11 September 2016 - Mergers, Good or Bad?

There is a question that comes my way more frequently these days. The question is this, “Are the mergers taking place in agribusiness beneficial for agricultural producers?” I can’t answer that question because I can see concerns and reasons on both sides of the question.

From a farmer’s standpoint, I understand their concern that merging companies mean fewer companies in business to serve American agriculture. That means less competition which, very often, could result in higher prices as you have nowhere else to go to get the products you need for a global agriculture.

In addition to that, there is the concern over foreign company ownership of American companies . . . Asian - based Chem China and Syngenta, European - based Bayer and Monsanto. Will that mean they won’t have to play by American rules; instead, will they play by whatever rules exist in their countries.

On the other hand, I realize it does take billions of dollars and years, perhaps decades, to research and create new products and then get them approved by the various government agencies before you can get them wto market. Maybe bigger companies with more dollars will have better success and be able to do that without raising the price of the product to American farmers.

I guess the jury is still out and you, the agricultural producers, will ultimately decide. As we watch the various mergers, we will learn if less competition means higher prices in the technology world of agriculture.

One thing is certain, several government agencies, particularly the Justice Department , will take a hard look at proposed mergers and what they could mean to competition and prices for America’s agricultural producers. The National Farmers Union is the first farm organization to call for a meeting with members of Congress and Secretary Vilsack to express its concerns on the issue.

We have seen mergers take place in every segment of the American economy over the past decade, so agriculture is not alone in merger activity. Is it good or bad? You decide.

My thoughts on Samuelson Sez.