US addresses concerns ahead of seed manufacturer mergers

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THE US Justice Department was looking into concerns that global consolidation among major seed and agricultural chemical companies might squeeze supplies of the building blocks for widely used genetically modified seeds, a farm group said.

The department had asked the American Soybean Association for details about how small and independent seed companies licenced seed traits from developers, said Steve Censky, the chief executive of the association.

The federal inquiries started after Dow Chemical said in December that it would seek to merge with DuPont in a $130 billion (R1.77 trillion) deal.

In recent months, department officials had also asked how farmers selected seeds, Censky said. Protection Such questions are common in antitrust reviews, as regulators try to decide whether to approve, reject or place conditions on a merger.

Smaller companies need to licence maize and soya bean traits, which can protect against insects and other threats, because they cannot afford the more than $100 million it costs to develop them.

Major seed makers often licence traits and other genetic material to smaller dealers that have close with farmers.

Independent seed sellers said the proposed Dow-DuPont merger could hurt them if the companies decided to hike licensing fees or to keep their best traits for themselves. They have similar concerns about subsequent announcements that Bayer would seek to buy Monsanto and that Chinese state-owned China National Chemical Corportion aimed to acquire Syngenta. All three deals are still pending. The association has asked Dow and DuPont to expand licensing as part of their merger.

“It’s the big question that everybody is looking at right now,” Independent Professional Seed Association chief executive Todd Martin said about licensing’s future. “Anything that does not support the expansion of the licensing market, we are against.”

The association has asked Dow and DuPont to expand licensing as part of the merger. The soya bean association, which represents more than 20 000 US farmers, told the Justice Department that trait licensing by major firms needed to be preserved, Censky said.

Unlike Dow, Monsanto, Bayer and Syngenta, DuPont has not been active in licensing traits. That has raised concerns among small seed companies that a combined Dow-DuPont could pull back on licensing the technology, a prospect Martin said would be “incredibly negative” for independent sellers.

Independent companies supply about 20 percent of maize and soya bean seeds in North America, giving farmers choices as they work to boost harvests in a downturn. Without licensing, the number of brands of maize seed would probably drop to less than a dozen from about 200 currently, Martin said. Not finalised Dow said it had not yet made decisions on trait licensing, because its deal with DuPont had not been finalised. Monsanto said it was “too soon to have any of those answers” about whether or not its $66bn acquisition by Layer would affect licensing.

Syngenta said its $43bn acquisition by ChemChina will not change its licensing conditions.

Trait licensing was on the agenda at a US Senate judiciary committee hearing last Tuesday, where executives of top companies defended their planned mergers and acquisitions. Bayer CropSciences’s chief executive told senators it had “no plans to discontinue” trait licensing. – Reuters