public until it was much too late.
For years, “marches against Monsanto” across almost 35 countries and over 410 cities served as evidence that the company’ s riskcommunication scheme had failed miserably. Gatherings aimed to raise awareness about genetically modified seeds, labelling and potential health risks caused by the use of unwanted herbicides. With the help of social media, opposition only gained steam. Since July 1, Vermont has made GMO labelling mandatory, while other states are considering the same. This is the legacy of the company pretending that the collective rejection of its model was not real. It was in denial for a very long time.
Given the compelling science behind genetically modified crops suggesting they were safe, these movements were less about GMOs than about Monsanto itself. In the past, the company felt so confident about its science-based approach in a science-dominated corporate culture that societal optics were never really seriously considered.
After all, Monsanto hires thousands of PhDs and researchers, and science was king. The company thought that by having science on its side, there was no need to tackle concerns originating from what it considered flawed studies. Yet adversaries of Monsanto’s business model have successfully exploited the fact that trust, the golden rule in risk communications, actually has more currency than science.
The extent and amplitude of public criticism caused Monsanto to recognize too late it had lost control over public perceptions. By then, gaining social licence was impossible. The company had inadvertently polarized the issue of genetically modified crops to its own detriment. Accepting Bayer’s offer suggests it realized it had completely misread the market and was unable to salvage its position.
Monsanto’s end will be met with delight from many environmentalists. But now, it’s time for a rational conversation about biotechnologies. Science deserves its place, of course, but consumers must remain part of that conversation moving forward.
Formerly with the University of Regina, Sylvain Charlebois is dean of the Faculty of Management and professor in the Faculty of Agriculture at Dalhousie University.