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Agricultural News

Farmers Union Urges Trump Administration to Consider Farmers Before Approving Ag-Chem Mergers

Thu, 01 Jun 2017 09:34:28 CDT

Farmers Union Urges Trump Administration to Consider Farmers Before Approving Ag-Chem Mergers Extreme concentration in the agribusiness sector has long threatened the wellbeing of farmers and ranchers. A recent wave of consolidation in the agricultural inputs sector has farmers particularly on edge, with three major proposed mergers: Dow-Dupont, Bayer-Monsanto and ChemChina-Syngenta. If all three are approved, it would limit major players in the agrichemical and seed sectors to just four companies. The resulting reduction in concentration would decrease innovation, increase input costs, and limit choice for farmers.

In January, NFU was alarmed when then-President-elect Donald Trump met with Bayer AG, a German agricultural input company. During that meeting, the two parties struck a deal, committing Bayer to invest $8 billion towards research and development, should the company be permitted to acquire competitor Monsanto Co. This deal suggesed the administration's tacit approval of the Bayer-Monsanto merger, which would occur at the expense of family farmers and ranchers. Additionally, the timing of this meeting was troublesome, as it occurred before the President-elect had selected his nominee for Secretary of Agriculture. This left many concerned that after inauguration, President Trump would continue to prioritize the needs of agribusiness over those of rural communities.

Similarly, NFU was worried by the approval of the proposed merger between Dow Chemical Co. and DuPont Co. by the European Union, and urged the Trump administration to block the deal. The merger of Dow and DuPont, the 4th and 5th largest firms, would give the resulting company about 41% of the market for corn seeds and 38% of the market for soybean seeds. If the Dow-DuPont and Bayer-Monsanto mergers were both approved, there would effectively be a duopoly in the corn and soybean seed markets.

In early April, the Federal Trade Commission (FTC), which is responsible for eliminating and preventing anticompetitive business practices, approved ChemChina's $43 billion acquisition of Syngenta, provided that it divest production of three pesticides. In the following days, the merger received the green light from the European Commission, the Comisión Federal de Competencia Económica in Mexico, and China's Ministry of Commerce. Brazil's Administrative Council for Economic Defense and Canada's Competition Bureau had previously approved the deal, leaving India as the only holdout as of early May. In response, President Roger Johnson submitted public comments to FTC Secretary Donald S. Clark, asserting that the deal further consolidates the highly globalized agricultural inputs sector. Johnson also expressed concern that the deal would give the resulting conglomerate an unfair advantage in accessing Chinese markets, as ChemChina is owned by the Chinese government.

Source - National Farmers Union



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