Owning All the Seeds: Consolidation and Control in Agbiotech

By Bratspies, Rebecca | Environmental Law, Summer 2017 | Go to article overview

Owning All the Seeds: Consolidation and Control in Agbiotech


Bratspies, Rebecca, Environmental Law


Agricultural companies are merging at a remarkable rate. The ensuing ag-biotech behemoths will have unprecedented control over global food production. The companies claim that this industry consolidation will not only benefit shareholders, but will serve the public by promoting food security and environmental sustainability. This Article tests those claims and finds them wanting.

I.    INTRODUCTION                                                584
II.   A BRIEF HISTORY OF AG-BIOTECH MERGERS                       589
III.  DETAILS OF THE MERGER PROPOSALS                             592
      A. Dow/DuPont                                               592
      B. Bayer/Monsanto                                           594
      C. ChemChina/Syngenta                                       596
IV.   SYSTEM-WIDE CONCERNS RAISED BY THESE MERGERS                598
      A. Anticompetitive Behavior: Raising Prices                 599
      B. Anticompetitive Behavior: Reducing Choice                600
      C. Anticompetitive Behavior: Decreased Innovation (and Why
      It Matters)                                                 604
V.    CONCLUSION                                                  608

"For the public and nature such mergers are marriages made in hell" (1)

I. INTRODUCTION

What if one company owned all the seeds for all the food crops planted around the world--all the corn, all the soy, all the wheat, all the rice--all owned by one corporation? What if that same company also owned all the fertilizer and all the pesticides? Would it matter? Would that kind of consolidation make food security more or less likely? What if it were two corporations instead of one? What if it were four companies instead of one? We are about to find out.

In the space of roughly one year, the so-called "Big Six" ag-biotech companies announced three mega-mergers. (2) First, in December 2015, Dow and DuPont announced a "merger of equals" combining the two United States-based chemical firms into a new $130 billion company. (3) In February 2016--less than two months later--Basel, Switzerland-based Syngenta announced that it had agreed to be purchased by the Chinese National Chemical Corporation (ChemChina) for $43 billion. (4) Syngenta made the ChemChina agreement after fending off repeated purchase offers from Monsanto. (5) Then, in mid-September 2016, Monsanto announced its own deal--the company had accepted a $66 billion merger proposal from Bayer. (6) When the dust settles, the world will be left with four extremely large ag-biotech companies: Dow/Dupont, ChemChina/Syngenta, Monsanto/Bayer, and BASF. As the lone non-merging company, BASF is the most likely purchaser of any agricultural units the other companies are forced to spin off in order to obtain regulatory approval for their proposed mergers. (7)

The primary justifications advanced for these mergers are efficiency and enhanced shareholder value. (8) Dow and DuPont, in particular, focused largely on the relatively prosaic business justifications of "synergies" and "strong industrial logic" for their merger. (9) However, the other companies were not above suggesting that these mergers were necessary to feed a growing global population. For example, Bayer CEO Werner Bauman characterized his company's proposed merger with Monsanto as "the kind of revolutionary approach to agriculture that will be necessary to sustainably feed the world." (10) Similarly, Monsanto's press release announcing the merger described it as responsive to "one of the greatest challenges of our time: how to feed an additional 3 billion people in the world by 2050 in an environmentally sustainable way." (11) The media conference call announcing the Bayer-Monsanto merger explicitly linked the merger to food security, describing the combined company as "benefiting from macro trends," including rapid population growth and "biophysical effects of climate change shocks on yields. …

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