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Commentary: Big Mergers Bring Big Changes

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Agriculture has always been and will always be a changing business. Granted, some of the changes today are coming faster and are bigger in scale and in scope than before, but basically it is part of the same process. Some of the biggest brands in seed and equipment today started as small companies serving a local area, just as small farm became medium-sized farms and now large farms. Yet, the global nature of consolidation today and the driving force behind it have farmers concerned and, frankly, a bit confused.

Last week Corteva, the agricultural arm of Dow-DuPont, announced what it is calling a “multi-channel, multi-brand seed strategy.” This is corporate speak for re-shuffling the deck and discarding some well-known brands. In the Eastern Corn Belt, Brodbeck will become part of Dairyland Seeds.

Corteva officials are also trying to narrow the focus of the new corporation that will become a stand-alone entity in 2019. They are looking to jettison some specialty lines to focus more on corn, soybeans, and wheat. Cost-cutting is also at work here. Dow-DuPont Chief Executive Officer Ed Breen said, on a Wall Street conference call to discuss first-quarter earnings, that they plan to cut $3.3 billion in expenses in the next year. But what does all this mean to farmers?

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On the one hand, it might mean a better selection of seed and technology.  One seed salesmen who is having to have new business cards made said, “If it means I can offer my customers new products, then it is a good thing.”  With the astronomical cost of producing and registering new technology, corporations need to sell that technology in as many different bags as possible. The downside for the farmer is that the neighbor or trusted friend who has sold you your seed for years may be different.

In the global corporate structure that represents most seed and input products, technology and innovation has value, but customer service does not. The restructuring decisions in these mega-mergers are being directed by people with far more experience in cost accounting and stock valuation than in seed placement and germination.

The Corteva changes are just the beginning. The Bayer-Monsanto merger is getting closer to completion, and last week it was announced several top Monsanto officials will not be making the move to Bayer. How all this will play out at the farm level remains to be seen. Trust and relationship have always been important to farmers. I don’t think, even in these high-tech times, that is going to change. In the end, the company that wins will be the one with the best trust and connection to farmers. I hope top corporate executives don’t lose sight of this.

 

  By Gary Truitt