Lambert here: No doubt one day, like GM or GE, Monsanto will make most of its money through its finance arm, once it’s locked in enough farmers to bleed them really dry. We’ll see how that goes.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. Originally published at Wolf Street.
German drug and agrichemicals giant Bayer has suffered a setback in its efforts to acquire the world’s biggest seed company, Monsanto. Bayer had reckoned on winning regulatory approval for its $63.5 billion takeover bid at the beginning of this year, but this week the company cautioned that it could take longer than expected to receive final clearance from EU regulators.
The corporate marriage between Bayer and Monsanto has already received the blessing of more than half the 30 antitrust authorities that need to sign off on the acquisition, including those in the US and Brazil. If given the go-ahead by the European Commission, this mega-merger would create the world’s largest supplier of seeds and farm chemicals.
Bayer’s interest in Monsanto is reflective of a trend that began decades ago but picked up speed in 2015: the increasing concentration of power and control over the global food chain. US giants Dow and DuPont were the first to tie the knot. Their merger, completed in 2017, resulted in a combined seed-and-pesticide unit that, in terms of annual sales, is roughly the size of its biggest current rival, Monsanto.
In the last two years, Chinese chemical giant ChemChina has bought up Swiss pesticide-and-seed player Syngenta; and fertilizer giants Agrium and Potash Corp of Saskatchewan have merged into a new mega-player called Nutrien.
This gathering process of oligopolization is happening at virtually all levels of the global food industry, including on the buy side — companies that purchase farmers’ crops and process them into livestock feed, food ingredients, and biofuel, as well as serve as the intermediary in grain export markets. But it’s the concentration of power and ownership in the global seed industry that should be the biggest cause of concern, since seeds are the primary link of the global food chain.
In 2016, just six American and European companies – Monsanto, Dupont, Syngenta, Dow, Bayer, and BASF – controlled 100% of the genetically modified seeds planted around the world. Those six are now five. If Bayer’s bid for Monsanto is successful, they will become four.
This trend has massive implications for both the choice and price of the food people consume. Seeds, which for millennia have been a common good to be shared out and improved among small communities of farmers, are increasingly becoming the preserve of a tiny handful of companies. As Mother Jones reports, by reducing the number of players in these markets, the mergers dilute the competition for farmers’ business, handing price leverage to the remaining players:
If Bayer-Monsanto goes through,… three companies will control around 60 percent of the globe’s seed and pesticide markets. A 2016 study by Texas A&M researchers found that a successful Monsanto-Bayer merger would increase seed prices for US farmers by around 2 percent for corn and soybean seeds and by 20 percent for cotton seeds.
The tie-up still faces a number of obstacles. Bayer would need to raise a large amount of debt and/or equity financing in order to acquire Monsanto. Last week the German drugs maker reported lower than expected fourth-quarter earnings after group profits were hit by pesticide pricing pressures in Brazil. The firm’s shares dropped 3.4% on the news, hitting their lowest point in almost 15 months.
The merger also poses a reputational risk for Bayer. Monsanto remains the world’s most despised company and as such could be more of a curse than a blessing. Monsanto is also weighed down by debt of its own, which it raised to fund its $10 billion share buyback program to prop up its own shares.
There’s also growing public opposition to the deal across Europe. Results from a YouGuv survey conducted in Germany, France, Spain, Denmark and the UK reveal that the merger gives 47% of EU citizens “serious” or “very serious” cause for concern, while just 11% think the merger offers any potential. The respondents worried that that the merger would negatively impact the environment, the amount of chemical substances used in farming to control pests and weeds, and farmers’ choices of what crops they would be able to farm.
Over one million Europeans have so far signed petitions calling on the European Commission to block it, and have been joined by more than 200 civil society organisations, from farm workers to international development groups. WeMove.eu, which organized the petition, calls it the “merger from hell.”
The Competition Commission is scheduled to make a final decision on the matter before the end of June. Considering that Europe’s immensely powerful biotech lobby has infiltrated just about every relevant regulatory and policy body in Brussels, the chances of the Commission derailing a deal of this size and strategic importance are slim.
Brussels gave its seal of approval to the Dow-Dupont and ChemChina-Syngenta tie-ups in 2017 with barely a blink of the eye. In November 2017 a wafer-thin majority of EU governments voted to extend the European license for glyphosate, despite fierce public opposition to the continued use of the highly controversial chemical.
The deciding vote was cast by Germany’s caretaker government. As Le Monde noted wryly at the time, it’s often forgotten that Germany, famed for its anti-nuclear activism and passionate environmentalism, is also, “a paradise for pesticides manufacturers.” Given the amount of money — and power — at stake, regulators will likely not get in the way of the biggest pesticide manufacturer buying the world’s biggest seed manufacturer, to create the world’s biggest agricultural company with enormous amounts of control over the global food supply. By Don Quijones.
Construction & services giant Carillion collapsed even as KPMG signed off on its financial statements; now they deny any responsibility. Read… “It’s Not only Carillion that’s Built on Sand, it’s our Whole System of Corporate Accountability”
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The oligopolization of the upstream agricultural supply chain is being matched by increasing concentration of the midstream, with ADM (the “A” in the ABCD soft commodity trading cartel) seeking to acquire Bunge (“B”), while China’s Cofco and Singapore/Temasek controlled Olam pursue ambitions of joining or displacing the existing cartel. Soon, Amazon may have few sources to supply Whole Foods. And then who knows, maybe consumers will become obliged to return to the farm. Or perhaps become urban farmers.
It seems that the world is being divided up into those countries that grow genetically-modified crops and those that don’t. An old list from 2015 listed about two dozen countries that banned the practice. If Bayer and Monsato team together, that would be a lot of political clout to force other countries to adopt genetically-modified crops whether they want to or not. Probably other commentators can weigh in here but I have the impression that the safety of these crops is similar with that of the science of climate change – deliberately muddied and distorted to save corporate profit in spit of the massive risks involved. It may be that in the long run that countries that ban these crops may find those same crops fetching a premium price as time goes by. Already, Monsato is finding that there crops are not working as well as expected due to something called evolution. Life will find a way.
Long ago, before I got internet(mid 90’s), I read an article in either Sciam or Discover regarding a genetically modified soil bacteria that almost went horribly wrong.
Seems the scientists, in the pacific NW, were so excited about their bug– which was a common soil bug engineered to produce ethanol from organic material–that they were all fired up to test it “in the wild”.
A grad student/assistant intuited that this could be very bad, if the thing got loose…potentially sterilizing topsoil the world over…and tattled to the bosses.
By chasing profits, and disregarding anyone urging caution, those scientists almost created a disaster.
This anecdote(I can’t find the article on line) has informed my opinion about GMO’s ever since.
The folks who can afford to play with that tech cannot be trusted, and…until they can be…I support a moratorium.
This anecdote, and the opinion I derive from it, has seen me labeled a backwards hick, anti-science, even anti-progress.
Usually, someone chides me with tales about the wonders of super rice and appeals to the starving people of the world.
(of course, it ain’t the amount of food humans produce, but how it’s distributed that’s at issue, there).
in the same way that hardly anyone knew what a CDO or CDS was, prior to the 08 crash, few people really understand the science at root of biotech…let alone the billion ways it can potentially interact with nature.
The Seed Cartels worry me…even without all the frankensteinian lunacy. It’s harder and harder to get regular garden seeds without sending money to the giants…and everything they do is suspect.
we grow only heirlooms, and I save seeds religiously…but all it will take is my neighbor planting some engineered high gear(silage) , because the local ag extension officer said it would be great(our ag extension guy despises me, lol…and hates anything “organic” or “sustainable”.)
It’s all very worrisome.
Know Yer Farmer.
I also read about this little problem with GMO research. “Klebsiella planticola – a Good Example of Why GMO is a real bad idea” [http://www.donabee.com/health/klebsiellaplanticola.htm]. Of course there was a certain amount of controversy around this research but I’m inclined to think it represented a real threat and was hushed up.
I’ve periodically(and not at all sytematically) searched for that article in the intervening years…usually during an online argument with proGMO people.
It’s in my Library, I’m sure…but there’s hundreds of such magazines in there,lol, in chaotic milk crates.
It’s still, to my mind, the clearest illustration of the dangers involved with profit driven biotech and unintended consequences.
and that was when there was still some little bit of oversight.
Thanks for the sane post regarding an insane industry. Having trained in biology and worked for 23 years in applied science ( in my case, Medical Entomology) I am highly sceptical of the phrase ” no known adverse effects”.
Nowadays research carried out or funded by industry is generally highly targetted to provide favourable answers for the organisation providing the funding – a far cry from the blue sky, “follow your nose and see where the research leads us” attitude which prevailed in my youth when research was mostly carried out by (horror!) government funded Universities.
So yes, everyone keep those heritage seed varieties going.
And perhaps foster discussion around the idea that it is not human food production that needs to increase, but human population levels that need to stabilise and ultimately fall before we completely wreck the place. So we need to call out and condemn countries, cultures and religions which encourage overpopulation.
Oops, silly me, we cant do that – it would be bad for profits…..
thanks! Sure enough, the testing was done at Oregon State.
I was told that story about the ethanol bacteria, including that it happened right here at Oregon State. The version I heard – from a horticulture prof. at the U – was that the grad student, looking for something to do, tried growing things in soil that had been laced with the spent dregs – after the ethanol had been extracted. Nothing grew, because the soil filled with ethanol. Oops. Releasing it could have sterilized most of the soils in the world.
It’s a perfect example of just how wrong GMOs can go, and of people being much too clever for their own good – regardless of whether it’s true. I wonder.
Reminds me of Cat’s Cradle by Kurt Vonnegut, in which a scientist discovered a variant state of water that is solid at room temperature.
“By chasing profits, and disregarding anyone urging caution, those scientists almost created a disaster”. This sentence brought asbestos, lead, statins and supply side, trickle on economics to mind- except the part about “almost disasters”. NC is the best and thanks for it.
Go EU regulators! Agriculture is foundational. It is of deep concern that control over global agriculture is gradually being ceded by a few politicians to a very few gigantic transnational corporations and their financiers whose primary objectives are ever-increasing “profits” (ironically termed “growth” given that term’s analogy to the life of plants) and monopoly control of a critical resource. It displays a state of mindlessness regarding the increasing risks to the food supply and human health from concentration of food production in a few genetically modified seed varieties and the potentially harmful effects on human health and the environment from pervasive applications of herbicides and pesticides.
As French agroecologist Pierre Rabhi observed, Alice’s efforts to find a way to the garden in Lewis Caroll’s book, Alice in Wonderland, may be a metaphor for our time and place.
I don’t know the relative size of Cargill versus Monsanto and Bayer although with a leveraged buyout a smaller fish can eat a larger fish. Could Cargill, as a privately held corporation, buy Monsanto or a company like Monsanto and encounter more lenient anti-trust regulation in the U.S. than a public corporation?
Could Cargill simply buy Monsanto and just shut the phukur down?
Golden rice:
https://source.wustl.edu/2016/06/genetically-modified-golden-rice-falls-short-lifesaving-promises/
I attended the first meeting of the International Society for Plant Molecular Biology in 1985 or 1986 in Savannah. Incipient Golden Rice and RoundUp-Ready crops were all the rage, with Bt toxin a close third. All are technical fixes for problems that either don’t exist or shouldn’t exist.
I remember reading about that “golden rice”. The “gold” color was supposed to come from some kind of engineered-in ability to produce some pro-vitaminA-type carotenoid. I read further that someone would have to eat 10 pounds a day of that rice to get enough of the carotenoid to make a nutritional difference. The whole technological excercise was a rhetorical performance display . . . to fake the appearance of something good being created by GMOing. The “golden rice” project was a bunch of “hasbara-of-the-deed” on behalf of the GMO community.
By the way, there is a several-centuries-old type of “golden rice” called Carolina Golden Rice . . . which still survives in the hands of a few diehard hobbyists and nostalgiasts . . . and is now moving into gourmet boutique foodie channels thanks to a very few tiny bussinesses.
https://www.slowfoodusa.org/ark-item/carolina-gold-rice
http://www.carolinagoldricefoundation.org/
Now , I have never actually seen this rice. So I don’t know if it is actually “golden”. But if it is, as in “genuinely yellow colored”, then the question arises . . . is the yellow color (if it is there) from carotenoids?
I would consider Bayer much more “chemical” than “biotech”. Mosanto itself is more chemical than biotech and bougth Calbiotech years ago. Tipically biotech companies are bougth by large chemical/pharma corporations. Such ultra-large corporations are not only an oligopoly but also produce an incredible number of products or have bougth the rigths to produce them. There must be many internal conflicts on what product to commercialize and what to set aside. Their decissions will not necessarily rest on what product is better but on expected incomes. So this behemoths become the first line of resistance against innovation when it is on their financial interest.
The public should distrust this power concentration and one wonders what the heck are thinking public authorities. There is no good reason to allow for this merger except for decission makers if they obtain personal gains. Yep, revolving doors.
Elaine Ingham was the person who blew the whistle on that gene modded Klebsiella bacteria. It was modded to produce ethanol. Its creators considered it a wonderful new biofuel-source technology. Ingham realized that since it could live in soil just like the ordinary Klebsiella, if it got out of the lab and into the Outside World; it could spread to all the soil in the world, killing every plant in its path with alcohol. So she got the project stopped. Her university forced her out for aborting their sweet racket before they could even get it started.
She started a company called Soil Food Web. Her deal was that the soil contains all kinds of whole lotta bunches of different kinds of organisms, all doing this or that to maintain the kind of physical soil condition and chemical nutrient availability that plants like. She would analyze the soil food web situation for soil-sample-sending clients, and make soil food web adjustment recommendations based on her lab’s findings. A few years ago she left the company. It still exists. I gather she is still on okay terms with the company.
http://www.soilfoodweb.com/
She herself has joined the Rodale Research Institute.
https://www.businesswire.com/news/home/20110124006098/en/Rodale-Institute-Names-Dr.-Elaine-Ingham-Chief
http://rodaleinstitute.org/search/elaine+ingham