Farming News - Farmers are concerned as Bayer reaches deal with U.S. for approval to buy Monsanto

Farmers are concerned as Bayer reaches deal with U.S. for approval to buy Monsanto

10 Apr 2018
Frontdesk / Finance

The takeover, one of a trio of major deals in the agribusiness sector in recent years, would create a company with a share of more than a quarter of the world's seed and pesticides market. A souring global farm economy has spurred consolidation among the major players, triggering protests from environmental and farming groups worried about their market power.

monsanto bayer

The $62.5 billion deal was approved by European Union antitrust regulators in March (Getty Image)

The deal reduces competition for sales of seeds and chemicals to farmers struggling with low crop prices, raising the risk for price gouging, said Wenonah Hauter, executive director for Food & Water Watch, an advocacy group.

“The Justice Department’s paltry divestment approach does little to address the extreme control the merged firm will have over farmers’ data, genetics, biotechnology traits or the associated agrichemical industry,” she said.

 The Wall Street Journal reported. Bayer agreed to sell off additional assets to alleviate anti-trust concerns. 

The two companies first announced the potential deal in September 2016, saying the move would boost agriculture research and innovation.

"By the time 2050 rolls around, the world will have 10 billion people, and the demand for food will double," Robb Fraley, Monsanto's chief technology officer, told Business Insider last year. "The whole point here is that the business combination between Monsanto and Bayer will allow the companies to invest in and create more innovation, and it's going to take a huge amount of innovation in order to double the world's food supply."

Farmers in the US aren’t so sure.

“From my perspective, they're saying the exact opposite of what most people in the industry actually believe," Clay Govier, a farmer in central Nebraska, told Business Insider in January 2017. Govier is the fifth generation to work on his family farm of 3,000 acres, which primarily grows corn and soybeans. The farm has used Monsanto products for at least 12 years, and Govier's family expects seed and chemical prices to increase due to the merger.

That could put many small family farms in tough positions.

"I just sat down to chat with my banker the other day, and fortunately we're in a position that I don't think we're going to have to have a hard conversation when it comes to loans for next year," Govier said. "But he said there are a lot of guys out there that are going to have a really hard conversation."

European Union antitrust regulators approved the deal in March after the companies agreed to sell a swathe of assets to BASF. China, Brazil and Australia have also approved the proposed merger.