Senate Judiciary Committee chairman Charles Grassley set a Sept. 20 hearing to examine consolidation in the seed and agricultural chemical sector at the same time that another blockbuster merger seemed imminent. “If these mergers go through, you’d have a ‘big three’ instead of a ‘big six’ dominating the market,” Grassley told reporters.
The biggest of the deals, the merger of U.S. companies Dow and DuPont, is under antitrust review. A Treasury-led interdepartmental panel has given the green light for state-owned China National Chemical Corp to buy Syngenta, based in Switzerland; Syngenta has large sales as well as research facilities in the United States. In the newest development, Bayer, with headquarters in Germany, offered more than $65 billion for U.S.-based Monsanto, the world’s largest seed company, said the Wall Street Journal. The new bid was an increase of $2 billion from an earlier offer, said Deutsche Welle.
The Senate hearing will look at the impact of consolidation on farmers and consumers. During town hall meetings in August, Iowans expressed concern about the ramifications of the mergers, said Grassley, who has urged regulators to do a thorough review of each of the mergers.
“Aggressive consolidation is changing the landscape for agriculture and rural communities” said president Roger Johnson of the National Farmers Union. “Specifically, the onslaught of consolidation in agricultural inputs can impair research and development efforts and create barriers for independent crop input companies as well as for independent producers at a time when low-commodity prices and high input costs are straining the farm economy. This, in turn, leads to fewer family farmers on the land, fewer innovators in the lab, and rural depopulation.”
The Justice Department filed suit last week to block Deere and Co., the world’s largest maker of farm equipment, from buying Precision Planting, owned by Monsanto and Deere’s chief competitor in sales of high-speed seed planters to farmers. In its antitrust suit, the Justice Department said the two companies account for at least 86 percent of sales of the machines.
“It does show they are doing their job,” Grassley replied when asked about the antitrust case. But he said it was not analogous to the ongoing mergers and was not an indicator of how the government would rule on them.
Bayer and Monsanto “appear closer to a deal than back in May, when Bayer launched its takeover bid,” said the Journal. Monsanto said its discussions with Bayer were constructive, but it also was evaluating other options.
Another of the leading companies in the seed and ag chemical sector, BASF, of Germany, was closely monitoring the regulatory reviews of the proposed consolidations. Regulators might require companies to sell assets, said the Journal. “Consolidation in the industry has been driven by pressure on agribusiness companies to slash costs and build scale as farmers grapple with a three-year slide in crop prices that has forced makers of seeds, crop chemicals, fertilizers and tractors to cut prices and lay off staff.”