Farm Groups will keep Watchful Eye on Merger Proceedings

merger-reaction

German chemical firm Bayer AG announced it is buying U.S. seed company Monsanto for more than $66 billion in a deal that drew a swift reaction from top farm groups. The deal reportedly is the largest cash acquisition on record and gives Bayer AG a chance to dominate the U.S. farm supplies market, uniting Bayer’s crop science business with Monsanto’s seed business. The deal still needs approval by U.S. antitrust regulators.

This is the fifth major agribusiness merger in the last year, and American Farm Bureau Federation economist Bob Young says that number alone is cause for concern.

“Any one of these by themselves you could say ok I understand what they’re doing. I think now the question becomes as you evaluate them you have to evaluate them in the context of this overall kind of market concentration.”

Young says that could force divestiture of some seed trait lines while raising overall concerns about input costs.

“I think there are going to be some efficiency gains and I think they’re going to be watched particularly carefully as we roll forward. I don’t know that that’s necessarily a given, but your suspicion certainly would be in that direction.”

National Farmers Union’s Zach Clark says fewer players on the field is concerning.

“We’re worried about the costs of these inputs continuing to go up as there’s fewer contenders in the marketplace, and we’re also worried about the important role that these companies play in off-farm jobs for farmers. We’re seeing merger after merger and employee after employee being laid off because there is less of a workforce needed.”

Senate Judiciary Chair Chuck Grassley has called a hearing for next Tuesday on increasing consolidation in agribusiness.