Mega-mergers in agribusiness raise concerns
New measures are labeled ‘monopoly capitalism in action’
Three mega-mergers of agricultural chemical and seed companies are reshaping global food production and prompting fears of higher costs for farmers and higher food prices for consumers.
They are also prompting concerns for environmentalists and others about their impact on biodiversity since the even-larger corporations will promote genetically modified seed and the pesticides and herbicides that make them effective.
Critics of the mergers of the China National Chemical Corp. (ChinaChem) with Swiss chemical and seed company Syngenta; Dow Chemical Co. with DuPont; and Germany’s Bayer with St. Louis-based Monsanto say the new companies will continue to promote a patented-chemical-dependent agriculture more concerned with protecting its intellectual property than innovation.
“This is monopoly capitalism in action,” said Marion Nestle, the Paulette Goddard Professor of Nutrition, Food Studies, and Public Health at New York University. “The fewer the compa- nies, the more they call the shots and the more impervious they are to complaints about unfair business practices. If your only source of seed is one company, you have no choice but to pay that company’s prices. In our present agricultural system, farmers are the ones getting squeezed. Expect the squeeze to get tighter.”
Ken Cook, founder of the Environmental Working Group that monitors agricultural policy and has been critical of farm subsidies to large farming operations, said: “We’re seeing consolidation in every aspect of agriculture.”
ChinaChem won antitrust approval from the U.S. Federal Trade Commission in February after agreeing to divest generic versions of a herbicide, an insecticide and a fungicide similar to branded versions of the same chemicals made by Syngenta. ChinaChem announced last month that it had purchased more than 98 percent of Syngenta’s share capital and that Syngenta would apply for de-listing from the Swiss stock exchange.
Dow and DuPont announced last week that all regulatory approvals and clearances have been received and that they expect to close their merger at the end of this month.
And Bayer is in negotiations with the European Commission over the nature and extent of the assets it will have to sell off to ease anti-competitive concerns as it aims to close the $66 billion Monsanto deal by year’s end.
While the companies are committed to delivering shareholder value and expect to achieve costsavings efficiencies — including via layoffs, some already under way — regulators and critics of the deals are concerned about the impact of such huge corporations on farming practices and the price of food.
The global consumer watchdog group Sum of Us has circulated an online petition to European Union Commissioner for Competition Margrethe Vestager and the U.S. Justice Department’s antitrust division in an attempt to derail the Bayer-Monsanto deal. It had 720,757 signatures this week.
But critics may be tilting at windmills. The Center for Re- sponsive Politics, which tracks the influence of money on public policy, shows Monsanto alone has paid 10 lobbying firms $2.2 million this year and spent $4.6 million in 2016. Bayer has spent $4.9 million, Dow has spent $7.6 million and DuPont has spent $1.3 million so far this year on lobbyists.
After health care, finance and insurance and communications industries, agribusiness ranked 9th overall in lobbying spending at $65.7 million so far this year, beating out defense which was ranked 10th.
Asked about the concentration of the agricultural chemical and seed industry, Rep. Doug LaMalfa, R-Calif., a rice farmer and member of the House Agriculture Committee, said through his spokesman Parker Williams that he would “withhold comment on this issue at the moment.” Another member of the committee, Rep. Jimmy Panetta, D-Calif., also declined comment.
The ongoing Bayer-Monsanto deal is playing out as Monsanto attempts to deal with reports that a new formulation of its weedkiller dicamba is curling the leaves of soybean plants in nearby fields. Arkansas recently banned the product.
“We are taking these reports extremely seriously, and we want you to know what we’re doing about them,” Monsanto’s chief technology officer Robb Fraley wrote in an open letter to “farmer-customers” earlier this month. He said Monsanto “will be with you every step of the way this season,” while investigating whether “unusual environmental conditions or weather patterns” might explain the leaf damage symptoms. It’s also expanding its training in the chemical’s use.
In an attempt to predict the impact of the mergers on seed pricing, Texas A& M agricultural economics professors Joe Outlaw and James W. Richardson last September calculated the magnitude of concentration in the industry.
They found that the proposed Bayer-Monsanto combination would raise cotton seed prices
18.2% while corn seed would rise
2.3% and soybean seed would climb 1.9%.