Bayer-Monsanto merger: An existential threat to South Africa’s food system...

PRESS RELEASE

In December 2016 Monsanto shareholders voted in favour of the sale of the company to Bayer for US$66 billion, making it the largest-ever foreign corporate takeover by a German company.

Both Bayer and Monsanto are major global manufacturers of agrochemicals and seeds, including genetically modified seed. A merged entity would be the world’s largest supplier by sales of both seeds and pesticides, controlling 29 percent of the world’s commercial seed markets and 24 percent of the world’s pesticide markets. Bayer and Monsanto are major actors in South Africa’s seed and agrochemical industries. The deal will require approval from about 30 regulatory agencies around the world, including by South Africa’s Competition Commission.

The African Centre for Biodiversity (ACB), with the support of the Rosa Luxemburg Stiftung, has produced a briefing paper titled, ‘The BAYER-MONSANTO merger: Implications for South Africa’s agricultural future and its smallholder farmers” which outlines that the proposed merger is taking place against a backdrop of other related mega-mergers in the seed and agro-chemicals sectors: between US chemical giants Dow and DuPont in a deal estimated to be worth US$130 billion, and China National Chemical Corporation (ChemChina) and Swiss-based Syngenta in a deal worth around US$43 billion.

According to the briefing, if all the mergers are approved, just three corporations will control about 60% of the global commercial seed market and 64% of the agrochemical market. The mergers will allow the corporations to claim “too big to fail” status, justifying future bailouts using public resources, and further reducing accountability and opportunities for democratic control of the food system.

The ChemChina-Syngenta merger has already been granted conditional approval by the South African Competition Commission, while the Commission has just completed the Dow-DuPont merger investigation and is awaiting remedies by the parties before it concludes on the matter. The Bayer-Monsanto merger is expected to be filed with the Commission very soon.

“These mergers have raised major competition concerns globally. Regulators fear a decline in innovation and investment in research and development (R&D). Civil society and farmer organisations are concerned about further concentration of input supply, leading to higher input prices and reducing the choices available to farmers” says Dr Stephen Greenberg, research co-ordinator at the ACB.

Already, consolidation in the global seed industry between 1994 and 2004 aligns with a more than doubling of seed prices relative to the prices that farmers received for their crops during that time.

The six merging companies currently control close to three quarters of all private sector agricultural R&D. The focus is primarily on a small number of lucrative crops – led by maize and soya both globally and in Southern Africa. These two crops are the mainstay of standardised industrial food and feed production globally. The sheer resources available to these companies allow them to shape the entire agro-food system based on considerations of their private profitability.

According to Mariam Mayet, Director of the ACB “the result is marginalisation and neglect of the wide range of agricultural biodiversity previously available to farmers and ultimately consumers. Over the past four decades there has been an alarming drop in the range of crops and seed varieties in use. This exposes the food system to vulnerability. Further concentration will only consolidate these trends.”

ACB’s briefing points out that the move towards integration between seed and agrochemical markets places farmers on a technological path that is becoming increasingly difficult to escape. Farmers have fewer choices about what crops they plant and what inputs they use. This model of production deepens inequality and threatens the integrity of land and water resources.

“The implications of the merger therefore go well beyond competition in segmented product markets. The ACB calls on the South African Competition Commission to reject the merger (when it is filed) in the public interest. We also call on the South African government to rein in the power of corporations and to channel more resources towards decentralised R&D in partnership with farmers and consumers” say Greenberg.

Download the full report PDF

Contact:

Ms Mariam Mayet: Director ACB mariam@acbio.org.za
Dr Stephen Greenberg: Research Co-ordinator ACB stephen@acbio.org.za
Mr Benjamin Luig: Rosa Luxemburg Stiftung Benjamin.Luig@rosalux.org