The announcement of a possible merger of Bayer and Monsanto has sparked worries by growers about another big merger by imput suppliers. Randy Kron, President of Indiana Farm Bureau, told HAT he will be watching the situation very closely, “As farmers, we always want to see investment in new technology but on the other hand we want to see plenty of competition.” He said he is going to wait before passing any judgement. According to Purdue Ag Economics, the consolidation also provides opportunities. If Bayer is allowed to buy Monsanto, it would create the world’s largest supplier of seeds, traits, and crop protection products. Mike Gunderson, Associate Professor of agricultural economics at Purdue, says farmers are right to be worried, “As an economist, we value lots of good competition There are drawbacks to having only a few large players.”
Gunderson points out, however, that large companies with a wide variety of product offerings will be able to provide better service to the grower, “If these combined companies can offer growers more product integration and technology, they can help producers drive yields and cut costs.” He noted, for example, Bayer is primarily a chemical company but that today growers need integration of chemicals, machinery, and data. He said, going forward, these larger kind of firms may be able to serve the grower better.
Gunderson says, while lower farm income is only a partial driver of this move toward consolidation, that there is a chess game underway where these large international firms are trying to get big enough to compete in a global marketplace, “Particularly big companies like Bayer, Chem China, and DuPont who are able to leverage a skill set they have domestically into new markets around the world.” Gunderson sees this trend of consolidation continuing while, at the other end of the spectrum, consumers are calling for more local foods produced without technology.