Farmers Fear Higher Prices, Fewer Choices from Bayer/Monsanto Deal
August 17, 2017
August 17, 2017 by Sonja Begemann
The possibility that Bayer could acquire Monsanto—just confirmed Thursday by both companies—is weighing heavily on the minds of U.S. farmers. “Big isn’t always better,” says Paula Karlock, fourth-generation corn and soybean farmer in Momence, Ill. “My concern is about competition and prices—with competition, others keep (prices) in check.” If Bayer’s $42 billion proposal is accepted by Monsanto, it would be the biggest merger globally so far this year, according to Bloomberg.
It would also pool Monsanto’s seed portfolio with Bayer’s crop chemical offerings. In 2014, Monsanto had a market share of 35.5% in corn and 28% in soybeans, according to Farm Journal’s 2015 Seed Guide. In contrast to Syngenta, which Monsanto courted unsuccessfully for years, Bayer brings minimal seed market share to the table; the company owns no corn seed and only recently launched Credenz soybeans. However, regulators would likely require Bayer to divest the glufosinate herbicide business, including seed traits tolerant to the herbicide, before approving the deal, according to the Wall Street Journal. The combined company could reach $67 billion in sales and give it the top spot in seed and crop chemicals, according to the Wall Street Journal.
As such, it offers both advantage and disadvantages to American farmers. “I don’t see this as all that different from Monsanto trying to buy Syngenta,” says Bob Young, chief economist at the American Farm Bureau Federation. “One brings strong seed, one brings strong chemicals. It could bring efficiencies to the process.” Others see the potential merger differently. "National Farmers Union is troubled by the latest news of a proposed Bayer AG buyout of Monsanto Co., perpetuating a disturbing trend of further consolidation in the agricultural input sector, including seeds and crop protection products. We have continuously expressed our concern about the outcomes of further industry consolidation, such as the recent proposed merger between Dow Chemical Co. and DuPont Co. Family farmers, ranchers and consumers are the ones that lose out when we cripple competition, increase prices, and reduce innovation through industry megadeals," says Roger Johnson, president of the National Farmers Union. Many farmers remain wary about what such a deal might mean for them in the years to come.
"I can't fault them for wanting to better themselves," says Frank Hrupsa, 45-year corn and soybean farmer of Harrington, Del. "I do wonder how it will affect Monsanto's employees." “Producers I’ve talked to understand why (Bayer and Monsanto might merge), but they don’t necessarily want it to go through,” Young says. “Some farmers see this as negative because of the size of the potential company and loss of yet another choice.”