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Corporate Control

The markets for genetically engineered (also called genetically modified or GM) crops are dominated by four seed and agrochemical companies. The high level of corporate concentration in the seed market has already meant higher prices, limited choices for farmers, a narrowing of genetic diversity in crops, and stagnating innovation.

Update

May 31, 2018 – Press Release: Canada’s Decision to Allow Monsanto’s Mega-Merger with Bayer Worries Farmers, Environmental Groups 

Canada and the US have agreed to allow Monsanto and Bayer to merge. The new company could control around 30% of the world’s commercial seed market and 25% of agricultural pesticides. Read CBAN’s Comments to the Competition Bureau (September 15, 2016)

With the Bayer-Monsanto merger, four companies will control about two thirds of the global seed market and more than 70% of global pesticides:

  1. Bayer-Monsanto
  2. Corteva Agriscience, the spinoff agricultural enterprise resulting from last year’s Dow-DuPont merger
  3. the company from the merger between Syngenta and ChemChina (ChemChina is expected to soon merge with the even larger Sinochem).
  4. BASF, that is expected to buy all or most of the assets Bayer and Monsanto are asked to divest

Source: ETC Group

“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.”from a letter opposing the mergers signed by over 300 groups in the US.

Corporate Concentration

The markets for genetically engineered (also called genetically modified or GM) crops are now dominated by four giant seed and agrochemical companies. The high level of corporate concentration in the seed market has already meant higher prices and limited choices for farmers. Legal controls, such as patents on genetic sequences, have meant that farmers cannot reuse, save, share or sell GM seeds, but have to buy them from seed companies every year. Patented GM seeds are significantly more expensive than non-GM seed.

With the June 2018 merger of Bayer-Monsanto, four companies control about two thirds of the global seed market and more than 70% of global pesticides

At least 70% of their research and development funds in seeds and crops are devoted to biotechnology and GE crops.

It is estimated that the four biggest companies account for over 95% of all GE crop acres in the world (97% in 2007). Monsanto’s GE traits are approximately 85% of the total GE acreage.

Since the first GE seeds were introduced in 1996, the market share of the world’s three largest seed companies – Monsanto, Dupont, Syngenta – more than doubled.

The companies regularly cross license to each other, reinforcing their market power. About half of all commercial GE seeds with stacked traits are the result of cross licensing between companies.

Monsanto is the world’s largest seed company and, as of January 2013, had filed 144 seed patent infringement lawsuits involving 410 farmers and 56 small businesses in 27 states in the US.

For information on the impacts of corporate control in seeds, see CBAN’s GMO Inquiry report “Are GM Crops Better for Farmers?”

Mega-Mergers

Companies Dow and Dupont agreed to merge and Chinese state-owned company ChemChina bought Syngenta. If regulators allow the Bayer-Monsanto merger, the resulting three companies will control more than 65% of global pesticide sales and almost 61% of commercial seed sales. (See Merge-Santo: New Threat to Food Sovereignty, ETC Group)

German chemicals giant Bayer’s record-breaking $66bn takeover of GM seeds corporation Monsanto would create the world’s biggest seeds and pesticides company. The new company would control approximately 31% of the world’s commercial seed market and 26% of agricultural pesticides.

This merger could further increase the price of seed, decrease choice in the marketplace for Canadian farmers, and stifle research and development. These three impacts are the generally anticipated consequences of corporate consolidation in most sectors and observed trends in the seeds market over the past two decades in Canada and the US already point to these particular impacts. See Comments to the Competition Bureau submitted by CBAN and Vigilance OGM, September 15, 2016 and our press release Bayer’s Takeover of Monsanto Triggers Anti-Competition Fears: Groups in Canada request Competition Bureau review.

December 2017: New research concludes that even on a narrow reading of European competition law, the merger between US-based agro-chemical and biotech companies Monsanto and Bayer should not be permitted. The legal study sets out five main reasons why EU competition law requires that the merger be blocked:

1. High market concentration: If the Bayer-Monsanto merger is approved, just three corporations (ChemChina-Syngenta, DuPont-Dow and Bayer-Monsanto) will own and sell about 64% of the world’s pesticides/ herbicides, and 60% of the world’s patented seeds. Thus, the Bayer-Monsanto merger would occur in a market context of even weaker competition.

2. Entrenched market power: Bayer holds 206 patents and Monsanto 119 on transgenic plant traits in the EU, while Monsanto monopolises the US market with 96% of patented cotton traits. The risk of “anticompetitive collusion” is increased by the significant links the firms have, such as cross-licensing agreements, joint ventures, and other R&D strategic alliances.

3. Increased prices for farmers: The merger would “undoubtedly” raise costs and reduce the choice of seeds for farmers, with “considerable effects” on the viability of smallholder farming. Farmers “will pay the price of an increase in concentration in this sector”, pushed into a “take it or leave it” position.

4. Locking farmers in: Monsanto and Bayer’s combined forays into “digital farming” would position it as a fully-integrated service provider. An offer that once accepted would be virtually impossible for farmers to get out of, being dependent on the company for all inputs, down to the very data on their own soils and crops. Farmers would become dependent on three mega-corporations for all important decisions, “ceasing effectively to operate as independent economic actors.”

5. Reduced competition and innovation: The merger would bring together two companies that are direct competitors in some areas, thereby removing competition and the incentive to innovate. The costs of competing with such new one-stop shop platforms may be prohibitively high for small and medium enterprises, which would instead be obliged to sell or license their technology to a merged Bayer-Monsanto corporation, allowing it to control the direction of technological change.

The researchers also call on the European Commission to broaden its investigation of the merger to take into account the full social and ecological costs at stake. For instance, the merger would make famers less able and likely to farm sustainably. Farmers will increasingly lose control of seed materials, which “will have devastating effects on local varieties and non-standardised agricultural products”.  Quantities of pesticides used by farmers can be expected to increase by the oligopoly of agrochemical giants promoting a high-input, high-tech, intensive monoculture model. This would have negative impacts on biodiversity, climate, and health. The political clout of a merged Bayer-Monsanto corporation would drown out alternative voices speaking for agro-ecological farming practices that boost biodiversity.

Resources

Summary briefing of Lianos, Ioannis with Katalevsky, Dmitry, Merger Activity in the Factors of Production Segments of the Food Value Chain: A Critical Assessment of the Bayer/Monsanto merger, Centre for Law, Economics and Society (CLES), University College London (UCL), Policy Paper Series: 1/2017, ISBN 978-1-910801-13-0 2

American Antitrust Institute, Food & Water Watch and the National Farmers Union USA, The Proposed Dow-Dupont Merger, May 2016

CBAN: “Are GM Crops Better for Farmers?” 2015

ETC Group tracks corporate consolidation and investments in the agriculture sector:

  • ETC Group, May 2015: Monsanto/Syngenta: From Gene Giants to Agribehemoths
  • ETC Group, March 2013: Gene Giants Seek “Philanthrogopoly” The report takes a look at how the 6 multinational Gene Giants control the current priorities and future direction of agriculture research worldwide.
  • ETC Group, December 2011: Who Will Control the Green Economy? This report connects the dots between the climate and oil crises, new technologies and corporate power. The report warns that the world’s largest companies are riding the coattails of the “Green Economy” while gearing up for their boldest coup to-date – not just by making strategic acquisitions and tapping new markets, but also by penetrating new industrial sectors. DuPont, for example, already the world’s second largest seed company and sixth largest company in both pesticides andchemicals, is now a powerhouse in plant-based materials, energy and food ingredients. Other major players like Monsanto, Syngenta, Dow, BASF and Unilever are making strategic investments in risky technologies in hopes of turning plant biomass into products and profit.
  • ETC Group, October 2010: Gene Giants Stockpile Patents on “Climate-Ready” Crops in Bid to Become Biomassters: Patent Grab Threatens Biodiversity, Food Sovereignty. Under the guise of developing “climate-ready” crops, the world’s largest seed and agrochemical corporations are filing hundreds of sweeping, multi-genome patents in a bid to control the world’s plant biomass. ETC Group identifies over 262 patent families, subsuming 1663 patent documents published worldwide (both applications and issued patents) that make specific claims on environmental stress tolerance in plants (such as drought, heat, flood, cold, salt tolerance). DuPont, Monsanto, BASF, Bayer, Syngenta and their biotech partners account for three-quarters (77%) of the patent families identified. Just three companies – DuPont, BASF, Monsanto – account for over two-thirds of the total. Public sector researchers hold only 10%.