Following European Union approval of the proposed merger between Dow Chemical Co. and DuPont Co., National Farmers Union (NFU) is calling on the Trump Administration to block the deal. The merger, if approved by the U.S. Justice Department, would create the largest biotechnology and seed firm in the U.S.
“The reduction in competition that would be wrought by a Dow-DuPont merger will result in less innovation, higher prices, and less choice for farmers,” said NFU President Roger Johnson in a letter to President Trump. “Given the damaging and lasting effects this merger will have on family farmers and rural America, we urge you to oppose this merger,” he said.
Johnson noted that the Dow-DuPont merger occurs amidst a massive wave of consolidation in the agricultural inputs sector. The combination of the two companies, coupled with the concurrently proposed mergers of Bayer-Monsanto and ChemChina-Syngenta, threatens to limit major players in the agrichemical and seed sectors to just four companies.
And that is bad news for farmers who rely on competitive pricing for their inputs.
“The merger of Dow and DuPont, the 4th and 5th largest firms, would give the resulting company about 41% of the market for corn seeds and 38% of the market for soybean seeds,” said Johnson. “If the Dow-DuPont and Bayer-Monsanto mergers were both approved, there would effectively be a duopoly in the corn and soybean seed markets.”
Johnson noted that the merger would limit choice in the marketplace for farmers. As Dow and DuPont look to leverage any efficiencies from the merger, there will be reductions in seed portfolios.
He also noted that the merger will likely diminish innovation competition, as the elimination of direct competition from one another will reduce the incentive to develop new products.
“Dow and DuPont biotechnology pipelines contain overlapping input and output traits in development for corn, soybeans, and cotton, as well as crop protection,” said Johnson. “Innovation is key to farmers and ranchers’ ability to increase crop production and improve crop quality. Without standalone competition between Dow and DuPont incentivizing innovation, farmers’ profits and consumers’ access to affordable food are at risk.”
While Dow and DuPont agreed to sell some of their key research and development assets, mergers in this consolidated of an environment are difficult, if not impossible, to remedy, he concluded.
“It is highly likely that many of those assets will be purchased by companies among the Big 6. Therefore, any reallocation of share within the large incumbents through divestitures would only result in a game of market concentration ‘musical chairs.’”