Will less competition stifle innovation? Farmers want answers to this and other lingering questions.
© Farm Journal
Before the sun even rose Wednesday morning in the U.S., Bayer and Monsanto had already announced they’d finally reached a deal for a pending acquisition. In light of the recent wave of other agriculture industry mergers and acquisitions, farmers and others in the industry have questions they want answered.
- How will these companies preserve competition in the market?
- What’s to stop companies from raising prices on seed and chemicals?
- Will less competition stifle innovation?
- How many people will lose their jobs over these mergers in the interest of efficiency?
“Consolidation of this magnitude cannot be the standard for agriculture, nor should we allow it to determine the landscape for our future,” says Roger Johnson, president of National Farmers Union (NFU). “The merger between Bayer and Monsanto marks the fifth major deal in agriculture in the last year, preceded by an approval of the Syngenta/ChemChina acquisition and proposed mergers between Dow/DuPont, Potash Corp./Agrium and John Deere/Precision Planting LLC.”
NFU says it’s pleased to see the Senate Judiciary Committee reviewing the trend of consolidation as the group believes it can lead to less competition, stifled innovation, higher prices and job loss.
But those at NFU aren’t the only ones concerned about recent ag mergers. Farmers and retailers have questioned how this move could benefit them.
“When in the history of capitalism has less competition been an advantage for anyone other than the companies merging? It is not even positive for the employees, the shareholders and share price with potential for growth are the drivers of bad deals like these. The only way to feed and clothe the world is through advanced technology bred from competition,” according to a recent AgWeb reader comment from Jared Shannon of Abernathy, Texas.
Many fear lack of competition will not only slow new technology, but also give companies the license to raise prices without recourse.
“I could see them raising their tech fees for seed traits to help pay for the deal. It burns me when tech fees cost more per bushel than what you can receive per bushel for the commodity you’ve raised. I’d have to agree with the National Farmers Union on this one,” says AgWeb reader ‘Zorcon’ from Nebraska. “Even if the deal gets done and the overlapping areas of the companies are consolidated to ‘increase efficiencies,’ they still have to pay for the merger. If they paid too much for the transaction to begin with, raising prices will have to happen.”
Farmers, retailers and others also took to Twitter to express their thoughts on the continuing trend of agribusiness consolidation. Here’s a sampling of what they were saying.
Welp. Here we go. https://t.co/NHstajSdPP
— Andrew Kniss (@WyoWeeds) September 14, 2016
— Mark Dorenkamp (@BRNAgNews_Mark) September 14, 2016
Maybe I’m crazy, but the Agrium/Potash merger concerns me way more than the Bayer/Monsanto one…
— Angie Setzer (@GoddessofGrain) September 14, 2016
Bayer/Monsanto Deal leaves AgReliant (3rd in U.S. Corn Market Share) only Top 5 company in the past 3 yrs that hasn’t merged or sold #stable
— Scott Rowntree, CCA (@agronomyscott) September 14, 2016
Bayer-Monsanto deal is so surreal
— ben (@BenShindel) September 14, 2016