The Dismal Truth

Contrary to their narratives that promise environmental sustainability, better choices and increased profitability for farmers, and greater scientific and technological innovations in food and agriculture, the effects of such mergers are devastating and far-reaching and can be recognized in several key ways.

Consolidation and Collaboration, Not Market Competition

Firstly, while these agribusinesses promise increasingly “differentiated products and solutions,” the concentrated market produced by such mergers is instead one that fosters—and thrives off of—dangerous alliances that actually undermine differentiated products and solutions. Specifically, such mergers help eliminate head-to-head competition in agricultural biotechnology innovation, crop seeds, and chemical markets. For example, these seed and agrochemical firms reinforce their market power by agreeing to cross-license proprietary germplasm and technologies, consolidate research and development efforts, and terminate costly patent litigation battles.16 In other words, consolidation and collaboration—not competition—are the order of the day.

One result of a market increasingly dominated by a fewer number of companies is the reduction of suitable options for producers. Although an explosion of new product lines is providing an illusion of innovation in processing and retail, these often amount to little more than the repackaging of existing products.17

Antitrust and Generics

Such mergers do not only encourage the repackaging of existing products but also the reduced availability of existing products. Specifically, although the Federal Trade Commission (FTC) and others have been authorizing such mergers, these mergers in particular still risk breaching antitrust law—legislation that aims to prevent controlling trusts or other monopolies and promote competition in business. For example, ChemChina’s proposed merger with Syngenta has faced difficulties as ChemChina’s subsidiary ADAMA sells generic versions of at least three Syngenta products. The FTC is requiring ChemChina to sell ADAMA’s rights to three generic versions of Syngenta products to AMVAC, a California-based agrochemical company. This will effectively eliminate the direct product conflicts for this merger.18

R&D Agenda for Further Consolidation and Agrochemical Dependence

Such mergers and monopolies have an even more insidious impact beyond simply product selection, availability, and cost. Specifically, growth in size also gives companies greater research and development (R&D) capabilities. Such an increase in R&D capacity is fostered either internally or through the acquisition of highly innovative enterprises and start-ups. The result, however, is a reduction of opportunities for procompetitive research and development collaborations. The scope of research and innovation has narrowed as dominant firms have bought out the innovators and shifted resources to more “defensive modes of investment,” and toward continued chemical-intensive industrial modes of production.19 Specifically, through such mergers, the “Big Six” research and development agenda—now the “Big Four” research and development agenda—further promotes genetic engineering, chemical dependence, and monopoly patents that ultimately thwart both public and private sector alternatives and innovation that may be more beneficial for consumers and the environment.20

One impact has been rising seed costs. Between 1994 and 2010, seed prices in the US more than doubled relative to the price farmers received for their harvested crops—more than any other farm input. According to the USDA, this increase was a result of the increase in value-added characteristics developed by private seed and biotech companies through R&D programs, and through technology fees and the cost of seed treatments, which themselves are a function of such mergers.21 In an attempt to predict the impact of the current mergers on seed pricing, a September 2016 Texas A&M study found that the proposed Bayer-Monsanto combination would ultimately raise cotton seed prices by 18.2 percent, corn seed prices by 2.3 percent, and soybean seed prices by 1.9 percent.22

Undermining Farmers’ and Breeders’ Rights

Such mergers and monopolies ultimately undermine the rights of farmers and plant breeders given their impact on product selection, availability, and cost, and the cycles of dependency farmers and breeders are pushed into. Specifically, according to the United Nations Conference on Trade and Development (UNCTAD), the privatization and patenting of agricultural innovation—including gene traits, transformation technologies, and seed germplasm—has been supplanting not only traditional agricultural understandings of seed, but also the right to save and replant seeds harvested from the former crop.23 The assertion of proprietary lines on seed technologies and genetic contents has turned farmers from being “seed owners” to mere “licensees” of a patented product.24

A More Restrictive Playing Field

The research and development activities of these and other agribusiness firms in turn allow advances that favor a strengthening of position for large firms at the expense of the principle of fair competition. Specifically, large companies have shifted R&D resources to the least risky modes of investment, and on input traits and major crops promising greater returns on investment. Consolidation trends are also often linked to technological and regulatory developments that lead to an increase in the costs of new products on the market. This increase reinforces the predominance of the big firms, which are more capable of coping with it.25 Together, such firms are focused on protecting patented innovations and creating barriers to entry for other competitors.26

Lobbying and State Power

Agribusinesses have built a vast network of influencers to shape US and European Union laws and safety standards to their benefit. This network includes not only their in-house lobbyists but also public relations companies, trade associations, think tanks, law firms, product defense companies, and lobby consultancies. Ultimately these actors and institutions echo their positions, produce and push studies in the companies’ favor, and provide public relation strategies.27 And the amount spent by the companies involved in the massive mergers of recent years has only increased. Companies such as Dow, DuPont, Bayer, Monsanto, Syngenta, and other agrochemical and seed companies spent $1.6 million more in lobbying in the first quarter of 2017 over the same period the year before, and 2.7 times their expenditures for the first quarter of 2008.28 The Center for Responsive Politics, which tracks the influence of money on public policy, shows massive lobby efforts by each of the agriculture, chemical, and pharmaceutical firms. In 2017, BASF spent $1.8 million in lobbying; Bayer spent $10.5 million; Monsanto spent $4.3 million; Dow spent $11.2 million; DuPont spent $15.9 million; and Syngenta spent $1.5 million.29

As ChemChina is not a private corporation but a state-owned enterprise, the current set of mergers and acquisitions highlight a new and critical variable. Such dynamics characteristic of increasing corporate power and control—including increasing consolidation, decreasing ease of rival entry, decreasing ease with which buyers can switch their purchase among sellers, an R&D agenda that further promotes genetic engineering, chemical dependence, and monopoly patents that thwart both public and private sector alternatives and innovation—now have explicit state support from the outset.

The move toward GMOs in China illustrates this point. President Xi Jinping said in a 2013 speech that China must “boldly research and innovate, [and] dominate the high points of GMO techniques... [We] cannot let foreign companies dominate the GMO market.” The GMO promise of dramatically higher crop yields was unavailable to China as long as the country did not have a place within the market. Growing US and European GMO crops would leave China reliant upon foreign sources of seeds, undermining its supposed goal of state-driven food security. Yet with a state-owned enterprise taking control of Syngenta, a leading seed company, China’s incentives with regard to genetically modified crops shifts accordingly. Ultimately, the potential wide adoption of GMO seeds becomes a commercial win for ChemChina and a policy win for the Chinese government.30