Dear Friends and Colleagues
Until recently, six or seven global agri-food businesses competed with each other for a share of the world market for seeds and chemicals. But if EU and US regulators allow a series of mega-mergers to take place, within months, just three companies will be left in control of nearly 60% of the world’s seeds, nearly 70% of the chemicals and pesticides needed to grow food and nearly all of the world’s GM crop genetic traits.
The mega-deals now being scrutinised by governments and the EU include the $66bn (£51bn) agreed takeover of US seed, chemical and biotech company Monsanto by drug and German gene firm Bayer; US chemical company Dow’s intention to merge with chemical conglomerate rival DuPont; and ChemChina’s plan to buy massive Swiss seed and gene group Syngenta for $43bn (£33bn). The consolidation will give the big three corporates access to massive banks of genetic data.
Consumer, environment and anti-trust groups claim that the three mega deals have the potential to concentrate political and financial power dangerously and could force more countries to adopt a single model of farming that further excludes or impoverishes small farmers. The concentration of power over agriculture in such a small number of corporations, and their ability both to set prices and determine the varieties available, is a serious a cause for concern. Moreover, these companies underpin an ever-narrowing agroindustrial route that is unsustainable and failing to feed the hungry.
With best wishes
FARMING MEGA-MERGERS THREATEN FOOD SECURITY, SAY CAMPAIGNERS
Deals would put the majority of seeds, chemicals and GM traits in the hands of three companies, deepening poverty for small-scale farmers
When an Indian farmer plants his cotton crop, there’s at least a 75% chance the seeds have been bought from a company owned by Monsanto. If a Latin American farmer sprays insecticide on her genetically engineered soya beans, the chemical is more than likely to have been provided by German chemical and drugs company Bayer or by US firm Dupont.
And when African farmers add chemicals to their maize fields or plant it’s odds-on that they have come from Swiss company Syngenta.
Until recently, six or seven global agri-food businesses competed with each other for a share of the world market for seeds and chemicals. But if EU and US regulators allow a series of mega-mergers to take place, within months just three companies will be left in control of nearly 60% of the world’s seeds, nearly 70% of the chemicals and pesticides needed to grow food and nearly all of the world’s GM crop genetic traits.
The mega-deals now being scrutinised by governments and the EU include the $66bn (£51bn) agreed takeover of US seed, chemical and biotech company Monsanto by drug and German gene firm Bayer; US chemical company Dow’s intention to merge with chemical conglomerate rival DuPont; and ChemChina’s plan to buy massive Swiss seed and gene group Syngenta for $43bn (£33bn).
Include the mergers of several of the world’s biggest fertiliser companies, and moves by the world’s largest farm equipment companies to invest in big data, robotics and farm surveillance technologies, and the consolidations are seen as taking global agriculture into a new era.
Alarmed EU, US and Latin American consumer, environment and anti-trust groups this week claimed that the three mega deals have the potential to concentrate political and financial power dangerously and could force more countries to adopt a single model of farming that excludes or impoverishes small farmers.
With seeds, chemicals, research and lobbying power in the hands of a tiny group of immensely powerful companies, they say, the small farmer will inevitably be blown away, competition could be stifled, and food and farm input prices will rise.
In a report to be shortly published on the growing concentration of power in the agri-food industry, the International Panel of Experts on Sustainable Food Systems (Ipes) is expected to say that “an unprecedented wave of corporate consolidation is under way”.
“New technology and data-driven synergies could lead to three companies controlling 60% of seeds and 70% of agrochemicals worldwide with still greater oligopoly possible – a historic power shift throughout global agricultural inputs and even greater crop and livestock vulnerability through uniformity,” says an early draft of the report seen by the Guardian.
The consolidation means that each of the big three corporates will also be positioned to access massive banks of genetic data, seen as crucial to companies growing in places like sub-Saharan Africa with burgeoning populations and food shortages.
“The mergers will enable pharmaceutical and agriculture companies to become big data companies,” says Catherine Wood, CEO of Ark investment management. “When you sequence a human genome, or a seed, what you get out of it is data.”
Olivier De Schutter, former UN special rapporteur on the right to food and a co-chair of Ipes, says the mergers will make developing countries a more attractive target for corporate farming. “The frontier of industrial agriculture is moving towards sub-Saharan Africa. There is a huge market there which the seed companies [say] will grow very significant in the next few years. “They will be in a position to dominate this market. Sub-Saharan Africa is becoming the battleground of the giants,” says De Schutter.
Colin Hamilton is Maquarie bank’s global head of commodities research in London: “These mergers show companies are looking for technological advance and improved yields. China gets half the corn output of the US, so it wants to catch up. It wants technology from Syngenta.” Some of the shift to corporate consolidation and a US system of agriculture led by genetic engineering is being driven by demography and technology, he says. “Most farmers in countries like China are aged over 50. Young people [no longer] want to farm.”
Technology and agriculture watchdog group ETC argues that the takeover frenzy is no longer just about seeds and pesticides but about global control of agricultural inputs and world food security.
“Anti-competition regulators should block these mergers everywhere, and particularly in the emerging markets of the global south, as the new mega companies will greatly expand their power and outcompete national enterprises [there],” said ETC’s director, Pat Mooney, a group which monitors global agribusiness and agricultural technologies.
Mooney says the mergers are linked to companies wanting control of big data and access to patents, gene traits and intellectual property.
“These deals are not just about seeds and pesticides, but also about who will control big data in agriculture. The company that can dominate seed, soil and weather data and crunch new genomics information will inevitably gain control of global agricultural inputs – seeds, pesticides, fertilisers and farm machinery.”
“Dominance may go to the biggest companies best able to manage the data and the DNA to their own advantage,” he says.
The mergers have created alarm throughout Latin America and raised concerns about increased prices, more privatisation of research and political pressure, says Silvia Ribeiro, director of ETC’s Latin American office in Mexico.
“[There is] huge pressure from these giant companies to make laws and regulations in our countries that allow them to dominate markets, crush farmers’ rights and make peasant seeds illegal,” he says.
“Together, these mergers are set to re-shape world farming, potentially raising prices for growers and consumers around the world,” says Adrian Bebb, senior food, agriculture and biodiversity campaigner for Friends of the Earth Europe, who has described the Bayer-Monsanto takeover as a “marriage made in hell”.
By concentrating market control and access to seeds and land among a handful of corporations, Bebb says millions of small farmers in developing countries stand to become impoverished. “From Africa and Asia to Latin America and the EU, corporate control over markets and supply chains is displacing millions of small-scale farmers.
“These dynamics have created some of the world’s highest rates of poverty and hunger among small-scale food producers and rural communities worldwide.”
Bebb and others argue that the mergers have little to do with solving world hunger. “Research consistently demonstrates that world hunger is not a problem of supply, but rather of poverty, lack of democracy and unequal access to land, water and other resources, especially for women. To avoid the absolute control of the global food supply by a few companies, money should be invested heavily in grassroots farming, he says.
“Smallholders are the backbone of world food supply; they represent over 90% percent of farmers worldwide and provide more than 80% of the food consumed throughout much of the developing world, particularly southern Asia and sub-Saharan Africa.
The battle to stop the mergers will not just be decided by regulators. Powerful farm movements in many developing countries frightened by the immense power that the corporates will wield, plan to take their concerns to the UN and international meetings in Indonesia, Mexico and elsewhere over the next few months.
One of the most important meetings will be in Rome where the UN’s Food and Agriculture Organisation’s committee on world food security meets next month.
“Virtually all of the world’s governments, farmer organisations and many agribusinesses companies will be in the same room for a week, with food security on the official agenda. There are going to be a lot of angry people there wanting to stop these mergers,” says Ribeiro.
AGRICHEMICALS AND EVER MORE INTENSIVE FARMING WILL NOT FEED THE WORLD
Our food production system is broken, with steep losses in biodiversity. The answer is not more chemicals from a few increasingly dominant companies.
British farmers growing wheat typically treat each crop over its growing cycle with four fungicides, three herbicides, one insecticide and one chemical to control molluscs. They buy seed that has been precoated with chemicals against insects. They spray the land with weedkiller before planting, and again after.
They apply chemical growth regulators that change the balance of plant hormones to control the height and strength of the grain’s stem. They spray against aphids and mildew. And then they often spray again just before harvesting with the herbicide glyphosate to dessicate the crop, which saves them the energy costs of mechanical drying.
Most farmers around the world, whatever the crop, will turn to one of just six companies that dominate the market to buy all these agrochemicals and their seeds. The concentration of power over primary agriculture in such a small number of corporations, and their ability both to set prices and determine the varieties available, has already been a cause of concern among farmers. Yet by next year the competition is likely to shrink even further.
The six global chemical and seed giants will become three behemoths with even greater market control. Just when climate change demands a more diverse and adaptable food system, resilient to changing conditions, agriculture is being dragged further down an ever-narrowing agroindustrial route.
Bayer, Monsanto, Dupont, Dow, Syngenta and BASF currently account for three-quarters of the global agrochemical market and nearly two-thirds of the commercial seed market. As commodity prices have fallen, their profits have been flagging. Farmers who are getting less for their crops have struggled to make money. In the US they have begun turning away from expensive GM seed, and in Europe more than 3m farms have been lost in eight years. So for two years the agrochemical companies have been engaged in a flurry of merger and acquisition activity to become even bigger and more powerful. The bids have settled, for the moment, on a trio of megadeals.
The most recently agreed merger, worth $66bn, is between Monsanto, the controversial US-headquartered giant that is the world’s largest seed and seventh-largest pesticide company, and German-based Bayer, the world’s second-largest agrochemical and seventh-largest seed company.
To give a sense of the scale of this deal and its impact, Monsanto, as well as being the leading global supplier of genetically modified seed, controls nearly a quarter of the vegetable seed market in Europe and is a big player in conventional maize seed. The herbicide glyphosate, its big earner, is now so commonly used across Europe that it has been detected in the urine of 44% of people surveyed for Friends of the Earth. Bayer is a leader in most pesticides, including neonicotinoids used to treat about 90% of UK cereal, sugar beet and oil seed rape.
The proposed Bayer-Monsanto merger follows a $130bn deal between the US corporates DuPont (No 2 in seeds, 6 in pesticides) and the Dow Chemical company (5 in seeds, 4 in pesticides). China, focused on its own food security, wants a bit of the action too, and its state-backed agrochemical company ChemChina (seventh in global pesticide sales via subsidiaries) has successfully bid $43bn for Swiss Syngenta. A parallel process of concentration is taking place in the fertiliser sector.
The narrative offered to justify this dominance of a supposedly free market is that only bigger, braver new entities can rise to the great challenge of our time: how to feed an additional 3 billion people by 2050 without destroying the planet. We are asked to accept the intensive model of agriculture as the heroic march of science, against primitive, low-yielding, traditional methods of production. There is no alternative. But in fact it is this model of food production that is stuck in a rut.
Postwar, there were indeed huge strides in increasing the amount of food produced globally thanks to plant breeding and the use of chemicals in the form of artificial fertilisers and pesticides. But alongside the triumphs of that green revolution, its longer-term shortcomings are increasingly apparent.
Overuse of agrochemicals has contributed to steep losses in biodiversity, and crucially of pollinators vital to food. Increases in pest resistance threaten to reverse previous gains in yields. Research has found that over a short period yields per hectare for individual crops are greater in intense agricultural systems. But over a longer period, and when you look at total farm output, more mixed and diverse farming produces more.
If the prime purpose of a food system is to nourish people and keep them healthy, this one is failing. Despite a doubling of available food in some regions, more than 750 million people still routinely go hungry. At the same time nearly 2 billion are overweight or obese.
The agroindustrial system these companies underpin is primarily focused on a small number of commodity crops for export. The ETC research group points out that GM seed companies have concentrated their development efforts on maize, soya and rapeseed (canola) rather than a wide range of the 7,000-odd food crops grown by farmers around the world. Breaking these commodity crops down into their constituent parts and reselling them as sugars, starches, and fats adds shareholder value in the chain but depletes nutritional value. Diet-related diseases have now overtaken infectious diseases as the largest cause of premature death globally.
Although the companies talk of tackling the threat that climate change poses to food security, the agroindustrial food system is one of the most significant causes of it, contributing a third of all manmade greenhouse gas emissions.
Corporate concentration in the food system has sucked the money to be made in the chain up to a handful of companies at the top. It works for the few but not for the many. As if to underline the point, the chief executive of Monsanto stands to collect over $135m from the Bayer merger in share options and severance pay. But paradoxically, these three mergers to increase power reveal a sector that is also vulnerable. The pesticide business is under pressure – Bayer and Syngenta are both big producers of the three types of neonicotinoids recently banned in the EU because of their impact on bees. The EU has been under pressure too to restrict the use of glyphosate, since it was ruled a “probable carcinogen” by the WHO last year.
This way of producing our food is broken and most people, including those still promoting it, know it. So why does it not change? The former UN rapporteur on the right to food, Olivier de Schutter, has described a series of “lock-ins” that prevent change. Because value accrues to a limited number of actors, their political and economic power and ability to influence government policy is reinforced.
The latest frontier is Africa, where there is a new scramble to spread the agroindustrial model of farming. It may well be in Africa, however, that a different, more ecological vision of the food future emerges. I had a glimmer of it on a trip to a large-scale horticultural export company based on Kenya’s Lake Naivasha.
The company, Flamingo Homegrown, has abandoned its long and heavy use of chemical pesticides, partly in response to a campaign highlighting their effect on workers’ health, but partly too in recognition that they were on a losing treadmill of spraying and pest resistance.
They have reinvented their agriculture in a way that makes the science of agrochemical use look as primitive as a blunderbuss. Instead they employ groups of highly trained African scientists to study and reproduce in labs the fungi and microrrhizae in healthy soil that form intricate links with plant roots. Rather than waging chemical war on the land, they are working to harness its immensely complex ecosystems. They have built vast greenhouses dedicated to breeding and harvesting ladybirds to control pests biologically rather than chemically.