Is the Bayer-Monsanto Merger Too Big To Succeed?

David Francis writes for Foreign Policy:

Image resultIt took $66 billion — the largest all-cash transaction in history – for German biotech giant Bayer to win control over Monsanto, the global seed market leader. The takeover creates a very unique — and to some, very unsettling — kind of corporate beast, one tasked with feeding billions as temperatures rise and farmlands shrink.

If the merger goes through — and that’s a very big if, given that both EU and American regulators are likely to carefully scrutinize the deal — the new firm would corner more than a quarter of the world market for seeds and pesticides. In the United States, it would control some 58 percent of cottonseed sales. According to Vox, the new company would be the largest agribusiness in the world, selling 29 percent of the world’s seeds and 24 percent of its pesticides.

That puts one firm in a pole position to influence, and potentially control, how the world feeds itself. Regulators are likely to investigate whether the merged company will be too big and able to squeeze farmers and shoppers at the price register. And it comes as the rest of the agribusiness industry is also consolidating, in part to counteract slumping commodity prices due to the economic slowdown in China, which trickles down and forces farmers to spend less on supplies.

The specter of greater market power for firms that make the seeds that many poor farmers need to buy each spring before planting is sparking panic in the developing world.

READ MORE…

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