Farmer in machine spraying crop rows

Agribusiness: The Monsanto Bayer Merger

When a business sector sees a rash of mergers and acquisitions, it’s for one of two reasons, growth or decay. The organic food industry has seen a lot of acquisitions by companies anxious to get in on the ground floor of the 5% annual growth rate in organic food and regenerative farming. Meanwhile, on the dark side, Monsanto is facing takeover by Bayer, not for any positive reasons, but because they are both looking into the abyss. Merger is one way to survive when the farmers they are competing for are spending less. Farmers aren’t stupid – they can do the maths. When they see diminishing returns on their investment in seeds and agrichemicals, they reduce their spending.

September 15, 2016 | Source: Craig Sams | by

When a business sector sees a rash of mergers and acquisitions, it’s for one of two reasons, growth or decay. The organic food industry has seen a lot of acquisitions by companies anxious to get in on the ground floor of the 5% annual growth rate in organic food and regenerative farming. Meanwhile, on the dark side, Monsanto is facing takeover by Bayer, not for any positive reasons, but because they are both looking into the abyss. Merger is one way to survive when the farmers they are competing for are spending less. Farmers aren’t stupid – they can do the maths. When they see diminishing returns on their investment in seeds and agrichemicals, they reduce their spending.

Normally in a situation like this the agribusiness operators would go to the EU or Washington and just wheedle more subsidies out of the national purse, bleating about food security while encouraging biofuels to prop up soy, rapeseed and corn prices. Who cares if you’re destroying the earth’s precious farmland at 30 football fields a minute? If you were a big landowner, you’d feel entitled to being paid to do this. That’s what us mugs are here for. Now that the EU even subsidises grouse moors you’d think the gates were wide open. But the money is running out. Half the EU budget goes to farmers, much of it British money going via Brussels to France. The US spends $350 billion a year propping up agriculture in the US, channeling money through farmers to agribiz.

Let’s take a look at who’s eating whom. The potash fertiliser price has halved in the past 3 years, from $450 a tonne to $219. So in Canada, Agrium and Potash, two of the world’s biggest potash producers, are merging in a desperate attempt to keep afloat while they wait for a bounce in price that may never happen. Bayer and Monsanto are both facing plunging sales and profits. Monsanto have the seed and Bayer have the pesticides to go with them. But again it’s desperation. They hope that innovation will save them, but innovation is not something you find in mega corporations.   GMOs are losing support – US farmers never wanted them but were denied choice after Monsanto bought up all the seed companies and forced GMOs down their throats.