Farmers Fear Higher Prices, Fewer Choices from Bayer/Monsanto Deal

May 20, 2016 09:27 AM
 
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The possibility that Bayer could acquire Monsanto—just confirmed Thursday by both companies—is weighing heavily on the minds of U.S. farmers.

“Big isn’t always better,” says Paula Karlock, fourth-generation corn and soybean farmer in Momence, Ill. “My concern is about competition and prices—with competition, others keep (prices) in check.”

If Bayer’s $42 billion proposal is accepted by Monsanto, it would be the biggest merger globally so far this year, according to Bloomberg.

It would also pool Monsanto’s seed portfolio with Bayer’s crop chemical offerings. In 2014, Monsanto had a market share of 35.5% in corn and 28% in soybeans, according to Farm Journal’s 2015 Seed Guide. In contrast to Syngenta, which Monsanto courted unsuccessfully for years, Bayer brings minimal seed market share to the table; the company owns no corn seed and only recently launched Credenz soybeans. However, regulators would likely require Bayer to divest the glufosinate herbicide business, including seed traits tolerant to the herbicide, before approving the deal, according to the Wall Street Journal.

The combined company could reach $67 billion in sales and give it the top spot in seed and crop chemicals, according to the Wall Street Journal.

As such, it offers both advantage and disadvantages to American farmers.

“I don’t see this as all that different from Monsanto trying to buy Syngenta,” says Bob Young, chief economist at the American Farm Bureau Federation. “One brings strong seed, one brings strong chemicals. It could bring efficiencies to the process.”

Others see the potential merger differently.

"National Farmers Union is troubled by the latest news of a proposed Bayer AG buyout of Monsanto Co., perpetuating a disturbing trend of further consolidation in the agricultural input sector, including seeds and crop protection products. We have continuously expressed our concern about the outcomes of further industry consolidation, such as the recent proposed merger between Dow Chemical Co. and DuPont Co. Family farmers, ranchers and consumers are the ones that lose out when we cripple competition, increase prices, and reduce innovation through industry megadeals," says Roger Johnson, president of the National Farmers Union.

Many farmers remain wary about what such a deal might mean for them in the years to come.

"I can't fault them for wanting to better themselves," says Frank Hrupsa, 45-year corn and soybean farmer of Harrington, Del. "I do wonder how it will affect Monsanto's employees."

“Producers I’ve talked to understand why (Bayer and Monsanto might merge), but they don’t necessarily want it to go through,” Young says. “Some farmers see this as negative because of the size of the potential company and loss of yet another choice.”

Want more video news? Watch it on AgDay.

What do you think of the potential merger? How will this affect your choices and control of what you plant and chemicals you use on your crops? Let us know in the comments.

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Comments

 
Spell Check

Jared Shannon
Abernathy , TX
5/19/2016 06:48 PM
 

  When in the history of capitalism has less competition been an advantage for anyone other than the companies merging? It is not even positive for the employees, the shareholders and share price with potential for growth are the drivers of bad deals like these. The only way to feed and clothe the world is through advanced technology bred from competition.

 
 
Zorcon
Western, NE
5/20/2016 08:33 AM
 

  I could see them raising their tech fees for seed traits to help pay for the deal. It burns me when tech fees cost more per bushel than what you can receive per bushel for the commodity you've raised. I'd have to agree with the National Farmers Union on this one. Even if the deal gets done and the overlapping areas of the companies are consolidated to "increase efficiencies," they still have to pay for the merger. If they paid too much for the transaction to begin with, raising prices will have to happen.

 
 
ERIC
FORREST, IL
5/20/2016 01:59 PM
 

  WHAT THE HELL IS THE FARMERS UNION??? HAVEN'T HEARD ANYTHING FROM THEM IN YEARS!! UNTIL THEY'RE READY TO START DOING ANYTHING TO ORGANIZE THE AMERICAN FARMERS TO TAKE CONTROL OF THEY'RE OWN FUTURES THEY SHOULD KEEP THEIR NOSE OUT OF IT.

 
 

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