In the aftermath of the US department of Justice approving the takeover of agribusiness giant Monsanto by its competitor, the Germany-based Bayer, the world market for commercial seeds and pesticides is now under an unprecedented monopoly. Following the deal, the name Monsanto is likely to be ‘retired.’
In March , the takeover was approved by the European Commission. In 2015 alone, the two companies had spent 15.7 million dollars on lobbying in the EU, according to research by Friends of the Earth Europe and the Corporate Europe Observatory.
The development comes in the aftermath of last year’s mega mergers when Dow and DuPont were integrated to form Dow-Dupont and ChemChina bought Syngenta. With the $66 billion takeover of Monsanto, the three mega entities now control 61% of the world’s commercial seed market.
These three firms, along with the Germany-based BASF – to which Bayer had to sell 9 billion of its assets in order to maneuver around the hurdle posed by Antitrust laws – control 70% of the world’s pesticide market.
The Anti-Trust laws in US were formulated to be a hurdle to acquisitions and mergers that reduce market competition. Such mergers lead to an increase in the prices of commodities the companies produce and reduce the incentives for them to innovate in order to outdo their competitors.
The US code regarding acquisitions of one corporation’s stock by another states: “No person shall acquire, directly or indirectly,.. where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly.”
The antitrust regulators in the US Department of Justice determined that merger of Bayer and Monsanto “would likely result in higher prices, lower quality and fewer choices across a wide array of seed and crop-protection products.. The merger also threatened to stifle the innovation in agricultural technologies that has delivered significant benefits to American farmers and consumers.”
However, on assessment of the assets of the two companies, the regulators determined that if Bayer divests 9 billion dollars worth of its assets, there will be no reduction in competition, and “American farmers and consumers will continue to benefit from competition in this industry.”
Bayer is now selling 9 billion dollars worth of its agri-businesses related to vegetable oils, seeds and seed treatments to another German company BASF. However, both Bayer and BASF have been part of the same corporate family – I.G. Farben – which not only patronized the NAZI party, but played a crucial role in carrying out the holocaust. (Read more about the sordid history of Bayer, BASF and Monsanto here)
Monsanto has antagonized farmers in developed as well as in developing countries
Since it “spun-off as a separate, independent agricultural company” in 2002, Monsanto has proven to be a relentless adversary to farmers – who are its primary clients – not only in the developing countries, but also in the developed ones.
In the US, where Monsanto is based, the company filed 144 lawsuits against family farmers and dragged another 700 into costly out-of-court settlements between 1997 and 2010. Having patent rights over seeds which the company has genetically altered, every year, Monsanto investigates hundreds of farmers for potential patent infringements.
Many of the victims of Monsanto’s lawsuits have been farmers who never intended to use its GM seeds. Natural elements such as wind and insects often cause cross-field breeding. Or a GM seed blown by the wind into a farmer’s field from a neighbour’s truck can germinate on a plantation whose owner never intended to use it. When Monsanto’s investigators identify such growth, innocent farmers get hit with fines going up to hundreds of thousands of dollars.
It is the farmers of the developing world, however, who have borne the brunt of Monsanto’s assaults. Since 2002, when Monsanto introduced in India its Bt cotton – which was supposed to be immune to pink bollworm infections but ultimately was not – the acreage planted with this crop has been constantly increasing, amounting to over 90% of all the cotton grown in the country today.
A study by University of California has shown that the increase in the suicide rates among farmers in the rain-fed areas of India is directly related to the increased adoption of Bt cotton. These patented seeds are designed to be used with “specific pesticides, herbicides or other agro-chemicals produced by the same company. The high costs of these inputs place additional burdens on small farmers and can lead to increased levels of indebtedness,” a report by Action Aid states.
Citing a study in the State of Andhra Pradesh, carried out soon after the introduction of Bt cotton, the report points out that, “farmers who cultivated Bt cotton spent 15% of the total cost of cultivation on the seed, as against 5% in case of non-Bt farmers. However, hopes of reduced pesticide requirements and higher yields were not realised. In the year the research was carried out, those farmers using Bt Cotton seeds experienced an average net loss of 1,295 rupees per acre while those using more traditional varieties earned an average profit of 5,368 rupees per acre.”
Further, as a result of the patent rights held on GM technology, farmers who fall into the trap of cultivating GM crops are not allowed to save and exchange seeds as they have been doing traditionally. Having developed a dependency on the company’s seeds and insecticides, they are caught in a trap of spiralling indebtedness, which has been the most important factor pushing farmers in India to commit suicide.
With the help of the multiple NGOs floated by the Bill and Melinda Gates foundation, which has multiple overlapping interests with Monsanto, the company has also been arm-twisting many African governments to rewrite its seed laws. This, Global Justice Now warned, requires “a fundamental restructuring of seed laws to allow for certification systems that not only protect certified varieties and royalties derived from them, but which actually criminalise all non-certified seed.”
Monsanto, which as of last year already possessed 97% of the market share of soybean traits, 75% of corn traits and 95% of cotton traits, was already a monopoly by any measure. After being bought out by Bayer, the political and economic clout of the combine will only grow exponentially.
This new company will have a significant monopoly not only in the areas of seeds, genetic traits and agro-chemicals, but also over data related to agriculture. In 2013, Monsanto bought Climate Corp, whose data on local weather was used for farming of over a third of all agricultural land as on 2014. Bayer has pointed out that one of the most important reasons for acquiring Monsanto was the latter’s ownership of Climate Corp, which is in command of “the most powerful data science engine and the most extensive field research network.”
Opposition from all quarters
The merger will make the new entity “the biggest player in the field of data platforms and data collection, exposing farmers to risks and problems similar to those seen in existing data platforms such as Google, Amazon and Facebook”, warned a number of civil society organizations in a letter written to the European Competition Commissioner early this year, urging her to block the merger.
“The combined data operations of Bayer and Monsanto would give them a ‘first mover’ position in the sector, creating a unique opportunity to exclude competitors and/or to bias the market (for seeds and pesticides as well as along the chain from advisory service to sales channels). Monsanto’s software already limits farmer selection to hybrid seeds and future data algorithms will likely only recommend solutions based on their own products,” the letter further warned.
Mute Schimpf of Friends of the Earth Europe, one of the organizations to sign the letter, further warned, “The new platform allows Bayer-Monsanto to control how, where, when, and by whom food is produced. As Facebook’s algorithms decide which newsfeeds we see, so ‘Baysanto’ will decide which pesticides are used, and which seeds are planted.”
Similar concerns were also expressed by National Farmers Union of US, which wrote to the Assistant Attorney General of U.S. Department of Justice Antitrust Division, urging them to not approve the deal.
A poll conducted in Europe in February, before the merger was approved by the European Commission, showed that only 11% percent thought that the merger had any positive impact on farmers and consumers, while 54% thought that it was “very important” for the Commission to block the merger.
Pointing out another threat, the Centre for African Biodiversity warned in its report, “Given the high amount of sunk costs that particularly Monsanto invested in the development of partly unsuccessful genetically modified organisms, there is a threat that the South African market will be used as a strategic point from where to ‘dump’ old genetically modified (GM) technologies onto the African market.”
Warning about the likely increase in prices of inputs, the report further stated that “Evidence from the last few years at both the South African seed market and the US seed market shows that a further increase in seed prices is very likely. The choice of available inputs will further decrease.”
Under the banner of All India Coordination Committee for Farmers’ Movements (ICCFM), 12 farmers’s organizations representing millions of farmers and agricultural workers in the country had also written to the Competition Commission to block the merger of the two companies’ Indian branches.
The fact that none of these warnings were heeded demonstrates the clout these companies have – one which is only likely to increase as its monopoly strengthens.
To feed the world by depriving access to food
Robb Fraley, Monsanto’s Chief Technology Officer, has said that the merger would allow the companies to invest in and create more innovation, which is ironic considering that in free market capitalism, competition is what spurs innovation. Data on 5.75 million acres of corn analyzed by the Farmers Business Network shows that after a few percentage points increase in market share, the slight increase in yield shown initially falls very quickly.
However, what is more problematic than this claim of increasing yield by monopolization is the narrative that feeding the world requires an increase in yield. The current rate of food production is sufficient, not only to feed the entire of world’s population, but also to feed the UN’s projected population of 9 billion year by 2050.
And yet, according to FAO’s 2016 figures, 815 million people suffer from chronic undernourishment. According to a recent UN report, of these 815 million hungry people, 520 million are in Asia, 243 million in Africa, and 42 million in Latin America and the Caribbean.
In these developing parts of the world, agriculture continues to be the major source of income for most people. Squeezing the incomes of farmers and others occupied in the agricultural sector, by appropriating larger and larger portions of the value of agricultural produce in form of costly seeds and other inputs including data that are monopolized by a handful of companies, and imposed on unwilling farmers by a high-handed means, is definitely not the way to increasing yield.
What it is certain to increase is hunger, as the incomes of millions of people are squeezed, rendering them incapable of affording food, the prices of which are likely to soar further as a result of monopolization.