Texas farmers are hoping European antitrust regulators will have a long hard look at the proposed tie-up of German conglomerate Bayer with US agricultural firm Monsanto before approving it in 2018 because if a Texas A&M University study holds true, that will automatically mean rising seed prices.
Until two years ago, the worldwide market for seeds (and various other agricultural materials) was dominated by six companies. Dow, DuPont, Monsanto, Bayer, ChemChina, and Syngenta.
At that time, the whole world was expecting some mergers to happen; and so in anticipation of that, Texas A&M University wrote a study, released in September of 2016, in which they predicted that such mergers would lead to higher crop prices because there is less competition. For example, they predicted the price of cottonseed to increase by about 20 percent by 2019.
Then in late 2016, the ball started rolling very quickly.
Chemchina merged with Syngenta, Dow proposed a tie-up with DuPont and Bayer proposed to buy Monsanto just a few months ago.
If therefore the latest merger is approved, that means the market for seed producers worldwide went from 6 to 3 in just two years.
For this reason, Mr. Dee Vaughan, the chairman of the Texas Corn Producers' Issues Committee and a Dumas-area farmer himself, wants the European Commission to have a critical look at the Monsanto-Bayer merger before approving it because he believes the other big groups will stagnate without “competition forcing them to stay innovative.”
“We have to buy seeds; they have us in a situation where we have to buy their product. But they still have the ability to go even higher on their prices.”
Ms Judith McGeary, executive director of farmers’ advocacy group Farm and Ranch Freedom Alliance, joined in, stating that Bayer's needs Monsanto’s patents to thrive, and ultimately, this will mean higher prices for farmers (which also means higher prices for consumers): “It’s important to realize how much agriculture contributes to Texas — we’re talking about $100 billion annually for Texas’ economy."
"So anything that takes out of the pockets of the farmers and puts it into large corporations that are headquartered elsewhere is a drain on our economy.”