By Chris Clayton
DTN Ag Policy Editor
OMAHA (DTN) -- An Iowa farmer and agribusinessman is calling on farmers and others in the industry to push President-elect Donald Trump's administration to block the three major mega-mergers happening in the seed-and-chemical industry.
Bruce Rastetter, CEO and founder of Summit Agricultural Group, issued a news release Thursday saying the mergers "threaten farmers worldwide and should serve as a warning for much-needed government reform." Rastetter added that the mergers "will limit competition, stifle innovative research and stunt job growth -- and will eventually lead to increased costs for farmers."
Rastetter has been a force in both the hog and ethanol industries in Iowa and he also farms in Brazil. Early in the presidential campaign, he held a forum in Iowa specifically to quiz GOP presidential candidates about their views on farm and biofuel policies.
The mergers Rastetter specifically highlighted were Bayer AG and Monsanto, Dow Chemical and DuPont, and the Syngenta-ChemChina merger. All three mergers are pending in different regulatory bodies not just in the U.S., but globally. The Department of Justice antitrust division has not officially weighed in on any of the three mergers. The Syngenta-ChemChina merger was approved last summer by the secretive U.S. Committee on Foreign Investment in the U.S. (CFIUS), though no details were released on whether Syngenta-ChemChina would have to divest of any U.S. assets. It is expected that the Bayer-Monsanto merger would also have to go through the CFIUS process because Bayer is based in Germany.
Rastetter noted in his news release that he is part of the agricultural advisory team for Trump's transition. Rastetter stated he is calling on the new administration to block the mergers while overhauling the patent process for biotechnology.
"I'm encouraged by what I hear from the new administration and its plan to curtail the federal government's over-regulation of agriculture and business -- this should include patent licensing, a system that is detrimental to so many companies," Rastetter said. "These steps, for example, could open the door for smaller, independent seed-genetics companies to compete and bring innovation and jobs back to the farm economy."
And yet, while Rastetter praised the push for less regulation in agriculture and business, he then pivots and argues for strong enforcement of federal antitrust laws. He noted that the mergers would create problems for farmers around the world for years to come. Rastetter cited that he farms in both the U.S. and Brazil, adding that Summit Agricultural Group will open Brazil's first corn-only ethanol plant later this year.
"As a farmer involved in production agriculture in both the United States and Brazil, I have serious reservations about the competitive dynamics that would be created as a result of these mergers," Rastetter said. "It's clear that the motivation behind the mergers is to increase prices and production costs for producers. Simply put -- this would be bad for every farmer on the planet."
Rastetter added that farmers need to voice their concerns to their elected officials and commodity groups. "As evidenced in the recent elections, rural America has a powerful voice," he said. "It's important that it's heard again."
Rastetter could not be reached by DTN for an interview on his comments.
Trump and his team have not commented on the agribusiness mergers. However, Trump also named Andrew Liveris, Dow's chief executive, as head of his Manufacturing Council, which functions as an economic advisory role for the White House.
The mania of agribusiness mergers began with the Dow-DuPont announcement in late 2015 as the companies agreed to a $130 billion merger that is expected to eventually lead to a spinoff agricultural division with seed-and-chemical sales of roughly $19 billion.
Monsanto and Bayer agreed last fall to a merger worth $66 billion that included combined agricultural sales of roughly $25.8 billion globally. Monsanto shareholders recently voted to approve the deal.
Syngenta agreed early last year to a $43 billion merger with ChemChina, a state-owned entity formally called the China National Chemical Corp.
Effectively, with BASF on the outside looking in, the "Big Six" ag seed-and-chemical companies will quickly become the "Big Four."
The National Corn Growers Association wrote the Department of Justice last summer expressing some concerns about Dow-DuPont due to increased concentration in the seed business. "This increase in market concentration does cause us significant concern that seed industry competition could be diminished as a result of this merger," NCGA wrote at the time. "We would ask the department to carefully evaluate the seed market impacts to determine whether remedies should be applied that could ensure healthy competition within the corn seed market."
The National Farmers Union, American Antitrust Institute and Food & Water Watch also sent a joint letter to the Justice Department urging the Obama administration to challenge the merger in court. The groups criticized the prospect of allowing any of the largest seed and ag chemical companies to merge.
The European Union Commission is also looking at all three mergers at the same time rather than examine each separately. The EU had already raised some objections to the Dow-DuPont merger as well.
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
(AG/BAS)
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