Engineering Seeds and Digging Into Global Markets

Summary

The Monsanto-Bayer merger caps off three rounds of mega-mergers among global chemical corporations.  These companies are consolidating and jockeying for better control of their market share of bio-technologies, agricultural seeds and agricultural data.

The growing of food has multiple political, social, scientific and environmental considerations; arguably the control of the seed value chain is key. Farming policies can either weaken or strengthen community-based farming systems and livelihoods decision. Much depends on agricultural sector policies and leadership among African countries that strikes the right balance of considerations. The tensions among these multiple priorities are simply side-lined when decisions are made based on deal-making between powerful agri-commercial interests and weaker nation states.

African rural economies that are often strapped for financial resources, have a legacy of powerful landed interests, and a citizenry unable to hold governments accountable could be cornered into farming policy-making that is short- sighted and that buys into the value proposition of “economic development” through foreign direct investments in the agricultural sector.

When corporate market dominance sells their agenda to national governments as the only real answer to either climate change or commercial agriculture (or both); this could put at risk family-run farms, especially if they are not clear about their own food needs and agro-ecological priorities. Both family-run farms and commercial farms need to fully assess the political economy implications of competing hi-technology seeds, pesticides and fertilisers marketed by mega industry.

There needs to be a strategic counter-movement to invest resources in applied research in local seeds, in farmer-learning to grow quality seeds and in farmer seed distribution channels within and among African economies. The success of a strategic counter-movement rests on how informed and organised farming communities can be to hold their national governments accountable, to shift away from external input-dependent farm production methods, to better understand the exact implications and impacts of chemicalised agricultural systems and to be supported in cultivating alternative and diverse local food systems.  Even more will depend on how active African rural women become once they fully realise both the potentials and dangers of chemical-intense farming, since it is likely that they stand to lose most if communal and collective farming and seed management systems are undone.

Introduction

“These mergers are a clear sign that companies that invest in high-tech seeds and chemicals are going through a rough patch, and they think consolidation is their way out of it.”[[i]]

Mainstream politics, policies and business deals that underpin today’s agricultural investments seem to be at odds with the kinds of farming systems considered to be optimal for feeding the world; for species biodiversity; for gender equity in the agrarian sector and for climate-sensitive farming.

Taking advantage of present policy contexts in both the United States of America and the European Union, dodging environmental and safety regulations and undermining policy-making based on scientific evidence, agro-chemical industries are deepening their “unholy alliances” with nation states in their pursuit of profits and market share – holding governments to ransom to chemicalised farming systems and making profit-motivated cases for the use of chemicalised seeds and inputs as assurances for managing unpredictable seasons and climate change.

Chemical giants jockey for global market share of seeds, pesticides and fertilisers

“If the Bayer-Monsanto merger is approved, the new merged company will control almost 30 percent of the global commercial seed market and 25 percent of the agrochemical market – making it the world’s largest supplier of seeds and chemicals. In South Africa, it would control about 30 percent of both markets. Already today, Monsanto is one of two companies in South Africa that employs 80 percent of the private sector breeders in maize and 100 percent of the breeders in soybean and sunflower breeders.” – African Centre for Biodiversity

Bayer, BASF, DuPont, Dow Chemical, Monsanto and Syngenta are some of the dominant chemical companies in the world [[ii]]. Since 2016, they have been carving up their market shares through strategic mergers and consolidations [[iii]]. Between them, China National Chemical Corporation [[iv]], Syngenta and DuPont-Dow can control about 60 percent of the global patented seed market and 64 percent of the agrochemical market.

While the ink has not dried yet on the proposed Monsanto-Bayer merger – which is the last of three big agricultural transactions that are reshaping global farming; the merger will happen – it is not a matter of if – but when. [[v]]

The global commercial seed market has an estimated value of about US $53 billion and is expected to grow to US $113 billion by 2020[[vi]] with the African market contributing less than two percent to the current value. Given the extent of arable land across the African continent, this presents a potentially lucrative market, but many obstacles have to be overcome to carry out a sustainably profitable business. Some of the bigger ones include lack of infrastructure, specialised knowledge, institutional arrangements and political bureaucracy.

The Bayer-Monsanto-BASF shuffle

“Every seed starts with the same potential. Making the performance of the seed count is what BASF Seed Solutions is all about. From today’s most advanced biological crop input tools, inoculants, functional coatings, colorants as well as traditional seed applied crop inputs, to tomorrow’s innovations, our holistic approach enriches the true potential of the seed from planting to harvest.” BASF Website [[vii]]

In May 2016, Bayer proposed to buy US seeds company Monsanto for US $62 billion. Monsanto rejected the acquisition bid, seeking a higher price. Bayer’s next offer of US $66 billion was accepted and in October 2017, Bayer announced it would sell its seed and herbicide businesses to BASF for €5.9 billion (US $7 billion). [[viii]] On 21 March 2018, Bayer AG cleared one hurdle for its takeover of Monsanto Co., winning European Union approval for the deal after agreeing to bolster BASF by selling vegetable seeds, pesticides and digital agriculture technology to the world’s largest chemical company. [[ix]]

Very critically, both Bayer and Monsanto are also engaged in big data projects in the agricultural sector. One of Bayer’s prime interests in acquiring Monsanto is because it owns The Climate Corporation, which has the most powerful data science engine and the most extensive field research network. In addition, Monsanto has its foot in several important Genome Editing initiatives: it owns one of the two existing Clustered Regularly Interspaced Short Palindromic Repeats licenses and has started two joint ventures on precision agriculture with the agro-tech giants CNH and AGCO. [[x]] BASF will license a copy of Bayer’s digital agriculture operations and research pipeline. This will allow “BASF to replicate Bayer’s position in digital agriculture” in Europe and ensure the race “in this emerging field remains open.”[[xi]]

Meanwhile BASF is lined up to buy Bayer’s global broad acre [[xii]] seeds and traits, including its research and development operations. The divestment plan covers oilseed rape, cotton, soybean and wheat as well as Bayer’s research on genetically modified traits. BASF will also purchase Bayer’s glufosinate assets and three research lines for herbicides, designed to replace glyphosate, a weed killer that some European countries are moving to ban.

Implications for access to quality seeds

“A good crop starts with quality seeds. Sufficient access to quality seeds of improved varieties is one of the many constraints smallholder farmers face. Improving access to seeds for smallholder farmers is thus an essential part of the solution to global food insecurity.” Access to Seeds Index Report 2016[[xiii]]

What are the implications for farming communities and the agricultural sector in African countries? Could the power of this merger sentence the African continent to a form of farming that is chronically dependent on imported input, that is inorganic, not very climate sensitive and potentially destructive to peasant farming communities? Can farming communities afford to be complacent or complicit in this intensification of farm technologies? Does the existence of one threaten the other? Can farming communities benefit from agricultural goliaths in their backyard?

The answer is mixed and one that begs for clear resolve and commitment from national leaders. On the one hand, access to quality seeds is clearly one important factor for adaptive and sustainable farming by both commercial producers and small-scale sustenance farming. Best practices in developing quality seed and involving farmers in localised science of seed promotion is critical.

On the other hand, value chain commodity markets are frequently held to very specific seed requirements, and these seeds often come bundled with finance, insurance, pesticide and fertiliser inputs, and some “guarantee” of a market for the product.  By opening the door to big tech seeds purposefully imported in order to feed an international market, governments may deliberately or unwittingly be closing the door on local quality seed production and seed sovereignty.

Building a robust local seed sector

We need to go beyond farming systems and talk about the localisation of food systems, including the strengthening of local and social capital among both men and women. Strengthening of whole communities (or communities in their wholeness) involves farmers in all their diversity coming together to determine their farming, food and business agendas.

Many African governments are committing to “commercial farming” policies, which support large-scale production, and welcome investments in full-scale technological approaches to farming. The Comprehensive Africa Agriculture Development Programme is the main policy backdrop for “agricultural transformation, wealth creation, food security and nutrition, economic growth and prosperity for all”. [[xiv]] When it comes to agricultural seed policy – these usually serve the needs of large-scale commercial farmers, with a dominant focus on hybrid, improved and genetically modified seed.

The Alliance for a Green Revolution in Africa (AGRA) website specifically mentions its work in boosting seed production by investing in local African seed companies.  The question is what kinds of seed production is being prioritised, is it primarily for export markets and how are non-commercial or family-run farm able to access this seed, manage and be responsible for the growing of quality seed.  Some reports [[xv]] suggest that AGRA distributes genetically modified seed and makes it difficult to use indigenous seeds and practices, potentially undermining the very business base of family farms.

The Access to Seeds Index [[xvi]] evaluated and ranked the world’s leading global field crop and vegetable seed companies in four regions on their policies and practices to improve access to quality seeds for smallholder farmers in developing countries. Worldwide, over 2.5 billion people manage 500 million small farms and in Africa alone, smallholders produce 70 percent of the continent’s food supply. To increase production, improve nutritional quality and adapt to climate change, these farmers need access to appropriate and high quality seeds. At present, the private sector plays a minor role in reaching African smallholder farmers – only 2.5 percent of seeds used by smallholder farmers in sub-Saharan Africa come from seed companies.  There is clearly a market need for quality seeds, and for organic seeds.

A commercial agriculture agenda, while important, needs to also commit to the following:

Africa should grow organic

Farming systems that are rooted in local customs and contexts, that use less energy, that work in symbiosis with local flora and fauna, that practice integrated pest management and nurtures soil health can be considered organic. Organic farming is not directly and specifically supported by agricultural policy in most African countries, and sometimes it is actively hindered. [[xvii]]

A United Nations Environmental Programme-United Nations Conference on Trade and Development report “Organic Agriculture and Food Security in Africa”[[xviii]] compiled research over four years – 2004-2008 drawing from results in Uganda, Kenya and Tanzania.  It states categorically that the reasoning for “chemical / industrialised farming can improve food security” are unjustified – and goes on to suggest that organic systems address fairness perspectives as well as health and ecological sustainability. The research submitted several cross-cutting conclusions – including:

1. Organic farming is not directly and specifically supported by agricultural policy in most African countries, and sometimes actively hindered. An enabling policy environment is critical to support and scale-up organic agriculture and its positive impacts;
2. More information on agro-ecological technologies is needed, this calls for a shift in emphasis in research and science budgets and for better linkages between science farmers and practice;
3. Organic farming builds on and stimulates the formation of human, social, financial, natural and physical capital;
4. The rise in fuel prices at the time made the case for less dependence on energy and external inputs even more critical;
5. Certified organic production can undoubtedly reduce poverty among farmers and in this way contribute to food security;

These findings are closely aligned with and further validate the findings and recommendations of the International Assessment of Agricultural Knowledge, Science and Technology for Development [[xix]] report released in 2008.

When farmers are asked

“This survey underscores what we’ve been hearing from our farm family members for decades – that overwhelming consolidation has substantially eliminated competition in the marketplace. Four or five firms dictate the prices that farmers pay for their inputs. Family farmers deserve fair prices, choices in what they plant, and the type of market competition that incentivises firms to compete and innovate for their business. A Bayer-Monsanto merger stands to move each of these factors in the wrong direction, and that is away from competitive markets. Our survey makes it pretty clear that farmers want the merger blocked.”—Roger Johnson, President of National Farmers Union, USA

An unprecedented poll of farmers’ opinions [[xx]] on the Bayer-Monsanto merger was conducted between 26 January and 12 February 2018 by a coalition of farm groups who collected 957 responses from farmers in 48 states. Cumulatively, the farmers who responded to the poll cultivate close to two million acres, and represent all sectors of farming.

• 91.9 percent of farmers are concerned that the merged company will use its dominance in one product to push sales of other products (79.6 percent very concerned/12.3 percent somewhat concerned);
• 91.7 percent of farmers are concerned that Bayer/Monsanto will control data about farm practices (79.5 percent very concerned/12.2 percent somewhat concerned);
• 89.0 percent of farmers think the merger will result in increased pressure for chemically dependent farming (77.1 percent very concerned/11.9 percent somewhat concerned).

The poll also found a high level of concern amongst farmers surveyed that the merged company will control data about farm practices, will increase prices, diminish quality, choice and seed varieties including availability of regionally adaptive seed, which farmers identified as critical given increasing climate variability.

The poll was fielded by a coalition of farm groups, and a white paper, prepared by the Konkurrenz Group, examines why the United Sates Department of Justice’s Antitrust Division should not accept Bayer’s proposed divestiture and behavioural remedies. Relying on the survey findings and other evidence, the white paper examines why the likely complex behavioural and structural remedies will not likely restore competition in the seed, trait, and pesticide industries.

“This merger will further concentrate ownership of our seed supply, inevitably leading to fewer seed variety options in the marketplace, less genetic diversity in our fields, and higher seed prices for farmers,” said Kiki Hubbard of Organic Seed Alliance. “Seed prices have nearly quadrupled in the past 20 years, even though yield and the prices farmers receive for their crops have not. History shows us that mergers of this magnitude also reduce rather than inspire innovation. Mergers of this magnitude therefore affect all farmers, regardless of how they farm, where they farm, and what they grow.”

A warning to African farmers

Justus Lavi Mwololo [from the Kenya Small-scale Farmers Forum] said: “Farmers, we have to put forward our agenda.”

The results of this (American) poll serve as a warning to African farming communities and to agricultural policy-makers in African nations. Farming men and women, communities in their wholeness, need to work together to define their agenda and to take decisions on their approaches to farming, food and natural resources for generations to come. Those rural communities whose ties to ecology and soil remain strong and secure – will be best equipped to reclaim their knowledge, their local economies and rebuild sustainable societies.

* Nidhi Tandon is Founder and Executive Director of Networked Intelligence for Development

Endnotes