Two former secretaries of agriculture are speaking their minds and lending support to a pending mega merger between Dow and DuPont.
Mike Johanns, who served under George W. Bush, and Dan Glickman, who served under Bill Clinton, wrote an op-ed piece saying the cost of developing new technology is rising. In order for farmers to feed more people and stay in business, it takes a bigger business dedicated to working for farmers.
Part of the statement reads, in part:
“Dow and DuPont are each huge conglomerates within which their relatively small agriculture businesses must compete for resources against other businesses. By coming together, they intend to then create a single, independent, U.S.-based and -owned pure agriculture company capable of competing effectively against their still larger global peers.”
Recently, Clinton Griffiths, AgDay anchor, spoke to Kenneth Zuckerberg, senior market analyst with Rabobank, says recent merger discussions aren’t surprising.
Like other industries following a downturn in markets, businesses typically turn to consolidation in search of value for shareholders, according to Zuckerberg.
While some believe many of these deals will go through, that doesn’t mean the companies won’t have to answer a lot of tough questions regarding competition, jobs, and benefits to farmers.
“I think the U.S. farmer is going to be fine,” said Zuckerberg. “In terms of the own economic terms of their business, there is a need to have greater scale. I think the party that’s likely to be squeezed is the distributor.”
He went on to say pressure on retailers is likely to include cooperatives as farmers and manufacturers working closer together.
Listen to Johanns discuss how the Dow-DuPont merger should be a "no brainer" on AgriTalk below.