Bayer-Monsanto Merger Would Devastate Farmers, Raise Food Prices
Innovation and competition are America’s economic strength. Unfortunately, the proposed $66 billion mega-merger between agriculture companies Bayer AG and Monsanto Company would prove disruptive for American farmers, ranchers and consumers. The merger would cripple working-class Americans by suppressing seed choices for farmers and would shut the door on competition and consumer-friendly innovations, while increasing grocery prices for the average American family.
According to a recent study, a merger between these two domineering companies would amass unprecedented integration and control over the seed and seed trait market. A merged Monsanto-Bayer would control over 35 percent of the global market for corn seeds, roughly 28 percent of the global soybean market, and almost 70 percent of the global cottonseed market. It’s projected that this integration would limit seed options and raise aggregate seed prices for farmers by 5.5 percent and cottonseed prices by more than 20 percent. With U.S. cotton alone contributing over $120 billion annually in total economic activity, the harm done to this sector of the economy would be felt on every socioeconomic level.
Furthermore, history shows that this type of market control strangles competition and decreases innovation. Mergers of this magnitude reduce the total amount the conglomerate spends on research and development, as it tends to concentrate its efforts on enhancing existing products and technologies. Start-up firms that would otherwise produce ground-breaking and innovative technologies are unable to compete in the cornered market.
Evidence of this in the seed market already exists. When Bayer announced it would be divesting its cottonseed and trait systems to BASF Group, BASF eliminated half of its plant science R&D and cut more than 350 jobs. If this new merger gets the stamp of approval, more jobs will be lost, product quality will decrease, and prices will increase.
In early December, James C. Miller, Ronald Reagan’s Federal Trade Commission Chairman, penned a column warning about the threat the merger poses to farmers’ choices and innovation. “A new Baysanto,” he wrote, “would have a dominant ‘platform’ in seeds and crop protection.” It would acquire the “power to require farmers to plant only its seeds.” Horizontal mergers like Bayer-Monsanto “potentially diminish competition, allowing the newly dominant firm to engage in predatory and other actions that harm consumers.”
The proposed merger also hurts working-class families. A 2016 study from Texas A&M University reveals that food prices would increase anywhere from 2 to 18 percent — this on top of stagnant wages for families already on tight budgets. This is simply a merger Americans cannot afford.
President Trump was elected in part on his promise to grow the economy and help families grow their incomes. Stopping this merger is vital in that effort, and the Americans who voted for President Trump agree. According to a recent survey, over half (54 percent) oppose the merger, with 27 percent strongly opposed. Trump voters have a clear understanding of the merger’s impact on America’s farmers and are sympathetic to the stranglehold a combined company would have on farmers. The president should heed the warnings from farmers and his supporters, and encourage the Department of Justice to critically scrutinize this proposed merger. The Americans who voted for him deserve his support. He must make good his promise to revitalize the American economy, put people back to work, and make American farming great again.
Patty Judge was the first female Secretary of Agriculture of Iowa and served two terms. In 2006, she was elected as Iowa's Lieutenant Governor. A lifelong resident of Iowa, Patty is a former state senator and registered nurse.