The October 31st edition of the Missouri Miner featured an article by Bailey Adams critiquing the recent corporate merger where Bayer purchased Monsanto for $66 Billion. The piece explored various conjectures illustrating tragedies likely to soon occur by the hand of the menacing seed-producer and biotech firm. Adams predicted widespread catastrophe within the food market: price hikes, food insecurity, bankrupted farms, herbicide contamination, threats to animals and birds, a horror that never stops. While apocalyptic visions like this are fun to dramatize, the probability that Bayer will ruin the world is quite low. The essence of Adams’s argument collapsed before it began when the claim was made that Bayer is “essentially a monopoly” because they and their two biggest competitors control 61% of market share in seed and pesticide production [Bayer itself taking estimated 29% of the seed market and 24% of the pesticide market according to the (IISD)]. While that is certainly high, 29% is nowhere near a monopoly. Amazon’s share of the 2018 online retail market is expected to be 49% by techcrunch.com, and their practices are not considered as monopolization by anyone because they haven’t restricted the access to products from competitors. That is the legal standard for businesses practicing as monopolies.
Much of the hit piece relied entirely on the unpopularity of the Monsanto Brand, which has certainly had some public relations issues in the recent past and has engendered a lot of scorn from particular groups of people. However before prejudgment, one should at least understand the nature of the business in dispute. Monsanto is one of the primary biotechnology researchers and innovators in the field of Agricultural and Genetic science. They use their products to help farmers produce larger crop yields and better tasting crops. Monsanto’s success in this endeavor has placed it in the very top of its field and also, in the same situation as many biotech companies. Their business model is dependent on the research and development of new products and therefore have to maximize profit on existing products - sometimes by dramatic means - in order to support the overhead budget. If Monsanto’s tomato seed is the preferred choice among consumers, then they will certainly exploit that increase in demand. Many biotech companies receive condemnation from customers and media outlets who object to ‘price gouging’ without considering how much research has to do with the price.
Honest criticism of Monsanto stems from two sides of an opposing issue. The environmentalists demand that biotechnology in agriculture is too dangerous, requiring larger expenditures into research for safety. On the opposing side, the farmer’s union voices accuse the biotech firms of price gouging and exploitative contracting - providing more leniency to customers. However, the real issue at hand appears to be the rigor of the governmental approval process and consequent research investment. New crops must be reviewed by the USDA, EPA, and DEA before being approved for the market. Wendelyn Jones of global regulatory affairs for DuPont estimates that the entire process typically requires 13 years and $130 million for research and advocacy. Such an outstanding budgetary obligation is the ultimate cause of consolidation in the biotech marketplace.
The possible solution to this issue creates an intersection of values and appeasement of one side. The solution for the farmers is to loosen regulation, but that is the exact problem for the environmentalists. This intersection of values is the reason why so many feel justified in attacking the biotech businesses outright. They are engaged in tough and gritty business practices in order to create their environmental catastrophe of a product. But what if the product is vitally necessary? Companies like Monsanto provide a tremendous service for which the consumer may never be grateful until it is gone. The availability of fresh fruit and vegetables in a grocery for reliably low prices is an absolute miracle of ingenuity and those who took risk to advance the marketplace should be respected.
Now to consider the issue directly at hand, Monsanto was just absorbed into the Bayer corporation worth $35 billion and Monsanto valued at $66 billion. This move should allow the agricultural giant to ambitiously research new products with little financial hindrance. Environmentalists and farmer’s unions be afraid, the biotech behemoth just doubled in size. However, before you grab the torches and pitchforks, do not forget the real source of the company’s power. Competitors are automatically excluded by the cost of the regulation overhead. The real debate should be between the farmer’s unions and environmentalists - taking place in the chambers of the senate and consisting of arguments over the necessity of certain regulatory hurdles. Market consolidation of this type is not the cause of malice by default. Often exterior imposition upon the marketplace produces restriction of competition as consequence. These factors should be deeply understood by advocates on all sides, yet too often they are totally ignored.