The Planted Row: Forgetting the lessons of history
For years, my family has planted the Merit sweet corn hybrid. It was released decades ago by Asgrow. It performs well in the South, it has good flavor, it silks easily, and customers ask for it by name.
The only problem is that we can’t plant Merit sweet corn anymore. In the ’90s Monsanto acquired Asgrow, and they have since discontinued the sale of Merit seed.
Merit is a non-GMO hybrid. There are other non-GMO hybrids available, but they don’t perform as well in north Mississippi. My family now has to pay roughly two-and-a-half times what they used to in seed costs for a GMO sweet corn that grows well in that climate. The new seed comes with plenty of bells and whistles, but we don’t really need them — yet, my family will have to pay for them just the same.
This sweet corn seed-sourcing dilemma is pretty small potatoes, but it is indicative what’s been happening in the business of agriculture. Companies merge. There’s less competition in the market. Input costs go up.
With that in mind, I’m more than a little nervous about the prospect of a merger between Bayer and Monsanto. The U.S. Department of Justice Monday approved Bayer’s purchase of Monsanto. This comes on the heels of two mergers between Dow and Dupont, and Syngenta and ChemChina.
Proponents of this merger say that it will help fuel the innovation necessary to feed the world’s growing population. I’m not sure I buy that argument. These are huge corporations, and they currently have no problem with innovation.
According to a Business Insider article, Farmers Business Network has demonstrated a correlation between a brand’s market share and the brand’s corn seed price. This means the greater the market share a hybrid has, the higher the cost for the seed.
What is the point of these mergers if not to get rid of the competition and increase the companies’ market share?
Given the trend, my guess is that you will pay more for inputs after the merger. You’ll need to produce more bushels per acre or farm more acres to take advantage of greater economies of scale if you want to maintain your profit margins.
Our country has faced the problem of monopolies and massive industry consolidation before, more than a century ago. Small railroads were being gobbled up by large railroad barons, and manufacturing companies were being grouped together. These new huge corporate entities were known as trusts, and they wielded enormous economic and political power. This power came at the expense of hardworking Americans.
Thankfully, we decided to do something about it. In 1890, we passed the Sherman Antitrust Act, which became the bedrock of U.S. antitrust laws. It was introduced by Sen. John Sherman, who said, “If we will not endure a king as a political power, we should not endure a king over the production, transportation, and sale of any of the necessaries of life.”
For the merger of Bayer and Monsanto to go forward, the companies had to negotiate a deal with the Department of Justice to squeak by our antitrust laws. This deal includes the sale of some of Bayer’s seed and treatment assets. Yet, even after this sale, the combined company will dominate more than a quarter of the world’s seed and pesticides market.
With every deal like this one we weaken our antitrust laws, which were designed to ensure a healthy competition in our markets — the cornerstone of capitalism.
We’re forgetting the lessons of history, and so we’ll be doomed to repeat it.
Who will pay the price?
This time, it looks like you will.