Environment

How Monsanto Could Get Even Bigger and More Powerful

We should be very concerned about the future of the world's food supply.

Photo Credit: prudkov/Shutterstock

Earlier this month, Swiss seed and agrochemical company Syngenta rejected Monsanto's second takeover bid in a year. Syngenta's board said the offer undervalued the company and did not fully address regulatory risks.

But the St. Louis-based biotech giant, the world's biggest seed seller, is not deterred and is planning a new offer to Syngenta, the world's biggest pesticide and fertilizer seller. If approved, it would be the biggest agribusiness merger in history. But clearing antitrust regulators in the U.S. and the EU is a big if.

The combined behemoth would be the world's largest seed and crop chemical company with more than $30 billion in revenue and control over 35 percent of the world's seed supply. It would dominate a market that includes other Big Ag players like BASF SE, Bayer AG and Dow Chemical Co.

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Possible antitrust issues arise specifically because of the potential merger's business overlaps in the herbicide markets in North American and Latin America, as well as the North American seed market, according to Morgan Stanley. To get the deal approved, Monsanto said it would divest Syngenta's seed business. But that isn't enough for critics who argue that the merger would result in a near-monopoly on the global food system.

The company is familiar with official scrutiny: It was the subject of a seed industry anti-trust probe by the U.S. Department of Justice, which ended its investigation in December 2012. The following month, at least seven states led by Iowa dropped their five-year investigation into Monsanto's practices and no action was taken.

The merger could lead to a Big Ag shake-up: With Monsanto solidifying its position, Dow may finally divest its agriculture unit, a move that has been suggested by CEO Andrew Liveris that may pique the interest of DuPont in regard to its Pioneer seed business.

RELATED: Biotech Giant DuPont-Pioneer Found Guilty of Pesticide Contamination

One of Monsanto's main challenges is in its biggest business: selling genetically modified seeds. Growth in this market has been slowing: Sales in 2014 rose 4.7 percent compared with 8.7 percent in 2013.

Martin Lehmann, manager of 3v Asset Management’s 3v Invest Swiss Small & Mid Cap Fund, argues that slower growth and lower commodity prices have put pressure on the entire agrochemical industry to consolidate. “A Monsanto/Syngenta deal would mark the beginning of further deals,” he said.

While the merger may make financial sense for Monsanto (in addition to added market share, they would be able to use Switzerland for a tax inversion), its primary customer base may be on the losing end of the deal: Farmers have faced steadily increasing prices for seeds and pesticides amid growing industry consolidation.

"We are very skeptical that an acquisition of this nature would be in the best interest of America’s family farmers," said Roger Johnson, president of the National Farmers Union, a farmer advocacy group based in Washington.

"This monster merger would give Monsanto an iron grip on farmers around the world — gravely threatening world food security," said Kaytee Riek, campaign director of SumOfUs.org, a nonprofit corporate watchdog group, in an email. "We have to stop this now."

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SumOfUs has launched a public petition urging U.S. and EU antitrust regulators to block Monsanto’s takeover. "Imagine this: Monsanto eliminates one of its biggest competitors and tightens its grip on the global farming industry," the group warns. "Our precious wildlife like bees, birds and butterflies suffer as Monsanto spreads its pesticides further and wider. More and more small-scale farmers are bullied if they refuse to buy Monsanto's seeds."

The group has already had success in their efforts to rein in Monsanto. In January, a fifth of the company's shareholders supported a SumOfUs-backed proposal calling for independent board oversight over Monsanto's executives.

In addition, the Big Ag industry has been facing mounting criticism for their use of neonicotinoid pesticides, which has been linked to the deaths of birds as well as pollinators like butterflies and the most important food pollinator, honeybees, which pollinate 70 out of the top 100 human food crops. Bee-pollinated crops supply about 90 percent of the world's nutrition. As Greenpeace puts it: "You have a bee to thank for every one in three bites of food you eat."

Neonicotinoids are made by Syngenta and used by Monsanto. Bayer and Dow both make and use them. They are used on crops that end up in the human food supply and also crops used to feed animals that end up in the human food supply. Of course, the agrochemical corporations maintain that neonicotinoids are not to blame for animal and insect deaths, but both the scientific evidence and consumer awareness are growing. "In the last four years, the chemical industry has spent $11.2 million on a PR initiative to say it's not their fault, so we know whose fault it is," said environmental documentary filmmaker Jon Cooksey.

SumOfUs notes that "Syngenta asked United States regulators for a 40,000 percent increase in the legal limit of bee-killing neonicotinoids."

The industry is also facing mounting opposition to the use of pesticides and GMOs. Recently, a jury in Hawaii awarded residents $500,000 in a suit against DuPont-Pioneer for damages caused by pesticide-contaminated dust from its operations in Kaua'i, which has been called the "global epicenter for GE seed testing."

RELATED: Why Did Gov't Give Big Thumbs Up to Notorious Monsanto Pesticide We Now Believe Causes Cancer?

While the industry is facing criticism and scrutiny on several fronts, Monsanto president Brett Begemann argues that the move would ultimately help farmers grow more crops, as it would allow the company to bring more seeds and pesticides to market faster. “We’re seeing the coming together of chemistry and biology,” he said at an industry conference last week. He added that with the addition of Syngenta’s range of pesticides, Monsanto will be able to extend their market reach in Africa and Asia.

But for activists, that kind of market reach for a combined company of its size and influence is approaching an absence of competition — not to mention the potential increased negative effects its products may have on food supply, human health and the environment. "No single corporation should be allowed to wield the sort of power that comes from a near-monopoly on our global food system," said SumOfUs.

As regulators review the possible Monsanto-Syngenta merger, they would do well to recall the words of pioneering environmentalist Rachel Carson, who wrote in her seminal book Silent Spring, "It is ironic to think that man might determine his own future by something so seemingly trivial as the choice of an insect spray."

Reynard Loki is a senior writing fellow and the editor and chief correspondent for Earth | Food | Life, a project of the Independent Media Institute. He previously served as the environment, food and animal rights editor at AlterNet and as a reporter for Justmeans/3BL Media covering sustainability and corporate social responsibility. He was named one of FilterBuy’s Top 50 Health & Environmental Journalists to Follow in 2016. His work has been published by Salon, Truthout, BillMoyers.com, EcoWatch, Truthdig, National Memo, Green America, Regeneration International, Revelist, Resilience and BlackBook, among others. Reynard is also the co-founder of MomenTech, an experimental production studio based in New York and Prague that has presented dozens of projects around the world exploring intersections of culture, history, politics, science and sports. Follow him on Twitter: @reynardloki or email him at [email protected]ind.media.