Whether it be the lack of a competitive market environment for farmers to sell their products, or fewer choices in the grocery store, concentration within agribusiness affects us all.
Enforcement of federal anti-trust laws has slackened in recent years, with few meaningful investigations into mergers and acquisitions of large scale agricultural producers, suppliers and processors. As a result, substantial consolidation has occurred throughout many areas of the agricultural sector. The commercial seed industry is no exception. This continued consolidation is bad news for family farms.
The global seed industry as it is today began to take shape in the 1990s. During the latter part of that decade, the acquisition of smaller seed companies by larger ones began to pick up speed with the “Big Six” (Monsanto, DuPont, Syngenta, Bayer, Dow and BASF) emerging at the top of the heap.
Since 2008, the top eight seed companies have acquired more than 70 of their competitors. Currently, Monsanto, DuPont and Syngenta control over half of the global seed market, up from 22 percent in 1996.
Cross-licensing agreements, which take place on a regular basis between the Big Six, add another layer of complexity to the issue. These agreements, in which the largest seed companies share genetically engineered traits with one another, do not involve any actual change in ownership.
This means that the modern day seed industry is likely even more consolidated than is reflected by looking only at merger and acquisition activity. Phil Howard, an Associate Professor at Michigan State University who researches food system consolidation, points out that these agreements can be problematic for smaller seed companies.
A big consequence of continued consolidation is that seed diversity will continue to decrease. This means diminished overall seed variety as well as reduced availability of non-patented seed varieties. As industry giants continue to patent seed varieties and genetic traits, farmers have little choice but to purchase new seed each year. Those who save seed are increasingly facing legal consequences and as a result, seed saving practices are rapidly declining.
Over the past few decades, farmers have also had to cope with a relentless increase in seed prices. As heavy consolidation continues within the industry, these increases have become more pronounced.
Just as concerning is that as the largest firms expand their portfolios to include not only seed companies, but pharmaceutical and chemical companies as well, they increase their control across the food system as a whole. Ultimately, continued consolidation means less control for farmers and a decrease in the vitality of rural communities.
Now more than ever, it is essential to continue pushing for improved enforcement of federal anti-trust laws pertaining to agribusiness concentration. Wisconsin Farmers Union applauds efforts by the U.S. Department of Justice to increase awareness of non-competitive practices in the agricultural sector and urges it to prosecute violators of antitrust laws.
Federal and state regulators should revise and reform applicable legislation to ensure fair market pricing and the avoidance of non-competitive monopolistic or oligopolistic market control.
Just this year, Monsanto, the largest seed/transgenic company on the planet, initiated talks to acquire Syngenta, the world’s third largest. This time Syngenta declined. Without putting further pressure on federal and state regulators and Congress to protect family farms from non-competitive business practices, things may play out differently next time.