On September 14, 2016, German pesticide company announced it decided to purchase American seed/pesticide company Monsanto for 66 billion dollars. This would become the largest agribusiness in the world, controlling 29% of the world’s seeds and 23% of the world’s pesticides. This would also be the largest merging in over a decade and would result in a ultimate control of the world’s food systems, meaning farmers and buyers would have increased dependence on these companies and less control themselves. Bayer and Monsanto have increased their lobbying spending over the years, breaking new records with the 2016 election spending $1.2 million to date.
They are currently undergoing regulatory review and will continue it until the end of 2017. This will represent not only the largest takeover of an American company by a German one, but also possibly still a rigorous challenge as the Department of Justice has failed to approve other bis mergers like US Foods and Sysco and Staples and Office Depot. However, if regulators do not approve the merger (both companies have poor reputations in many European countries), then Monsanto is required to pay Bayer a 2 million dollar termination fee as part of the agreement.
According to Ecological Farming Association,
“In December 2015, U.S. chemical giants Dow Chemical and DuPont agreed to a $130 billion merger. They plan to streamline agricultural operations, creating a company that unites DuPont’s and Dow’s seed and crop protection businesses. The resulting company would be one of the world’s largest seed and pesticide conglomerates, controlling 17 percent of global pesticide sales and approximately 40 percent of America’s corn-seed and soybean markets. This year, multi-billion dollar German pharmaceutical and chemical giant, Bayer AG, made an offer of $66 billion to acquire Monsanto, Co., which Monsanto accepted. The resulting company would be the largest agribusiness in the world, selling 29 percent of the world’s seeds and 24 percent of pesticides. Even before the mergers began, these seed and agrochemical companies held inordinate market power, with Monsanto, Dow and Syngenta collectively controlling more than half of the global seed market.
It is predicted that if all three deals were to close, the three resulting companies would control nearly 70 percent of the world’s pesticide market, more than 61 percent of commercial seed sales and 80 percent of the U.S. corn-seed market. Such a heavily consolidated seed and agricultural input industry makes it easier for cartel-like tacit collusion that raises prices for farmers and other buyers and ultimately consumers while stifling innovation that is propelled by healthy competition in the marketplace. Predictably, more concentration of power and less competition will lead to reduced responsiveness to documented farmer and consumer desire for ecologically sound technologies that are cost-effective and sustainable, meaning less choice in the marketplaces for seeds, inputs and foods…
These mergers will exacerbate and worsen consolidation that the industry has been experiencing for many years. In 1996 there were 600 independent seed companies; this number dropped to 100 by 2009. This concentration resulted in crop seed prices more than doubling relative to the prices farmers received for commodity crops between 1994 to 2010…
The “Big Six” firms—Monsanto, Bayer, BASF, Syngenta, Dow and DuPont—held more than 95 percent of trait acres for corn, soybeans and cotton in the U.S. by 2009, with seed containing Monsanto traits accounting for 90 percent of those acres. Bayer-Monsanto and Dow-DuPont corporations would intensify their dominance among a shrinking pool of similarly situated firms…
Conglomerates of such massive scale, breadth and reach, such as those proposed by these mergers, pose a real risk to our economy, to our agricultural sector, to public health, to food security, to the environment and to the general health of the agricultural and food business climate. Dominance of this magnitude can pose both domestic and international consequences that would be irreversible, once set in motion. ”
Read more about the potential consequences of these mergers here.
The World According to Monsanto
The Christian Science Monitor: Bayer-Monsanto merger: Concerns about a seed-and-pesticide food monopoly
Food and Water Watch petition: Stop the Monsanto-Bayer Merger!
Ecological Farming Association: Sign-on Letter Against Agrochemical & Seed Industry Mergers (Dow Chemical with DuPont, Monsanto with Bayer AG, and Syngenta with ChemChina)