Big Six Summoned to Capital Hill

Representatives from five of the six biggest agriculture companies appeared together on Capitol Hill this week. The leaders were asked about the big topics of competition, jobs, and innovation. The “Big Six” of biotech seed would become the “Big 4” if regulators approve Bayer’s $66 billion buyout of Monsanto, China National Chemical or Chem China’s $43 billion purchase of Syngenta and a $59 billion deal between Dow and DuPont Pioneer. James C. Collins, Jr./DuPont Pioneer: “Bringing together the innovative engines of DuPont and Dow into one company, fully focused on agriculture, allows us to expand the choices and the competitive price values that farmers demand.” Robb Fraley/Monsanto: “We’re witnessing a new era in agriculture that’s a result of the advances in biology and data science. Silicon Valley is digitizing farming around the world, and breakthroughs like gene editing are opening up a whole new world of possibilities in plant biology.” Tim Hassinger/Dow AgroSciences: “Combing our R and D capabilities will enhance our ability to innovate and create values for farmers. An innovation driven company creates competition.” Jim Blome/Bayer CropScience: “We expect to advance our digital farming capabilities and strengthen our focus on new product development across seeds, traits and crop protection.” Critics contend the biggest three remaining companies would control 80 percent of the corn seed sales and 70 percent of the global pesticide market. Roger Johnson, National Farmers Union: “The damaging consolidation is occurring at a time when farmers are struggling with depressed profitability after seeing an approximate 50% decline in most commodity prices over the past three years. Clearly the nation’s anti-trust enforcement has failed farmers and consumers.” Diana Moss, American Antitrust Institute: “Any claims that the deal will simply package complimentary assets should be viewed with some skepticism. The companies own documents indicate their own R and D pipelines compete head to head with overlaps in R and D for traits, seeds and crop protection. Much like in pharmaceuticals, maintaining competition in standalone parallel R and D ensures strong incentives to continue to innovate.” Sen. Grassley: “To me, it looks like this consolidation wave has become a tsunami.” Iowa Senator and committee chair Charles Grassley cited data from Iowa State University revealing collective cost of seed, chemicals and fertilizer for an acre of soybeans has gone up 94 percent over the last 20 years. Grassley, also a farmer, said the collective industry has produced greater innovations and yields, but questioned the cost. Sen. Charles Grassley, R- Iowa: “However, when does the size of companies and concentration in the market reach the tipping point, so much that a market becomes anti-competitive?” Cotton farmers also could be faced with steep price increases on seed if a recent Texas A&M study holds true. The research revealed a possible 18 percent hike if the mergers move forward while corn and soybean seed prices would increase around 2 percent. For Market to Market, I’m Paul Yeager.