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Environment

Chemical industry officials defend merger ‘tsunami’

Senate panel questions consolidation in agrochemical sector

by Glenn Hess, special to C&EN
September 21, 2016 | APPEARED IN VOLUME 94, ISSUE 38

Credit: Associated Press
Leaders from Dow, Sygenta, Bayer, and Monsanto testified before the Senate.

Top executives from farm chemical and seed companies tried to assure skeptical lawmakers Tuesday that a recent wave of mergers will not result in higher prices for farmers or hinder innovation.

DuPont’s pending mega-merger with Dow Chemical is “procompetitive and good for farmers,” DuPont Executive Vice President for Agriculture James C. Collins said in testimony before the Senate Judiciary Committee.

“It creates an American agriculture leader and strong global competitor capable of increasing productivity and profitability for U.S. farmers better than either company could alone,” said Collins, who would head the combined companies’ agriculture business. The deal is awaiting U.S. antitrust officials’ approval.

Since December, six major agricultural chemical companies have agreed to merge, creating three global giants with a broad array of products. In addition to DuPont and Dow, Monsanto has agreed to merge with Bayer AG, and China National Chemical (ChemChina) is finalizing its acquisition of Syngenta.

“I’m afraid this consolidation wave has become a tsunami,” said Sen. Charles Grassley (R-Iowa), the committee’s chairman. Farmers are already under “tremendous pressure” from lower crop prices in an already declining agriculture economy, and Grassley warned the merger could mean even higher seed prices.

“Concerns have been raised about the loss of head-to-head competition of because of these transactions, and whether they will reduce incentives to invest in research and development,” Grassley said.

Sen. Patrick Leahy of Vermont, the committee’s top Democrat, said he was troubled by the “anti-competitive consequences of concentration” and urged antitrust regulators to closely scrutinize all of the proposed mergers.

But officials for Monsanto and Bayer testified that their deal would lead to greater investments in technology that could help American farmers feed a global population that is projected to grow by an additional 3 billion people by mid-century.

“This type of change enables more innovation and delivers better products to the farm even faster,” said Robert T. Fraley, executive vice president and chief technology officer of Monsanto. “Farmers are best served when companies invest more in new technologies and accelerate the pace of their R&D, which in turn spurs robust competition.”

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