Bayer-Monsanto deal could hit Manitoba farmers with higher prices
If deal approved, Bayer will control 93% of canola seed supply in Canada, says U of M prof
An expert on the agriculture industry in Manitoba is worried Bayer's $66-billion deal to buy Monsanto could hurt farmers in the province.
The offer still needs approval from Monsanto shareholders and competition regulators. If it's approved, Bayer will become the world's largest crop seed producer.
"As a farm kid, I'm a little bit worried about this," said Derek Brewin, an associate professor in the department of agribusiness and agricultural economics at the University of Manitoba.
"[These are] two companies that have had a big impact on the Canadian agricultural industry getting together."
Monsanto and Bayer are both leaders in developing high-performance genetically modified seeds.
Monsanto's Roundup Ready seeds and Bayer's LibertyLink seeds have revolutionized farming. Both seeds are resistant to herbicides patented by the companies. Farmers must buy the two products together — the seeds and the herbicides — to get the optimal effect.
Bayer and Monsanto seeds have had a "huge positive impact" on Canadian agriculture in terms of the return for farmers, creating a nearly $1-billion increase in profit per year over the old system, Brewin said.
The two companies virtually control the supply of seeds in North America, including the vast majority of canola seeds sold in Canada.
"If we create a firm with those two companies, 93 per cent of all the [canola] seed going through the system will be controlled by a single company," Brewin said.
That concentration could eradicate competition in the seed market, with farmers left holding the bag.
"I think farmers might see higher prices because of that," he said. "It hurts the economy in Manitoba a lot when farmers start to lose money."
Brewin said he is also concerned Monsanto Canada's head office in Winnipeg could be hit by cuts to high-paying jobs, many occupied by former University of Manitoba students. Bayer has already said it plans to have a single North American headquarters in St. Louis, Mo.
Brewin hopes Bayer will see the resources in Winnipeg as a benefit to the company, not a redundancy ready for the chopping block.
"I think they would look at the labs here ... in Winnipeg as an asset to the new firm," Brewin said.
Based on other similar multinational deals in agriculture, Brewin suspects antitrust regulators will have a list of demands before the Bayer-Monsanto deal goes ahead.
"I think they're probably either going to have to sell off one of the big patents — the Roundup Ready or LibertyLink — or the deal won't go through," said Brewin.