For thousands of years, farmers have been breeding, saving, replanting, and freely exchanging seeds. In the past century, breeders developed new crop varieties for farmers around the world, resulting in plants adapted to various cuisines, geographical regions, soil types and weather conditions. However over the last few decades, just five companies have acquired the majority of the world's seed supply: Monsanto, DuPont, Syngenta, Dow and Bayer. In the 1980s, appeared the first patents on seeds that dramatically increase use of pesticides the companies also sell, and declining choice of seed varieties. Patents ensure higher profits from higher seed prices by allowing the companies to outlaw thousands of farmers that sued for seed-saving.
Controversial consequences of the merger
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Now, two of the world’s largest pesticide-seed companies may merge into a still bigger entity. The union of Monsanto’s seeds and Bayer’s herbicides would perfectly position the merged giant to fully exploit a highly profitable cycle of increasing herbicide use and weed resistance. Unfortunately, toxic pesticides, pollinator decline and the illegalization of seed-saving are all prominent features of agriculture in America today, thanks to enormous global corporations that have gained control of the world’s seeds. Bayer offered $62 billion to acquire Monsanto, and while Monsanto rejected this offer, it remains open to a better one. If all go through, the deal would create a global giant in agriculture technology touching much of global food production through the development of seeds and pesticides.
The consolidation of two big industry players may also limit farmer choice and bargaining power, with increasing seed prices expected to be passed on to the grocery aisles. There’s already a deep and widely held public suspicion of Monsanto, which has been so battered by controversy that it dedicates a section of its website to allegations that its genetically engineered seeds are harmful, that the company is malicious in its dealings with farmers and more. Genetic engineering is often the target of health concerns, but the real danger is how it impedes biodiversity. That concern also translates to weather variations, a factor that has become even more unpredictable with climate change. Seeds are sold with a combination of traits, including being more disease-resistant, productive and so on. These traits prevent farmers from customizing to their specific geographies and other particularized concerns and forces them to pay for traits they don’t require. And obviously, higher seed prices translate into higher consumer prices.
Monsanto wants farmers to pay a royalty to plant any seed that descended from a patented original. The big seed companies use a strategy to attack seed savers that consists of three stages: investigations, coerced settlements, and litigation. Just in the U.S., Monsanto has sued hundreds of farmers and small farms businesses for alleged seed patent violation.
Opposing groups united against Monsanto
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Last week, dozens of environmental activist groups, farmers, and sustainable food organizations joined forces at the COP21 Paris to announce that Monsanto will face international tribunal over crimes against humanity and the environment. It is set to take place in October of 2016, on World Food Day. The effort already seems to be receiving resistance from corporate media. The announcement took place at the climate summit, because they think that Monsanto is a major contributor to anthropogenic greenhouse gas emissions, the depletion of soil and water resources, declining biodiversity, species extinction, and the displacement of millions of small farmers worldwide. “The Tribunal will rely on the ‘Guiding Principles on Business and Human Rights’ adopted at the UN in 2011. It will also assess potential criminal liability on the basis of the Rome Statute that created the International Criminal Court in The Hague in 2002, and it will consider whether a reform of international criminal law is warranted to include crimes against the environment, or ecocide, as a prosecutable criminal offense, so that natural persons could incur criminal liability.”
Another bidder for the merger
Adam Greene CPA knew that Bayer could face a rival for the $62B Monsanto takeover in Hugh Grant, chairman and CEO of the St. Louis-based seed and Pesticide Company. Mr. Grant said in a Wednesday statement he's held recent talks with representatives of both Bayer and "others regarding alternative strategic options." The possibility of a new contender against Bayer came as Monsanto reported a $717 million third-quarter profit, or $1.63 a share. Both financial measures fell below Wall Street forecasts. Despite the downbeat financial news, Grant's statement about the takeover talks sent Monsanto shares closed 2.4% higher at $103.52 Wednesday. Bayer, whose shares closed virtually unchanged, declined to discuss the comments.
The European Union announced plans for a close review of the potential Bayer-Monsanto deal to create the world's largest seed and pesticide business. For now, two European Parliament members from Germany oppose the deal. The review would likely examine the transaction's potential impact on prices, the diversity of available seed products as well as research. It must strictly and impartially apply European merger control rules. Also, European Parliament member Martin Häusling has warned that a Bayer takeover of Monsanto would leave the European Union's vegetable seed market in the hands of just four companies.