Wednesday, January 10, 2018 Principles For Progress

The following commentary is by North Carolina Farm Bureau President Larry Wooten, first published in the Winter 2017-18 issue of NC Field and Family.

Mergers showcase the need for competitive choice

Progress has been a guiding principle of farming since before North Carolina’s first Commissioner of Agriculture Leonidas L. Polk established Progressive Farmer magazine in 1887, after serving in office.

With each new season of the year, it seems there is also a huge new merger or acquisition being announced in the name of progress. With the dizzying pace of consolidation in agribusiness, it seems appropriate to consider both sides of this double-edged sword. Is consolidation beneficial to farmers and consumers? Or do these legal strategies lessen competition to the point where too many options vanish?

According to industry analysts, these deals may result in increased efficiencies, crop yields and time savings, so we’re typically told this merger or that acquisition is ultimately for the benefit of farmers and consumers. Yet, is consolidation the only way, and the best way, to achieve progress?

What makes our economy prosperous? Is the answer independent, strong small businesses? Or, is it the consolidation of large corporations? Like most things in life, the truth is usually somewhere in the middle. Ideally, we’d like everyone to be prosperous. But one thing is certain: Farmers and consumers need choice!

There should be a balance between competition and efficiencies in the marketplace. Mergers and acquisitions decrease the number of sellers and lessen choice. By industry accounts, synergies resulting from consolidation may lead to new discoveries and products that could possibly benefit farmers and consumers.

Dow and DuPont Pioneer’s merger and ChemChina’s acquisition of Syngenta are just two of the major deals completed recently. Bayer’s proposed acquisition of Monsanto is expected to be approved by regulating agencies and finalized in early 2018.

The circuit breaker for consumers in all of these mergers and acquisitions is an efficient and strong regulatory system that ensures abundant competition, which historically has resulted in great technological advancements. Every great leap forward in industrial precision practices tends to bring with it monopolistic conditions. Monopolies reduce choice and hurt farmers, consumers, and ultimately, the U.S. economy. Divestitures often occur to ease these concerns. DuPont sold part of its crop-protection business to appease regulators. Bayer may need to divest some of its seed and herbicide lines.

National and international mergers continue to threaten the competitive choices available in the agricultural marketplace. Farm Bureau is watching and ready to provide any appropriate assistance to help ensure the continuation of an adequately competitive marketplace for farmers and consumers!