Breaking Bad: Big Ag Mega-Mergers in Play

http://www.etcgroup.org/content/breaking-bad-big-ag-mega-mergers-play

A report by the ETC Group

December 2015. In this new report, ETC Group examines corporate consolidation in four agricultural input sectors: seeds, pesticides, chemical fertilizers and farm equipment. With combined annual revenue of $385 billion, these companies call the shots. Who will dominate the industrial food chain? And what does it mean for farmers, food sovereignty and climate justice?

Issue

The Big Six agrochemical corporations (BASF, Bayer, Dow, DuPont, Monsanto, Syngenta) that dominate commercial seed and pesticide markets worldwide now insist they must get bigger, faster if the world wants food security in the midst of climate chaos. According to agribusiness, the extreme pressures of population, demand for meat, and climate crisis require Big Science and Big Money – and that means extreme Mergers all along the industrial food chain.

At Stake

The fate of the six dominant pesticide and seed companies (and their $93 billion market) is in play. For all the talk of “Climate-Smart Agriculture,” their R&D strategies are collapsing and, among them, there are more sellers than buyers. Simultaneously, the much bigger ($175 billion market) greenhouse gas-intensive fertilizer industry is caught in the headlights of climate change negotiators and is wrapping itself in the mantle of Climate-Smart Agriculture to protect its assets. The four companies that control 56% of the $116 billion farm machinery industry already have the robotics hardware; are acquiring the software (Big Data, satellite surveillance) technologies; and are thinking about adding the bio-based software (seeds and pesticides) to their shopping cart. It’s too soon to tell which companies or sector will become the one-stop shop for farm inputs – but farm machinery, seeds, fertilizers and chemicals are now linked like never before. Monsanto collaborates with the world’s three biggest farm equipment companies (Deere & Co, CNH Industrial, AGCO). Deere has strategic alliances with five of the Big Six companies. Ultimately, the company that controls the data on soil, historical weather and crop yield, as well as the Big Box robot that deposits the seeds, pesticides and fertilizers will be the company that can gain most from crop insurance contracts that increasingly dictate inputs to the farmer. In the short term, the big shifts will likely be among the existing seed and pesticide enterprises, but even in the mid-term, watch out for the muck and machinery majors to rule the roost.