Mergers can’t be good for farm economy

September 14, 2018

Business consolidation within the agriculture industry has dominated the agribusiness landscape for several decades.

It has dire consequences for independent farmers struggling to compete in the marketplace.

There are no signs that consolidations will slow in the sector due to lax enforcement of anti-trust laws and the international scope of agribusiness.

Look what happened in 2017 when the largest mergers in agribusiness history were completed. Dow Chemical merged with Dupont, giving stockholders a $30 billion windfall while reducing competition and potentially increasing input costs for farmers.

Bayer AG of Germany took over Monsanto last year in a deal that is expected to save the united business $3 billion annually while potentially handicapping innovation and increasing costs for farmers.

ChemChina of China acquired Syngenta of Switzerland in a massive deal.

The three merged firms are expected to control 60 percent of the world’s seeds and 64 percent of the world’s crop pesticides. Having such a large portion of the world’s genetics in the hands of so few not only threatens biodiversity, it threatens to distort marketplace power.

That’s already happening in several agricultural enterprises. In the United States, four firms control 60 percent of the poultry market; four hold 85 percent of the beef market; and four companies control 52 percent of the hog market.

Lack of competition in the marketplace has disastrous impacts on family farms and the rural communities on which they depend.

History is clear that when a business sector is controlled by so few, the firms that operate in that environment are less likely to invest in creating new products. For farmers, more efficiency could be sacrificed.

Food security also is threatened in an environment where corporate agriculture’s interests transcend national borders to meet global goals and self-interest.

Domestically, regional farm cooperatives have merged with shareholder approval to adjust to marketplace conditions.

It’s natural during a time when the agricultural economy is struggling for agribusinesses to seek potential increased efficiencies through mergers and acquisitions. However, it is important that regulators in the United States and Europe consider the costs associated with reduced competition in the marketplace.

The loss of competition weakens capitalism and free enterprise, which are the keys to economic progress in the United States.

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