Farmers want US Dept of Justice to stop proposed Monsanto-Bayer tie up
Members of the National Farmers Union (NFU), American Antitrust Institute and Food and Water Watch sent a letter to the Justice Department on Wednesday highlighting producer concerns about the consolidation and what it could mean for the growers of several feed crops including canola, soybeans and corn, the groups said.
The proposed merger is of a much larger scale than others that recently transpired in the same sector, said Barbara Patterson, government relations director with the National Farmers Union (NFU). “The only comparable one is of Dow and DuPont, which is a much smaller merger,” she added.
“The signals aren’t good, and the regulatory environment hasn’t been great from our perspective,” she told FeedNavigator. “I don’t think we’re more optimist at this point, we anticipate that there will be some requirements [but] we whole-heartedly think that it should be blocked and that they should figure out how to stop these – it’s harming farmers, it’s harming rural America.”
If the merger is allowed to go through, then the US crop inputs sector will have condensed from the “Big 6” to the “Big 3,” the groups said in their letter. And, it will end the “head-to-head” competition that Monsanto and Bayer have in soybeans, crop protection and digital farming.
The proposed merger presents several concerns, said Patterson. When the number of companies providing services shrink, feed crop producers and farmers can be left with fewer choices, less innovation in products and more expensive options.
As companies combine and streamline internal efforts it can mean laying off researchers and scientists so efforts are not duplicated, she said. “It’s fundamental competition economics, when you have more innovators in a space you have more innovation,” she added.
“The early announcements about Dow and DuPont were there were a lot of layoffs, and many of them were scientists,” she said. “You merge to create efficiencies and that means only having one scientific group not two – having more competition you’re always trying to outdo competitors and that offers more innovation. When you don’t have someone challenging you, you have less need to innovate.”
There also could be less work done on crops like canola that do not have the same production levels that corn and soybean do, she said.
“Corn and soy, given the massive amounts of resources that go into those commodities, are more or less going to be okay with these mergers – it’s not great, it’s not preferred, but there is a lot of attention paid,” she said. “It’s the other commodities that are more troublesome – there are a lot less dollars going in.”
There are already fewer choices for producers planting those types of feed crops, she said. “It restricts what you can plant and when,” she added.
“There are only two major players (Monsanto and Bayer) in soybeans and Bayer dominates canola, with Monsanto as a secondary player,” the groups added in their letter. “The merger would significantly consolidate these markets. Post-merger, Monsanto-Bayer would hold 58% of cotton events appearing in commercialized crop trait profiles, 72% soybeans, and 97% of canola.”
It also may become harder for producers to find options for conventional seeds, said Patterson. Some producers have turned to those crops to cut costs as commodity prices have stayed low.
In the past, as seed companies have acquired smaller competitors they have stopped production of those seed lines, the NFU said in the letter. And, consolidation efforts can make it more expensive for farmers to find non-biotech seeds that fit their production needs.
Having larger companies within the industry also makes it increasingly hard for new companies to gain a foothold, said Patterson.
“It’s already hard,” she said. “And with Bayer and Monsanto [together] it would make it more challenging.”
The NFU would love see more development of new crop varieties along with support for new seeds and traits, she said.
Additionally, the current climate toward mergers may support similar actions, she said. Some areas within the larger agricultural sector have already experienced “extreme consolidation.”
“We’ve seen it with processing – there’s already tremendous amount of consolidation,” she said. “When your balance sheet looks a lot different than it did a few years ago, having a regulatory environment that indicates that these mergers will get approved, it is not helpful from our perspective – the signal is already on the table that this environment will be conducive toward more consolidation.”
stop it!! total agreement!
Posted by Laurel,