The international association ETC, which closely follows the evolution of technology and the activity of the large multinationals, warned in 2015 of a wave of mergers when Monsanto itself was trying to bribe Syngenta (in vain, to say all). But ETC forecasts go further: as soon as companies that control seeds and pesticides become mega-enterprises, companies that sell agricultural machinery will come into play, even bigger than others. The end result, in the medium term, may be that there are only a few very powerful actors who fully control all aspects of industrial cultivation, to the detriment of small farmers and, ultimately, food sovereignty.

In the following lines we will inform you about the fusion processes currently taking place, as well as the future prospects of ETC, especially on the basis of the materials published by that association.

It tries to imagine that a single company sells the seed, knows the prevalence of pests and gives the most convenient pesticide, knows the conditions of the local soils and distributes the fertilizer accordingly, which will be launched by a “smart” tractor manufactured by it, in the amount needed in each square meter, besides predicting the characteristics of the climate and offering a crop protection insurance.

A text published by the ETC group in May 2015 sets out the situation we have just described. At the moment it is no more than a hypothesis, but it has its foundation: during the two years that have passed we have come a little closer to that imaginary reality, although we are not yet in the first steps.

The large companies in the industrial agriculture sector have set up fusion programmes, and if the wheel is not stopped, it may be that the future will be that of the previous paragraph or something similar – in this LARRUN we will analyse its consequences – even if it is allegedly contrary to the monopoly regulation… In fact, the institutions responsible for circumventing the monopoly are now in the hands of those responsible for giving the business associations green light or not.

Three "weddings" between transnationals

The global market for industrial agriculture is divided into four main sections: seeds, pesticides, machinery and synthetic fertilizers. In the first three, the concentration is remarkable: a few companies control a very important part of the market. Let us first consider the field of seeds and pesticides.

While the dance of mergers does not further reduce the number, at the moment there are six large companies (Monsanto, Bayer, BASF, Dow, DuPont and Syngenta) leading the seed and pesticide market. They're called the Big Six. It is no coincidence that most of these companies operate in two areas: in recent decades they have acquired hundreds of small seed companies, with the exception of BASF, and have started to create pesticide-resistant variants produced by themselves through biotechnology. The case of Monsanto's transgenic seeds is the best known, but not the only one.

In 2014, Monsanto offered a purchase offer to the Swiss Syngenta, but she replied no. The U.S. company tried twice as much, and in the two claims Syngenta said no. However, the merger race was already underway. In the end, Bayer purchased Monsanto in September 2016, but the others have not been watching; Dow and DuPont have decided to merge and Syngenta, after rejecting Monsanto, has found a buyer he liked: The state-owned Chinese company ChemChina, which owns the seventh global company in pesticides.

Of the Big Six, only the BASF has been left out of the game of the associations for the time being, and it will have to be seen what path it will take if the three operations mentioned are carried out in their entirety. In any case, of agricultural products, the percentage of the total benefits of FVs is low. The same goes for Bayer and Down.

In an article published on 10 June in the Mexican newspaper La Jornada, Silvia Ribeiro, from the ETC group, explained that “mergers are being studied (supposedly) carefully by antitrust organizations in many countries.” In the opinion of ETC, these organizations have acted too tibiously over the past few decades with big companies, but when it comes to writing these lines it seems that some government in the Global South, or more than one, can hinder the intentions of companies. This may lead to investors rejecting mergers even though Brussels or Washington authorise mergers and companies backing away. In any case, it is clear that the commitment of the companies is to increase the concentration. If they didn't get it now, they could try it later. With what conclusions?

Increased capacity to put pressure on small farmers

If mergers take place between Monbanco Bayer, Dow DuPont and Syngenta-ChemChina, the three companies that are incorporated will control 60% of the world market for commercial seeds, including almost 100% of transgenic seeds, and 70% of pesticides, according to the article cited by Silvia Ribeiro. The sum of these two markets is valued at US$ 97,000 million (about EUR 86,000 million).

In the words of the ETC member, mergers will have a strong impact on the economies of agricultural families, although most of them use their seeds and very few artificial chemical inputs, “because megaenterprises will have more capacity to push governments as they grow, as well as forcing local small businesses to exit the market.”

According to this forecast, companies will press for more restrictive intellectual property rules, prohibit or limit the exchange of seeds among farmers, for example by forcing them to use registered seeds on the excuse of health rules, that agricultural credits are conditional on the use of their patented inputs and seeds, or that expenditure on agricultural infrastructure is in favour of the industrial
model. “In the alone, and therefore in food, there will be more agrotoxics that allow the continued sale of transgenic seeds, despite the resistance of dozens of invasive plants,” adds Ribeiro.

Need to "shake" the business line

Besides increasing power, Monsanto started this orgy of fusion with good reasons to conquer Syngenta. On the one hand, he could have anticipated a fortune by moving his US headquarters. United States a Europe. On the other hand, it was forced to diversify its income. For a long time, Roundup herbicide and its associated Roundup Ready products have secured the company’s benefits. Roundup, or what is the same glyphosate, is the best-selling agrochemical substance in history, and is the main ingredient in about 700 products (since 2000 anyone can use it, since then the Monsanto patent was exhausted).

The company has sold the pesticide along with genetically modified soybean and maize seeds known as Roundup Ready. These are genetically modified plants to withstand the influence of glyphosate, designed to grow abundantly in clean fields abandoned by the Roundup without “weeds”.

But Monsanto has two problems. On the one hand, glyphosate-resistant plant varieties have evolved over the decade: at least 25 species are able to withstand the herbicide invented by Monsanto, and farmers who have supplied their products now have a serious problem. In the United States alone, there are four million hectares of super-resistant herbs (2015 data). Twice the surface of the Basque Country.

The other blow came from the World Health Organization (WHO), the US multinational. In March 2015, the WHO International Agency for Research on Cancer ranked the substance in the group of “probably causative cancers”. Subsequently, however, the European Food Safety Agency took the opposite route, claiming that there is no evidence that glyphosate is harmful to humans, precisely when the European Commission is in the midst of a debate on the extension of the marketing authorisation for the substance. The issue is at a critical juncture; for the moment, the Commission has proposed to the Member States of the Union to extend the authorisation of glyphosate for ten years, but no fixed decision has been taken. In any case, and whatever happens, Monsanto is clear that the time of glyphosate is beginning to end, and a few years ago the patent for Roundup Ready transgenics was stamped out and with it the monopoly. The well-known transnational has to reform its chemistry
department.

Impact of diversity and innovation

Innovation is precisely one of the arguments cited by the leaders of the big companies in the sector in favour of mergers. In July 2015, when Syngenta was still trying to buy it, Monsanto’s president said that the sum of both companies was going to offer more opportunities to farmers. The ETC group, for its part, showed its opposition to the Breaking bad report published in connection with the merger attempts: “According to many studies, market concentration means a reduction in opportunities.”

ETC cited as an example two research carried out in Europe and published in scientific journals, one in 2013 and the other in 2015. According to them, the larger the companies, the less cereal varieties they offer. Another passage in the same report says: “Economists warn that if the four companies control 40% or more of a market, there is a great risk that they will give up competitiveness, to the detriment of innovation.”

In both the pesticides and the seed sector, the concentration far exceeds the 40% limit. Concerning pesticides, the three main companies (Syngenta, Bayer and BASF) have 51% of the market value; in the case of seeds, the sum of the three most powerful companies (Monsanto, DuPont and Syngenta) reaches 55%.

Another detrimental consequence of large mergers is that, at the same time as the number of variants and innovation is reduced, the prices of seeds and inputs are increased. Two facts: In the European Union, this increase was 30% between 2000 and 2008, according to a report published by the Group of the Greens of the European Parliament; and in the EE.UU, between 1990 and 2010, the price of agricultural inputs, especially crop inputs, rose faster than the compensation farmers received for their products.

Machinery companies awaiting entry into the game

The global market for seeds and pesticides has a value of 97,000 million dollars, and its control is at the heart of the party that the Big Six and ChemChina are fighting for. “But the fusion round does not end here, it has only just begun,” says Silvia Ribeiro; “in the medium term the control of $400,000 million of all agricultural inputs is at stake.”

The other three quarters of this money moves in the fields of machinery and synthetic fertilizers. As for machinery, the total market value was US$ 114 billion in 2014. As with seeds and agrochemicals, there is a lot of concentration and few companies dominate the market. Specifically, the four large companies (John Deere, CNH, AGCO, Kubota) already control 54% of the total population. Led by John Deere, which accounts for almost a quarter of the market.

When we say machinery, we don't just talk about tractors anymore. Great automation has been achieved by incorporating GPS and sensors such as irrigation and fumigation drones, unguided tractors and many satellite soil and climate data. Monsanto and the company also have huge databases on the genome of crops. To use ETC language, biotechnology companies have software and hardware machinery.

Commodity of the future: data

Needless to say, things are not so simple. The technologies of each other come together, the markets are touched, alliances are created. For example, John Deere, which has been collecting climate data for more than 15 years, started building connections with the Big Six in biotechnology in 2013 and currently has partnership agreements with each of them. Monsanto, for its part, has claimed maps and historical data at 1:10 scale of 30 million hectares of U.S. fields.

In 2012, a Monsanto executive suggested that the company would soon be known for its activity in the field of information technology. That same year he purchased the company Precision Planting. Precision Planting manufactures precision agricultural systems: what to grow, when to water, what to deposit fertilizers...

In 2015, John Deere decided to purchase Precision Planting Monsanto, but the U.S. Department of Justice suspended the operation in the summer of 2016. If the merger had materialized, “Deere would have been able to dominate the market for precision farming systems, increase prices and slow down innovation, at the expense of US farmers subjected to these systems,” according to the Justice Department. In fact, John Deere and Precision Planting, together, would have absorbed 85% of the precision crop market.

The companies said they would fight the decision of the authorities and try to materialize the merger, and for a moment it was thought that the conquest of Monsanto by Bayer could open the way to that goal, but then they retired. For now, at least. “Despite the suspension of the sale operation, the attempt demonstrates the trend,” explained Silvia Ribeiro.

Agriculture, just using data?

“After all, among the objectives is also the control of information,” said ETC director Pat Mooney in September 2016, when he learned that Bayer had bought Monsanto. “If a company manages to own seeds, store soil and climate information and process new genetic information, it will necessarily gain control over agricultural inputs around the world.”

That is why the team led by Mooney takes the view that if the attempts at fusion in the field of seeds and pesticides are successful, the second wave will come: the machinery companies will try to assimilate biotechnologies. Will they succeed? You don't know, but if you have to wager, ETC defends the yes for several reasons. On the one hand, the tractor that the farmer will use in his field, or in other words, the hardware that will collect all the other data, because it is his own. “The farmer’s work will ultimately focus on data handling in the area of operation, i.e. on the tractor,” can be read in the Breaking bad report, “This area of operations will perform calculations on the state of the soil, climate and market, to print a recommendation on growth, pesticide and fertilizer from them, or to appear on the screen.”

Utopia or dystopia? In the opinion of ETC, the second is clear. “The aim of this second round of fusion is to impose a highly automated and very low personnel cultivation model,” explains Silvia Ribeiro. “Farmers will be offered a package that they will not be able to reject: seeds, fertilizers, pesticides, machines, genomic and climate data. They will also inform them of the insurance they have to buy and will try to make the payment of the credits dependent on the purchase of this package, as they already do with seeds and agrochemicals.”

The question of fame or disadvantage of being Monsanto

Another reason that ETC considers favorable to machinery companies is the “good fortune not to be Monsanto”. John Deere and company have more sales than seed and pesticides, but they also have the advantage of not being in the field of genetics and chemistry. “They sell precision equipment that has not undergone genetic transformation and are therefore not toxic on this side,” explains ETC. Machinery sellers can create mistrust on farmers, but not on consumers. However, Monsanto’s name has become a synonym for cunning around the world. Moreover, it cannot be ruled out that for the sake of popularity this name will soon disappear from the public arena, taking advantage of the merger with the Bayer.

Machinery sectors also have a more prosaic advantage: the growth of their market. If the forecasts are met, demand for drones, robots, sensors, cameras and other growing equipment will increase significantly in the coming years: From $2.3 billion in 2014 to $18.450 million in 2022, the account is not going to stay there. The greatest opportunities for precision agriculture are in North America and Europe, where the seed and agrochemical business is increasingly slowed down, but also in the major latifundia of the Global South has a large number of potential buyers.

Fertiliser sector, marginalised

The bulk of this enormous bollo of $400,000 million in agricultural inputs is the field of fertilizers: Annual sales amount to $18 billion. But it has a feature that other sectors don't have: concentration is not that big, there are no giant companies. Of the three big companies, they only occupy 21% of the market. Two of them (Potash Corporation and Agrium) are now in the process of being merged, but the company that would be overtaken would reach only half the sales of Bayer-Monsanto.

For this reason, companies in the sector will hardly be able to enter the large number of mergers that are being fought in the world, for the time being. Furthermore, genetics and the use of large databases are unknown. It is still disturbing for the ETC group, which has so far been successful in the forecasts made. Of course, USD 18 billion is a tempting picoteo; it is difficult to imagine that at the end of this process the fertiliser field is not involved in any way.