Currently, there are six companies that dominate the biotech seed and agrochemical industries: Bayer, Monsanto, Dow, DuPont, Syngenta, and BASF. But in recent months, DuPont has proposed merging with Dow, Bayer has struck a deal to buy up Monsanto, and Chinese giant ChemChina is buying Syngenta. If these mergers all go through, the three biggest agribusinesses would sell 59 percent of the world’s patented seeds and 64 percent of all pesticides.
As I detailed earlier, the biggest worry here is that a lack of competition could stifle the innovation needed to help farmers grow enough food to support a population that’s soaring past 7 billion. These giant oligopolies could also, potentially, raise prices on farmers who have already been battered by falling incomes in recent years. [...]
The basic thread running through these five points is that competition is crucial for fostering innovation, as farmers have more choices and companies have more incentive to create the most appealing seeds and pesticides for them. Reducing this competitive dynamic is likely to swamp any benefits from increased synergies from mergers.
By the way, Roger Johnson, president of the National Farmers Union, raised a related concern. Right now, there are so many regulatory hurdles to bring new biotech products to market that it’s hard for any but the largest firms to compete. “The unpredictable and lengthy regulatory review process, particularly in the biotechnology space, encourages greater consolidation in the sector,” he noted. So that’s another piece to consider here.
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