By Maria Curi | firstname.lastname@example.org
In his role as Senate Judiciary Committee chairman, longtime Iowa Sen. Chuck Grassley is holding a committee hearing today regarding Monsanto and Bayer’s proposed $66 billion merger and its potential impact on the price of seeds, chemicals, and fertilizers for farmers and commodities prices for consumers.
According to Bloomberg, the consolidation of the Monsanto and Bayer will create the biggest supplier of seeds and pesticides in the market generating $26 billion in revenue from agriculture and shrinking the sector’s global players from at least six to only four.
“Iowa farmers are concerned about rising input prices in a struggling agriculture economy that doesn’t look to be turning around anytime soon. Commodity prices are already at or below the cost of production,” Grassley said in a prepared statement on Sept. 16. “The consolidation trend we’re seeing in the seed and agrochemical industries has all of us concerned that less competition will mean increased prices for seeds, chemicals and fertilizers for farmers.”
The proposed merger of the two giants is the latest in a trend of big ag mergers, including Dow and DuPont’s consolidation and ChemChina’s purchase of Swiss company Syngenta.
Grassley will meet with the Justice Department, the Federal Trade Commission, and the Department of Agriculture at 10am to analyze the growing market concentration.
Bayer, a German company, is mainly a producer of pharmaceutical and health care products, while American company Monsanto is a seed and crop chemical company. Bayer also dabbles in agribusiness, and the two companies’ overlap in the markets for cottonseed and canola seeds is raising concerns over limitations on product choices for farmers and consumers.
“We are limiting the number of companies and that does affect competition,” Chad Hart, a Professor of economics at Iowa State University and crop markets specialists said. “But whether costs for farmers and consumers will increase can’t be known right now and will depend on what government regulations are set in place.”
Because the two companies will have to obtain approval from 30 regulatory jurisdictions, they said the biggest deal of the year is not expected to close until the end of 2017.
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