In the past two years alone, three major corporate mergers have begun to reshape what was an already concentrated international market for agricultural chemicals, seeds, and fertilizers. If the mergers gain approval from their relevant regulatory agencies, these six multinational corporations would fold into three (Dow-DuPont, Bayer-Monsanto, and ChemChina-Syngenta), and have a profound impact on the future of global agriculture. The mergers would drastically reduce competition in the areas of crop protection, seeds, and petrochemicals; further consolidate the agrochemical market; reduce procompetitive research and development (R&D) collaborations; and, most urgently, pose a critical danger to ecosystem sustainability and exacerbate the global climate crisis.1
In the first case, in September 2016, the German multinational life sciences, pharmaceutical, and chemical company Bayer bought out Monsanto, the US multinational agrochemical and agricultural biotechnology conglomerate known for producing genetically modified (GM) seeds. On March 21, 2018, Bayer won antitrust approval by the European Union’s European Commission for its $62.5 billion bid for Monsanto, and on May 29, the US Justice Department approved the acquisition,2 with the companies’ joint assets now amounting to $87.95 billion, and a total combined revenue of $55.84 billion.3
In the second case, in April 2017, DuPont, the US chemicals company that works in agricultural, advanced materials, electronics, and bio-based industries, merged with Dow Chemical, the US multinational chemical conglomerate developing products for agricultural, automotive, construction, consumer, electronics, packaging, and other industrial markets. In April 2017, the European Commission conditionally approved the $130 billion merger between the two US companies.4 The two companies will have combined assets of $121.79 billion, and a total revenue of $63.25 billion.5
In the third case, the Chinese state-owned chemical and seed company ChemChina purchased Syngenta, the Swiss agricultural company which produces seeds and agrochemicals. In April 2017, the $43 billion merger won US antitrust approval, though it remains contingent on approval from China, Europe, India, and Mexico. Their joint assets would amount to $142.4 billion, with a $70.67 billion total revenue if it receives final approval.7
Altogether, the combined assets across the three new companies would amount to $352.14 billion and their combined total revenue would be $189.76 billion. These deals alone will place as much as 70 percent of the agrochemical industry and over 60 percent of commercial seeds in the hands of only three companies.8
These mergers are emblematic of rampant market concentration across a number of global agricultural input industries. Between 1994 and 2013, the four firms (BASF, Bayer-Monsanto, Dow-DuPont, and ChemChina-Syngenta) combined market share jumped from 21.1 percent to 44 percent in crop seed and biotechnology; from 28.5 percent to 62 percent in agrochemicals; from 28.1 percent to 56 percent in farm machinery; and from 32.4 percent to 55 percent in animal health.9
- 1. While corporate consolidation still matters, that alone is no longer considered to be a sufficient indicator of market power. Other factors, such as the ease of rival entry and the ease with which buyers can switch their purchases among sellers, paint a more complete picture. James M. MacDonald, “Mergers and Competition in Seed and Agricultural Chemical Markets,” Farm Economy (Washington D.C.: USDA Economic Research Service, April 3, 2017), https://www.ers.usda.gov/amber-waves/2017/april/mergers-and-competition-....
- 2. Patrick Mooney, Chantal Clement, and Nick Jacobs, “Too Big To Feed: Exploring the Impacts of Mega-Mergers, Consolidation and Concentration of Power in the Agri-Food Sector,” (Brussels: International Panel of Experts on Sustainable Food Systems, October 2017); Foo Yun Chee, “Exclusive: Bayer to Win EU Approval for $62.5 Billion Monsanto Deal,” Reuters, February 28, 2018, https://www.reuters.com/article/us-monsanto-m-a-bayer-eu-exclusive/exclu... Kendall, Brent, and Jacob Bunge. “U.S. to Allow Bayer’s Monsanto Takeover.” Wall Street Journal, April 9, 2018, sec. Business. https://www.wsj.com/articles/justice-department-to-allow-bayers-acquisit....
- 3. “Bayer’s Annual Report,” Bayer Global, 2017, http://www.annualreport2017.bayer.com/management-report-annexes/report-o... “Annual Reports,” Monsanto, 2017, https://monsanto.com/investors/reports/annual-reports/.
- 4. “Dow, DuPont Complete Planned Merger to Form DowDuPont,” Reuters, September 1, 2017, https://www.reuters.com/article/us-dow-m-a-dupont/dow-dupont-complete-pl....
- 5. “Dow Historic SEC Filings,” DowDuPont, 2017, http://www.dow-dupont.com/investors/dowdupont-filings-and-reports/dow-se... “DuPont Historic SEC Filings,” DowDuPont, 2017, http://www.dow-dupont.com/investors/dowdupont-filings-and-reports/dupont....
- 7. Amie Tsang, “China Moves a Step Forward in Its Quest for Food Security,” The New York Times, April 6, 2017.
- 8. Mooney, Clement, and Jacobs, “Too Big To Feed: Exploring the Impacts of Mega-Mergers, Consolidation and Concentration of Power in the Agri-Food Sector.”
- 9. Mooney, Clement, and Jacobs, “Breaking Bad: Big Ag Mega-Mergers in Play” ETC Group Communique (ETC Group, December 2015); Keith Fuglie et al., “Rising Concentration in Agricultural Input Industries Influences New Farm Technologies,” Amber Waves (Washington D.C.: USDA Economic Research Service, December 2011); Aleksandre Masashvili et al., “Seed Prices, Proposed Mergers and Acquisitions Among Biotech Firms,” Choices Magazine, Agricultural & Applied Economics Association 31, no. 4 (2016).