Farmers fear mergers of agriculture firms
bdlive.co.za - Jun 20th 2016, 11:28
Three megamergers in the agrochemical sector including Bayer and Monsanto, have raised concerns among farmers who fear higher prices and of consumers who fear more genetically modified (GM) food.
Even before Bayer successfully woos US-based Monsanto, German civil society has erupted in protest against a national champion acquiring a producer of genetically modified seeds and Roundup, the world’s leading but also controversial weed-killer that is suspected of being a carcinogen.
Meanwhile, ChemChina is tying the knot with Swiss-based Syngenta, and US companies Dow and DuPont are also finishing wedding plans. The three giants born of these mergers will control two-thirds of the global market for seeds and pesticides, two key products for farming.
As competition regulators in Europe and the US weigh the mergers, the nongovernmental sector and advocates of small-scale farming are voicing their concerns on this.
"Wherever you set the bar to define an oligopoly, it’s clear that the mergers will further reduce choice for farmers, especially in southern countries," said Renee Vellvee of the NGO Grain.
She expressed concern the mergers would put "too much power at the top of the food chain in the hands of several company boards".
In Germany, Annemarie Volling of the AbL group of small and medium-sized farmers worries that after such mergers, the big players will decide themselves which sorts of seeds will go on the market.
"For the moment, there are no GM crops in Europe, but the question is whether Bayer will dare to try it," she said.
Large farmers and co-operatives in Germany are so far, less engaged.
"It isn’t an issue at all, the farmers have other concerns at the moment", such as the fall in milk prices, said Holger Brantsch of the Brandenburg Agricole Federation.
While some sympathetic US farm groups see the mergers as a means for their suppliers to cut costs and maintain funding for research and development into innovative products, others are calling for the mergers to be blocked. "Seed costs are the highest input expense for farmers," National Farmers Union president Roger Johnson said in a statement in May.
"While some of the cost can be attributed to more sophisticated technology, we have seen time and again that consolidation and market restructuring has increased the cost of crop inputs," he warned. With the current low prices for food commodities, "additional cost increases for crop inputs could cripple a lot of family farms in this country".
In Argentina, a big customer for GM seeds for maize, soybeans and cotton, there is a wait-and-see attitude. "While the scenario of price hegemony is likely, it isn’t the immediate reality," said Carlos Marin, member of a group of more than 2,000 agricultural businesses. On the contrary, he noted, pesticide and fertiliser costs have been decreasing in recent months.
In France, the co-operative group InVivo, which holds about half of the market for the distribution of pesticides, believes it is large enough to hold its own in price negotiations with the agrochemical giants.
And "there are new suppliers arriving on the market, in particular, with generic versions of pesticides, where there is a frenzy of competition," said Jean-Sebastien Bailleux, who heads up the agricultural supplies unit at InVivo.
But Pat Mooney, director of the Canadian NGO ETC, called it "short-term thinking by any company ... to think they can face the pressure themselves".
And he believes the pressure could be even greater as the current crop of mergers could be just a prelude to agrochemical companies being picked by tractor manufacturers, which have much higher sales.
The purchase of Bayer-Monsanto would be of interest to a company like John Deere, as both agrochemical groups and equipment manufacturers have been moving towards providing data services to farmers for "precision agriculture".
"Farmers would be much more nervous if John Deere was coming in, because it’s a much bigger company than Monsanto," he said.From DFM Publishers (Pty) Ltd.
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