The Senate Judiciary Committee met Tuesday morning to question corporate executives, industry representatives and antitrust experts on how widespread consolidation would likely affect U.S. agriculture.
The meeting focused on a string of deals that all started in December 2015 when Dow Chemical Company and DuPont agreed to a mega merger worth more than $120 billion.
That deal was followed in February by an agreement between China National Chemicals Corporation and Swiss seeds and pesticides maker Syngenta for $43 billion.
On Wednesday, German pharmaceuticals firm Bayer agreed to a $66 billion deal with St. Louis-based Monsanto.
Policymakers say they are concerned the deals — if approved — would increase costs for American farmers by eliminating competition for seeds and pesticides. They also worry such deals would stifle innovation and leave growers without new technologies to combat climate change or pesticide-resistant weeds.
Those concerns are magnified by U.S. Department of Agriculture projections that have farmer income to dropping to the lowest level since 2009.
“It’s no secret that I’ve long been concerned about concentration and competition in the agriculture sector,” said Republican Senator Chuck Grassley of Iowa during the more than two-hour meeting. “Farmers are unique and their professional involves accepting prices from input providers and commodity markets while hoping for good weather in between.”
Regulators must review each deal to evaluate monopoly concerns before any is finalized.
Policymakers also brought up concerns about intellectual property rights, U.S. relations with China, potential job losses and tax issues.
Executives from DuPont, Dow, Monsanto, Bayer and Syngenta attended the Senate meeting.
In general, the executives said mergers would not hurt competition because they are complementary in nature and bring together different company strengths. They also outlined how deals would drive innovation by strengthening research budgets.
Here are highlights from the testimony given at the meeting:
“As someone who grew up on a small family farm in Illinois, I understand that change can be unsettling to farmers. But our industry is changing — and it needs to — because the solutions we need can only come if companies embrace new technology, increase their investments and accelerate research and development. And that’s why you are seeing the latest round of mergers right now.” – Robb Fraley, Monsanto executive vice president and chief technology officer
“Monsanto is a perfect match to Bayer’s agricultural business, combining complementary skills with limited geographic overlap. Bayer is a leader in crop protection, with historically a greater presence outside North America. Monsanto is a leader in seeds and traits, with historically a greater presence inside North America.” – Jim Blome, Bayer CropScience LP president and CEO
“The proposed mergers occur against a complex industry backdrop, marked by concentrated agricultural biotechnology and seed markets, increasingly high prices paid by farmers for technology, reduced seed choices and growing evidence of flagging innovation. The proposed mergers are likely to substantially lessen competition in markets in the U.S. to the detriment of farmers and consumers.” – Diana Moss, American Antitrust Institute president
“Dow-DuPont, Bayer-Monsanto, and ChemChina-Syngenta would have more than 80 percent market share of U.S. corn seed sales and 70 percent of the global pesticide market. These mergers will result in fewer choices for farmers, higher prices and less innovation. I strongly encourage Congress to continue to examine consolidation and its impacts.” – Roger Johnson, National Farmers Union president
“By combining our complementary strengths such as DuPont’s seed expertise with Dow’s trait development, we will be able to respond faster and more effectively to the changing conditions that impact farmers.” – James Collins Jr., DuPont executive vice president
“In order for the U.S. to maintain its global leadership in agricultural production and technology, companies such as Dow and DuPont must find ways to more effectively and efficiently deliver new technologies and tools to the American farmer.” – Tim Hassinger, Dow AgroSciences president and CEO
“In the U.S., the proposed acquisition of Syngenta by ChemChina should pose no antitrust concerns. Syngenta is an agriculture company and ChemChina is a chemical company, so the two companies do not compete.” – Erik Frywald, Syngenta AG CEO
“[The American Farm Bureau Federation] has had several conversations with the respective companies regarding their plans for research and innovation budgets post-merger. All have indicated the intent to continue funding close to or above where current combined levels are.” – Bob Young, American Farm Bureau Federation official
“With any reduction in the number of major market players in the seed industry, it is imperative that open and competitive licensing of biotechnology traits to local and regional seed companies be maintained.” – Christopher Novak, National Corn Growers Association