It has been over a year since Bayer AG, the German chemical giant announced its $66 billion takeover of U.S. agrochemical major Monsanto - a move which would end up creating the world’s largest seeds and pesticide company. Ripples of concern have erupted all across the ag-industry on this prospect, as Monsanto is a company that has had an image blighted by controversies, courtesy its GMO seed production.
Monsanto vehemently objects to naysayers that deride GMO, and insists that the science behind genetic modification is sound. The problem though has never been about the science in itself, but more about the approach that Monsanto had taken over the years to convince its consumers about GMO’s benignity.
For one, consumers have a hard time trusting corporate-funded research outcomes that continuously yield a slew of positive results. And with Monsanto, the concerns are not without rationale. Documents that went public through The New York Times last year, highlighted attempts by Monsanto to sabotage research and to try sway public opinion in its favor by contentious practices. Though Monsanto had categorically refused the claims, the damage was already done.
Another issue that is raging in the ag-industry is the apparent monopoly that Monsanto enjoys over its GMO crops - a claim that is ubiquitous across most of the markets the company has a presence in. A majority of the farmers are forced to buy seeds from Monsanto for the lack of a viable alternative, and this is a cycle that keeps repeating every year. The farmers also need to sign an agreement that they would not save and replant the seeds produced from the seeds they buy from Monsanto, making them completely rely on the company for future yield. Monsanto is extremely vigilant and territorially protective of its products having sued farmers who do not honor such agreements.
In developing countries like India, the farming land is too less and the farmers too many, that an average farmer owns only about a few acres of land. The farmers there were dependant on non-GMO crops for centuries, and now with the advent of Monsanto, they believe that their traditional way of farming is under threat. Though GMO crops are known to give higher yield and are generally more resistant to crop failure or pests, the idea of being dependant on a corporation for their farming needs is still unacceptable to the majority - a notion that is quite not out of place in the U.S. either.
What is fairly noticeable across the GMO debate is how well etched in the minds of the consumers is the idea that GMO products might inherently be bad for health, even though there isn’t any conclusive evidence to advocate the same. The blame lies partially on the food producers too, as they have opposed the labeling of their products that contain GMO ingredients. The Congress had passed a measure in 2016 which made it mandatory for labeling GMO ingredients in food products, which could be done either through an explicitly worded mention on the cover, or by including a QR code that could be scanned by consumers to understand where the ingredients are sourced from.
But it was pretty evident soon after the legislation was passed that both the sides of the labeling debate were not satisfied with the result. The farmers and the producers were frustrated with the need to label their produce while the pro-labeling groups were let down by the possibility of QR code labels that were not overtly explanatory.
Cut to the situation now, and Liam Condon, CEO of Bayer CropScience has mentioned that Bayer needs to gauge the expectations of the people and the environmental groups about the future post the Monsanto takeover. “The reality is Bayer is going to come together with Monsanto, and this is going to be the biggest company in the agricultural space. With that, it’s going to have an awful lot of responsibility,” he said.
Bayer also faces an issue with antitrust laws, as U.S. officials are worried that the takeover could hurt competition. To address concerns, Bayer had sold a part of its agricultural products business to BASF SE, in a $7 billion deal last year. This was BASF’s biggest-ever acquisition, which included buying the rights for mainstay crops like cotton and soybean, along with a herbicide brand named Liberty.
But the U.S. government wants the company to divest more of its assets to further assuage the widespread apprehension of the takeover. Bayer is currently working it out with the government through negotiations which are said to continue for a few more months before a middle ground is reached.
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