The Rising Monopoly of Monsanto-Bayer
Monsanto was an agrochemical and agricultural biotech company established in the US that became a large producer of GMO crops, with their main GMO crop having been corn. Monsanto was bought by Bayer, a German multinational pharmaceutical company, in late 2016 for $63 billion dollars. This deal was approved in early 2018 by the European Union and the US. This merging of Monsanto-Bayer, along with Monsanto’s patent of their kernels, have resulted in the rise of a near monopoly of Monsanto-Bayer in the agricultural industry and the demise of smaller farmers and companies.
Prior to its merging with Bayer, Monsanto has a history of suing small farmers and enforcing usage of Roundup herbicide in the agricultural industry, tactics through which it increased its position as a mega-corporation. Towards the end of 2012, Monsanto’s profits approximately doubled to a total revenue of $2.94 billion as a result of the rising price of Roundup, market hegemony in the US, and especially expanding markets in Latin America. Moreover, Monsanto eliminated competition from smaller farmers in US industries through the exploitation of Monsanto’s patent on transgenic corn, soybean and cotton. Monsanto was under investigation by the US Department of Justice until the end of 2012 due to its violation of anti- trust laws by engaging in activities that limit competition with other biotech companies.
Likewise, Monsanto had filed 144 lawsuits against family farmers and settled 700 cases out of court between 1997 and 2010. Those subject to Monsanto’s lawsuits include farmers who used Monsanto seed and violated the licensing agreement and farmers whose seeds were contaminated with Monsanto GMOs without their knowledge. The Organic Seed Growers and Trade Association (OSGATA) et al v Monsanto was a case that dealt with the farmers who unknowingly had contaminated seeds that would then be used by Monsanto as a pretext to sue them. OSGATA et al v Monsanto represented 31 farms and farmers, 13 seed businesses and 31 agricultural organizations that represented over 300,000 people and 4,500 farms or farmers. A declaratory judgement was requested by plaintiffs in order to guarantee that Monsanto did not have the right to sue the plaintiffs for patent infringement.
OSGATA having stated that many small farmers have found their efforts to grow specific crops futile is indicative of the progressing monopolization caused by Monsanto’s pursuit of patent infringement lawsuits. Despite these efforts, federal courts still have a history of defending the right of Monsanto to capitalize off of a patenting system that decimates the market, resulting in further abuse of this action by the mega-corporation. An example of this is the Farmer Assurance Provision of the 2013 Consolidated and Further Continuing Appropriations Act, which individuals such as farmers who were sued by Monsanto call the “Monsanto Protection Act” due to the protection it provides Monsanto and its affiliates from lawsuits. Another factor that is weighed into the expanding hegemony of Monsanto is their potential development of its form of a marijuana seedstock, following the legalization of medical marijuana and recreational marijuana in numerous states, since marijuana cultivation has become a significant industry. Monsanto has invested millions of dollars in RNAi technology, which would be used to manipulate characteristics such as the color of a plant or to make a plant digestible to insects, as well as to make more potent marijuana plants through this genetic modification.
The merging of Monsanto-Bayer represents the gradual development of a monopoly. A monopoly refers to a corporation or other entity that dominates a sector or industry. According to the Federal Trade Commission (FTC), a corporation has a monopoly when it significantly restricts competition through its market power and gained that position through improper conduct. In 2016, Liam Condon, the head of Bayer’s crop science division, stated that Bayer will become the sole shareholder of Monsanto. He furthered that the joint mega-corporation had to continue independent operations for a two-month period in 2016 as Bayer sold some parts of its business to the chemical company BASP. Following that time period was when Bayer was able to access more confidential information about the business operations of Monsanto, which Condon stated had to be done before changes such as dropping the Monsanto name could be made. Condon also elaborated that Bayer had estimated that it could realize $1.2 billion in “synergies” from the merger within four years, with $200 million of this quantity stemming from project sales and $1 billion linked to overlapping infrastructural costs.
The near monopoly of Monsanto-Bayer on the agriculture industry obliterates market competition and leaves farmers with virtually no other choice but to rely on GMOs, which threatens the global food supply and environmental health. Monsanto-Bayer is estimated to receive around one-quarter of global spending on seeds and pesticides, which also implies a market share of over 61 percent of global revenue and a hyper-concentration of the seed, trait and pesticide marketplace.
The merged mega-corporation is implementing two essential strategies in order to increase its economic hegemony. The first strategy is to include a central “digital agriculture” platform named FieldView in its portfolio. This software would provide commercial farmers with actualized data on climate patterns and soil and irrigation conditions monitored by Monsanto-Bayer’s in-field sensors, meters and satellites. The platform is meant to remain open at first to allow developers to create their own programs; however, it will incorporate a paid subscription once it becomes vital to farming. The second strategy details that the supply chain control would implement the new digital platform with seeds and other agricultural chemicals, which would make farmers even more reliant on Monsanto-Bayer products. Monsanto already practiced this technique before it became centralized as a Monsanto-Bayer strategy, given that the Monsanto Roundup tolerance is a seed trait that is highly sought after, so Monsanto obligated farmers to purchase Roundup Ready seeds along with premium-grade Roundup.
Monsanto-Bayer continues to expand its presence in crop cultivation and agriculture, which recent data proves. Philip Howard of Michigan State University published his first version of his notable seed industry consolidation chart in 2008, detailing that six corporations dominated most of the brand-name seed market and were beginning to form new partnerships with competitors that threatened to reduce competition. Following 2016, Howard has updated the seed chart (image below), illustrating that what was formerly regarded as the Big 6 (Monsanto, DuPont, Syngenta, Dow, Bayer and BASF), has been reduced to a Big 4 headed by Bayer and Corteva, the merged company of Dow-DuPont, followed by ChemChina and BASF. The Big 4 now possesses over 60 percent of global proprietary seed sales, which indicates how antitrust laws and oversight by the US Department of Justice (DOJ) have failed to prevent the increased hegemony of said mega-corporations in the agricultural industry.
Howard began gathering data on seed industry ownership in 1998, which was the year when the agribusiness mega-corporations increased their hegemony by purchasing smaller firms to compile more intellectual property rights. By 2008, Monsanto’s patented seeds and crops were planted on 80 percent of US corn acres, 86 percent of cotton acres and 92 percent of soybean acres and these numbers continue to rise. According to economists, the competition of an industry is diminished when the concentration ratio of the top four firms is at least 40 percent, which the Big 4 exceeded given that before they merged from the former Big 6, they had controlled over 60 percent of the global seed market. According to Howard’s chart, the merging
of Dow and DuPont cost $130 billion and produced three companies in total, including the new agricultural firm Corteva. The merging of ChemChina and Syngenta cost $43 billion and enabled
China to add its second company. The merging of Bayer and Monsanto cost $63 billion and was the second largest merger of 2016; as of the merging, Bayer has dropped the Monsanto name. Despite the fact that Bayer sold some of its seed divisions to BASF in preparation of merging with Monsanto, the control of the market by mega-corporations has only been augmented.
Although it is argued by some that increased monopolization of industries produces more jobs and boosts innovation, this is not the case. In December 2018, Bayer stated that it would cut 12,000 jobs, which makes up approximately 10 percent of its global workforce. Seed industry corporations have a history of providing less choices and higher prices for farmers in part through the implementation of overtly protecting their IP rights, which results in less innovation and increased restrictions on how seeds are utilized and exchanged, such as seed saving and research purposes. These restrictions make a significant amount of plant genetics inaccessible to public researchers, farmers and independent breeders, which also limits seed diversity in the market. According to data from the US Department of Agriculture, near-monopolization of industries results in less innovation due to a limited amount of companies. An instance of this is a US Department of Agriculture study published in February 2004 (image on next page), which demonstrates that private research intensity on GE varieties of corn, cotton and soybeans dropped or were reduced in the late 1990s. This coincided with the time period when agribusiness giants merged with smaller firms to increase their intellectual property rights.
Ultimately, the merging of Monsanto-Bayer has resulted in the rise of one of the four largest global mega-mergers of the decade and the formation of a near-monopoly in the agricultural industry. This was developed through the subordination of small farms, elimination of market competition, patenting of GMO kernels, and the filing of lawsuits against farmers who unknowingly used GMO seeds. Furthermore, the Principles of Analytic Design were employed to make this case, seeing that the text and visual displays made comparisons among mega- corporations and their hegemony and related seed data; causality was employed because the motives as to why and how Monsanto-Bayer rose to power was explained and analyzed; multivariate analysis was displayed since several variables were incorporated in determining how Monsanto-Bayer incremented its power; evidence was integrated and documentation was consistent; the content was of quality and relied on credible sources and primary documents and statistics.
By Valerie Reynoso
Source: Counter Punch