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Friday, 23 September 2016

Will agriculture mergers hurt R&D?

The world is staring down the barrel of a veritable “tsunami” of mergers in the agricultural space, according to recent news. Biotech seed and agrochemical giant DuPont is looking to merge with Dow. Bayer has agreed to buy Monsanto, and Chinese giant ChemChina is nabbing Syngenta. “If these mergers all go through, the three biggest agribusinesses would sell 59 percent of the world’s patented seeds and 64 percent of all pesticides,” according to Vox. And while M&A might boost short-term profits, time and time again we’re told that mergers stifle competition and, in turn, innovation if they don’t fail outright. In the agiri-business, that means no more “innovation needed to help farmers keep growing enough food to support a world population that will soon reach 9 bn” and develop seeds resistant to resistant to pests. Harvard Business Review came up with some hard proof that in August that, at least in the medical field, mergers certainly hurt innovation.

(The story piqued our interest as Egypt tussles again and again with ergot levels in wheat that resulted in a short-term boycott by global traders until we reversed the requirement at week’s end. Turns out, there’s work being done on creating ergot-resistant wheat. Plant researchers have identified sources of genetic resistance, but development of a completely resistant strain is still “a ways down the road,” according to Jim Menzies, a phytopathologist with Agriculture Canada.)

In fact, “superstar” companies are killing competition — and “using the darker arts of management to stay ahead” across in nearly every industry, according to the Economist in “The giant problem.” The ‘newspaper’ warns that concentration (and the tax practices to which it leads) could be do as much damage to the current world order the backlash against the industrial revolution was during its time.

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