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Monanto - Bayer Merger

KickIT

TRIBE Member
Surprised (but not surprised) this isn't receiving much press.

Why Bayer's massive deal to buy Monsanto is so worrisome - Vox

Looks to be a trend of world wide consolidation of agribusiness companies being bought by chemical companies. These super companies will have super uber lobbying power beyond what they even have now.

So now you have all these companies that specialize in developing herbicides that will kill non-GMO treated crops. That'll be like Symmantec being allowed to create the viruses and malware only their software can detect and clean.
 

praktik

TRIBE Member
Surprised (but not surprised) this isn't receiving much press.
Actually I see tons of coverage in all mainstream outlets and a constant reminder of this in my FB feed every day this week! Beezle Bayer is here - this will bring along the IG Farber/Nazi analogies to the GMO debate now with Bayer getting into the mix.

So now you have all these companies that specialize in developing herbicides that will kill non-GMO treated crops. That'll be like Symmantec being allowed to create the viruses and malware only their software can detect and clean.
So there are advantages to these products which is why farmers buy them - they may get Roundup Ready beets for instance and spray a shit-ton less of whatever they were using before, so the question is always one that needs to look at things holistically - what practises do you use with your agriculture before the GM crop, what do you do after - whats the relative difference in toxicity and application weight of each method you were using?

The people who talk about Roundup rarely talk about the older, more toxic pesticides it replaced:

About those harsher herbicides that glyphosate helped replace: – The Credible Hulk

Many people never even hear about the herbicides that were phased out in favor of glyphosate simply because they aren’t pertinent to the anti-agricultural biotech narrative, and because their popularity had waned by the time it had become trendy to demonize GMOs and everything remotely associated with them.

I said this before, and I’ll say it again:

“Opponents of glyphosate often seem to hold this unfounded notion that, if they can manage to get glyphosate banned or simply willingly abandoned, then it would mean an improvement in both food and environmental safety, but the truth is it would likely be the exact opposite of that. Weeds are a legitimate problem in farming that has to be dealt with one way or another. In its absence, it would have to be replaced with something else, and it would likely be something more caustic: not less.”​
So what about the good things Monsanto does then?

Like this: As consumers shift to non-GMO sugar, farmers may be forced to abandon environmental and social gains – Control Freaks

The improved weed control provided by Roundup Ready varieties led to rapid environmental gains. By 2009, only two years after widespread adoption of GMO sugarbeet, over 50,000 acres of sugarbeet fields were converted to some form of reduced or conservation tillage practices in Nebraska, Colorado, and Wyoming. That number is probably much higher now. Conservation tillage practices improve soil health, reduce soil erosion, and preserve soil moisture. Conservation tillage simply wasn’t possible in sugarbeet before the introduction of Roundup Ready varieties, because intensive tillage was needed to obtain adequate weed control in the crop.
...
So to summarize, GMO sugarbeet has reduced herbicide use, increased soil health, decreased risk of crop injury, increased yield, and has even allowed farmers to spend more time with their families​

And donating the patent that saved the Hawaiian papay industry from a critical pest?

or donating the Bt Brinjal patent which is letting bangledeshi farmers use about 80-90% less pesticides, reducing harm to the environment and themselves (since practises are so poor there and the equipment they use to protect themselves is sometimes nonexistent when applying). No seed patents and lawsuits, no big profits, just donated technology being used by Bangledesh to grow more food with less chemicals - Monsanto is out of the picture and its all being made by interests in SE asia, with free seed available.

Look I think there are some issues of corporate consolidation here that are worth worrying about - but there are things Monsanto does which actually reduce our net toxic load and make the environment a better place - maybe its a bit of "chemical karma", paying back for the moral debt they incurred when they took over one of the 8 companies that were forced by the US government to make agent orange, or some of the PCB spills from that same company in the 70s. There's no reason to fear Monsanto's products and why farmers use them, actually the opposite!

If we could make Monsanto go away - wouldn't that be JUST the thing Dow Chemical would love??

Monsanto Killing DuPont Insecticide Sales With New Soybeans - Bloomberg
 

KickIT

TRIBE Member
If we could make Monsanto go away - wouldn't that be JUST the thing Dow Chemical would love??

Bayer is on the same team as Dow Chem. So wouldn't them buying Monsanto effectively make them go away to a certain degree?
 

praktik

TRIBE Member
Well I actually meant Dupont, but I guess larger point is that Monsanto's influence on Ag has been a reduction on toxic load of chemical inputs associated with farming, so making all of Monsanto's products go away would mean the chemical companies making older herbicides and those making insecticides not needed as much with Bt crops would benefit. Farmers would be stuck paying more for chemical inputs, using more and spending more time applying them, so not everyone would benefit from a non Monsanto world.

More here on this:


GE crops are not the only reason our net toxic load has been on a downward trend of both toxicity and amount needed, but they are part of a pretty striking trend across crops showing some great strides in recent decades meaning less toxic chemicals and less amounts overall are needed.

This is also a good link discussing those trends with real numbers from real crops.
 
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praktik

TRIBE Member
Bayer Buys Monsanto

Steven Novella | Sep 16th 2016 | link

German company Bayer has successfully bid to buy Monsanto for $66 Billion. This merger represents the latest in the consolidation of the biotech industry that has been going on feverishly in the last few years.
I have more questions than opinions about this merger, but there are some points worth discussing.

Consolidation


Every article and opinion I have read about the merger characterizes it as a bad thing, as a symptom of a dropping agricultural market. The story being told is this: as crop production has increased, the price of major crops in the market has decreased. This has squeezed farmers, who in turn buy less biotech products, which squeezes the seed and fertilizer companies.

Initially this resulted in the big agribusiness companies buying up many of the small local companies. Now the big companies are buying up each other in a major round of consolidation.

This is all generic business and nothing new. There is a tendency toward consolidation in large markets. Companies need to get larger to compete with other large companies, which drives a trend toward consolidation to become big. Larger companies may benefit from efficiency of size, and also are in a better position to control the market.

The huge downside to such consolidation is that it reduces competition. This is why there are anti-trust laws and why the Feds need to approve such mergers.

That is my synthesis of what everyone is saying about the merger. What I haven’t read are possible solutions to the potential problems of this industry consolidation.

I don’t understand (perhaps someone can explain it to me) why the market is not correcting itself more quickly. For example, the NYT reports about a farmer’s plight:

“We’re producing our crops at a loss now, just like the oil guys are pumping oil at a loss,” Mr. Halcomb, who grows corn, soybeans, wheat and barley on his 7,000-acre family farm, said by telephone on Wednesday. “You can’t cut your costs fast enough.”​

Perhaps this is a naive question, but why produce crops at a loss? This seems to perpetuate the problem of oversupply. Reduce supply and let prices float back up.

From my perspective, the major advantage of biotech is that it allows for more crops to be produced per acre, which theoretically should allow for the use of less farm land. That would be great for the environment – allow some farmland to go fallow, and even revert to a natural ecosystem. Let the least productive or optimal farmland go first, which would increase the average efficiency of production.

Perhaps that will happen eventually. Perhaps demand will increase without the need to expand farmland, because we are already producing enough.
This could also be a role for government aid to stabilize an industry – they could purchase excess food supply and sell it or give it to countries that have too little food.

Conspiracy Theories

This is where I get frustrated when I try to understand an important topic like this. Most of the articles I find fall into two categories – there are somewhat wonky economic articles just talking about the merger from the perspective of an investor. This is business news.

There are also articles written from an environmentalist or anti-GMO perspective that talk about corporate takeover and how now the same company that makes pesticides also makes the drugs we will use to treat the diseases caused by those pesticides (this is not true, btw).

Missing in the reporting is a meaningful analysis for the average citizen.
As is typical, the conspiracy theorists mainly serve to distract from the real issues. They actually, if anything, help the corporations they oppose by making the opposition about silly and easily refuted conspiracies, rather than focusing on the real problems.

I think, as is too often the case, ideologies get in the way. In an ideal world, we would collectively leverage the power of the free market to self-regulate, while thoughtfully regulating the rules of the market to prevent abuse, perverse incentives, or monopolies. Then experts would monitor the effects and make evidence-based tweaks as necessary.

Humans, however, like to think simplistically. So we have politicians who are free-market ideologues who think the magic wand of the free market will work everything out if you just leave it alone. There are also anti-corporate ideologues who want to micromanage the market and regulate everything. We need a balance in the middle, but this means setting aside ideology and following logic and evidence. That does not seem likely in our current political environment.

Further, I wish news reporting was more meaty and delved into the issues more meaningfully. Let’s have a robust conversation about what the real issues are and what the potential solutions are.

Perhaps that discussion is happening out there somewhere, but it is hard to find. This is an area where I don’t have a lot of personal knowledge or experience to bring to bear, so I am reliant on experts to provide the analysis for me, and journalists to report on that analysis.

I’ll keep looking, but feel free to provide links to good discussions on this topic in the comments.
 
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Boss Hog

TRIBE Member
No worries. They have good intentions. They're gonna make it rain rice across the poorest parts of the world.
 
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praktik

TRIBE Member
Bayer takes over Monsanto and GMO critics take an aspirin
André Heitz | October 4, 2016 | Genetic Literacy Project

The proposed acquisition of Monsanto by Bayer raises fears and fantasies. Would the approval lead to a dangerous concentration of control over our food supply? Are those concerns reasonable?

The landscape is much more complex than the picture set out by GMO critics, many of whom see the world in black and white, or the description by some economists and especially politicians who are holding hearings on the proposed merger.

In September 2016, after months of negotiations, Bayer’s and Monsanto’s executives announced the agreement: a total cost of $66 billion, roughly 15 to 30 times Monsanto’s annual revenues (Monsanto’s revenues have plummeted since January 2015 due to the sharp fall in agricultural prices). For Monsanto shareholders, this represented a 44 percent premium on the share price as it stood on May 9, 2016, when Bayer made its first offer; the deal is, therefore, enticing.

Short and long term rationality

The move makes business sense in a consolidating sector. Grain prices have declined sharply, bringing stock values down with them and creating bargains in the process. DuPont and Dow Chemical announced a merger “of equals” in December 2015, which if approved would result in a split into three independent companies, one of which would be for agrochemicals. After the failure of negotiations last year between Monsanto and Syngenta, the latter accepted in July 2016 a takeover offer by ChemChina.

The move is also a response to the prospect of a planet projected to have some 10 billion inhabitants by the year 2050 and an agricultural sector that will have to produce, in a conservative estimate, 50 percent more food than today on roughly the same amount of arable land and under increasing environmental constraints.

Bayer and Monsanto have opened ajoint website and offered the rhetoric of a bright future for shareholders, farmers and the public.

The combined company would bring together a flagship of agricultural chemistry (with other activities in its portfolio) with a world-leader genetics that has more recently diversified into other strategic areas such as integrated farming production systems and big data. The new company plans to establish research and development platforms with an annual budget of around 2.5 billion euros. That is, roughly three times the resources allocated to French agricultural research. It is also 2.5 times the budget of all the international agricultural research centers.

Alternative movement quick to voice opposition

The anti-globalization and environmental movements have painted the merger in the gloomiest of terms. Scientists are used to it: it’s been almost 40 years – from Pat Mooney’s Seeds of the Earth: A Private or Public Resource? (1979) – that we have been warned of the Apocalypse resulting from the alleged corporate control of our food.

Le Monde, the banner of environmentalism in France, offers us an illustration of the extravagant condemnations: “The future world number one in seeds and pesticides has the ambition to control the entire agricultural chain from the seed to the consumer’s plate.”


The usual array of activists has chimed in. Vandana Shiva plays the ‘Nazi card,’ calling the merger part of the “poison cartel of I.G. Farben,” which she claims can be linked to both companies:

The Farben family chemical cartel was responsible for exterminating people in concentration camps. Today the poison cartel is wearing G-Engineering clothes, and citing the mantra of ‘innovation’ ad nauseam. …

Through cross-licensing agreements, mergers and acquisitions, the biotech industry has become the I.G. Farben of today, with Monsanto in the cockpit.“​

Shiva is the lady who is praised by the alternative movement as one of the great voices of ecological wisdom!

In any case, if the acquisition goes through, and the Monsanto name disappears, the alternative movement will have to find new slogans.

…and so perhaps also the world of politics

The German Greens have also voiced their opposition as expected:

This deal should not be allowed. The result is an ultra-powerful cartel which does not fight world hunger but exacerbates it […]And that’s not all. Economic power also increases the political power of Bayer and Monsanto.

Margrethe Vestager, European Commissioner for competition, said she wants farmers and consumers to have the choice between different kinds of seeds and that they “are not locked with just one producer and just one set of pesticides.

She would have done better to check the facts beforehand. The ECdatabase of the Community Plant Variety Office shows for maize (corn) – a very popular species among large seed companies – a list of 2,244 approved varieties since July 1995; last year, protection was granted to no less than 321 new varieties, all different and original. For wheat, the figures are 876 and 128, respectively. This is pure precautionary hysteria, political cowardice, and demagoguery.

A giant among dwarfs, or a dwarf among giants?

The acquisition of Monsanto by Bayer would allegedly create a giant in the chemical and genetic agricultural supplies sector. But in reality, the new entity remains a dwarf.

Regarding revenue Monsanto is about the same size as Whole Foods, the major North American and UK organic products distributor. Monsanto is roughly one-half of John Deere (tractors and agricultural machines), one-third the turnover size of Coca-Cola, one-fifth of Carrefour, one-sixth of Nestlé and 1/32 of Walmart. A giant in the global corporate or food sector it is not.

The haters of Monsatan in their view Monsanto is the evilest company in the world, to the point of creating a pseudo-judicial masquerade in the Hague, the Monsanto Tribunal – claim this relative dwarf can corrupt the political leaders and decision-makers around the world! And yet, in Europe, GMO cultivation is banned almost everywhere, and the future of glyphosate is gloomy.


Worldwide net sales in billions. Compiled by Schillipaeppa from data onMarketWatch
 

praktik

TRIBE Member
(cont'd)
It’s still a long way to acquisition

The deal requires clearance from regulatory and anti-trust authorities. Will the United States let Monsanto ‘fall into foreign hands’, or will politicians succumb to economic patriotism or even retaliate in the event of a failed merger of Dow and DuPont?

But let’s imagine that the Big Six became the Big Three.

According to a document from the virulently anti-GMO ETC Group, Bayer-Monsanto’s share of the agrochemical market would increase to roughly 25 percent which would put it on a par with a combined ChemChina-Syngenta. In seeds, the blended company would be 30 percent versus 23 percent for Dow-DuPont, according to activists.

But those numbers are surely wrong. They reflect only the value of seeds produced by large entities and do not take into account many factors, such as seeds the farmers generate themselves. The combined company is more likely to ‘control’ at best 10 percent of the overall seed market for a limited number of crops—hardly an anti-competitive threat.

So, should we fear a monopoly stranglehold? There are four answers.

First is the basics of business. Agricultural suppliers—these newly combined entities—would be very unwise to strangle farmers, their clients.

Second, the downstream operators – especially retailers – have a considerable amount of elbow room and do not hesitate to use it. We have already seen major retailers removing from their shelves items from “uncooperative” suppliers, and conversely, farmers emptying supermarket shelves. When farmers demonstrate, it’s mostly to oppose downstream companies, not upstream sellers.

Third, governments have tools to fight against abuses of dominant positions if problems should arise. In the case of patents, there is the threat of compulsory licenses which, if they were to be implemented, would be much simpler to enforce than the instruments of competition law.

Fourth, in this economic Kriegsspiel, we often forget the special characteristics of agriculture. Macroeconomic analysis ignores the fact that the position of a large group consists of the sum of its positions on, for example, various pesticides, each of which is for a particular crop or set of plants and has one or several targets; in the case of varieties and seeds, supply must meet agro-climatic conditions so diverse that it is almost impossible to reach a global monopoly position, or even a regional one—except if governments institute so many restrictions on cultivation that only large corporations can engage in the process.

In other words, anti-GMO activism has forced consolidation to produce companies that can afford to cover the 13 years and $150 million that it takes to bring a new genetically engineered product to market; if that situation persists, then yes, larger companies with fewer and fewer products could be the norm.

Future is not what we see (or believe we see) in rear-view mirror

Who was Monsanto’s best ally – as well as Pioneer (DuPont)’s, Syngenta’s, etc. – in the rise of a select class of GMO suppliers? Political powers, and in the first place the Europeans with their regulations whose ulterior purpose was to prevent the cultivation of GM varieties. But while the European authorities have the power to rein in research, development, and distribution of products of inventive and innovative activity, and thus prevent the emergence of new players, it is not at all certain that the current structure is set forever.


In particular, concerning GMOs, the first patents are expiring. New players can enter the market, provided that they are not choked by excessive administrative procedures, either in the areas which become patent free or in crops that have not been targeted for GM research by the larger corporations. Such is the case of Intrexon-ownedOkanagan Specialty Fruits, with its Arctic apples resistant to browning. Or the JR Simplot Company’s Plant Sciences, which has developed a potato that does not turn brown, unlike “traditional” varieties, and which produces less of the carcinogen acrylamide when fried, and is blight-resistant – just remember the famines in Ireland in the 19th century.

Indian researchers have recently produced a GM cotton resistant to whitefly. In Africa, researchers in Uganda are working on a range of genetically modified plants to fight malnutrition or plant diseases which cannot be countered except through the deployment of transgenic crops.

And that’s not counting the “new plant breeding techniques” (NPBTs), including CRISPR, which does not involve the insertion of ‘foreign genes’ yet has stirred the ire of activists who would like nothing more than to see agricultural innovation stopped dead in its tracks.

In the field of plant protection and chemicals, the world order may also change rapidly. Glyphosate – stubbornly preceded by “Monsanto’s” or followed by “from Monsanto” when referred to by campaigning activists – has been out of patent for a long time, and Monsanto no longer has an extensive crop chemical product portfolio.

What matters here, finally, is that it would be a major mistake to assess the acceptability of the acquisition of Monsanto by Bayer by the current situation and its linear projection into the future.

This article is slightly adapted from a French version which appeared originally as Bayer avale Monsanto, l’altermonde reprend une aspirine

André Heitz is an agronomist and a former international civil servant in the United Nations system. He served in the Union for the Protection of New Varieties of Plants (UPOV) and the World Intellectual Property Organization (WIPO). In his last operational position, he was the director of the WIPO Coordination Office in Brussels. He blogs in French on Over-Blog.
 
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