Through aggressive vertical integration, the Monsanto-Bayer merger represents a near-monopoly on the agriculture supply chain, which eliminates marketplace competition and forces farmers’ complete reliance on genetically modified organisms (GMOs). This phenomenon poses a massive threat to global food supply and environmental health.
In 2016, Green America’s Food Campaigns Team published an article detailing grave concerns over a potential Monsanto-Bayer merger. Now, it appears that our worst nightmare has come true.
After two years of controversial negotiations with regulatory agencies around the globe, the German pharmaceutical giant closed an all-cash $63 billion merge with Monsanto in June, creating the largest seed and ag-chemical company in the world. The newly-formed mega-corporation is estimated to receive approximately one-quarter of seeds and pesticides spending worldwide. That’s a near-monopoly with a massive market share at over 60% of global revenue. The seed, trait, and pesticide marketplace is more concentrated now than ever before.
The agro-chemical company plans to drop its American namesake, hoping to cast off the curse of the Monsanto’s bad reputation and successfully commercialize the merge as a necessary step towards much-needed agricultural research and innovation. Here’s why the merger is far from a saving grace and more like a wolf in sheep’s clothing.
During the 1990s, the agricultural sector experienced a shift in primary seed distribution from small, independent seed businesses to multinational, agrochemical joint ventures. This consolidation brought the increased use of seeds with genetically-engineered traits, like drought or insect resistance, over conventional ones, spurring even more consolidation and integration amongst the traited seed and agrochemical industries. As dependence on traited seeds and other agrochemical goods became more pronounced, farmers were subjected to higher prices attributed to seed treatments and technology fees.
Emerging from these developments, Monsanto became one of four formidable traited seed companies in the United States. By 2009, Monsanto’s crop protection and herbicide resistance traits had spread like wildfire across the nation, present in 77% of all acres of cotton, 82% of all acres of corn, and 95% of all acres of soybeans. Eventually, the GMO titan claimed its title as the world’s largest seed seller, driving up seed prices for farmers globally.
Consolidation of the seeds and pesticides business has never boded well for farmers, and the Monsanto-Bayer merger will be no exception. Combining the might of Monsanto’s traited seeds with Bayer’s agricultural chemical expertise results in a dangerous episode of expansive vertical integration in which smaller traditional seed sellers will be unable to compete, and farmers will pay more for fewer choices of seeds and agricultural services.
There are two main strategies at play for Monsanto-Bayer to succeed in its quest to establish supply chain dominance. First, the mega-corporation anticipates to add a central “digital agriculture” platform to its portfolio. FieldView is a software and application hub that would allow commercial farmers to receive real-time data on climate patterns and soil and irrigation conditions monitored by Monsanto-Bayer’s own in-field sensors, meters, and satellites. While the platform is intended to stay open initially for developers to create their own programs, the digital tool will eventually become monetized through a subscription process once it becomes a farming essential, touted as the central agricultural data hub.
Supply chain control will then be further established by bundling this new digital platform with seeds and other agricultural chemicals, instigating farmers’ further dependence on Monsanto-Bayer products. Monsanto already practices this technique: since Roundup tolerance is a seed trait in high demand, Monsanto can afford to offer seemingly generous discounts on Roundup Ready seeds by forcing farmers to purchase them in tandem with premium-grade Roundup. The Monsanto-Bayer union, bringing together specialties in traited seeds and agro-chemicals respectively, will be able to use bundling to secure its presence in all aspects of crop cultivation, from seed to harvest.
While Bayer claims that its merge with Monsanto will bolster the technological development necessary to feed the world, it is more likely that the mega-corporation will actually deter innovation. In fact, a 2017 report shows that consolidation of research and development (R&D) capacity does not necessarily increase the quantity or quality of innovation, but is more likely to reduce the kinds of innovation that take place.
With the exception of FieldView, Monsanto-Bayer does not have an economic incentive to pioneer new technologies. Instead, the mega-company is likely to use its R&D capabilities to commercialize and enhance existing seed and chemical products. Even if R&D funding remains robust, resources would be concentrated on specialized opportunities with particularly high commercial returns. For example, in the agricultural industry, about 40% of all private breeding research is dedicated to the cash crop corn. Following suit, Monsanto chose to focus on three cash crops — corn, cotton, and soybeans — in an effort to take over Argentina’s seed markets in 2004. Eyeing potential profits, Monsanto-Bayer is not interested in trying new things, but rather, committing itself to the tried and true to cultivate a handsome income.
Further, Monsanto-Bayer is incentivized to stifle R&D efforts to ensure a less competitive landscape. Monsanto holds a decade-long history of expressly forbidding seed purchasers from conducting private research on traited seeds, threatening litigation. Thus, scientists have been prevented from conducting experiments, such as comparing tampered and conventional seed performance in different climate conditions or measuring the toll of genetic modifications on the environment. These restrictions have been heavily enforced by Monsanto, likely out of fear that findings could either destroy its credibility in the seed marketplace or provide valuable information to a cunning competitor.
Pairing a lack of motivation to innovate internally with a monopolistic disposition, the Monsanto-Bayer merger is far from an open invitation to innovate, and the costs are serious. A profit-oriented mentality encourages “one-size-fits-all” formulas, in which case, seeds will carry stacked traits. Farmers dependent on Monsanto products will then have no choice but to buy seeds that have undergone more genetic treatments that drive up prices, degrade the environment, and grow less effectively.
Among the chief concerns of the Monsanto-Bayer merger are its massive implications on the environment. Green America’s Food Campaigns have identified several key environmental concerns of growing GMOs, including ecosystem destruction, eradication of important pollinators, superweed and pest development, and soil degradation — all of which are left unchecked due to lack of proper regulation and environmental health reviews.
Monsanto-Bayer, with its intent to dominate the agriculture supply chain, will make it much more difficult for farmers to practice small, organic, regenerative farming. Conventional seeds will become less accessible as conventional seed farmers are unable to compete and non-genetically modified crops risk mass contamination. As a result, the agriculture industry is on track to become increasingly reliant on genetic modifications, leaving us with a chemical-ridden food supply and a damaged environment.
The next step is to take action. Check out Green America’s resources on sustainable food to learn more about GMOs and how consumers and businesses can avoid them. Green America’s Food Campaigns Team has successfully partnered with Chobani to discuss organic, non-GMO options for cattle feed and pressured Mars, Inc. to make its pet food line GMO-free. But the fight isn’t over. Learn more about how you can make a difference in the fight against GMOs and corporate consolidation.