WASHINGTON, Sept. 28, 2016 - Economists at Texas A&M
University say the Bayer-Monsanto merger would boost cottonseed prices by more
than 18 percent while the pending combination of Dow and DuPont would lead to
far more modest increases in the prices of corn and soybean seed.
The Bayer-Monsanto merger would give the company about 70
percent of the cottonseed market, while Dow-DuPont would control 41 percent of
the corn seed market and 38 percent of soybean seed sales, according
to a report the economists prepared for the journal Choices. The report did not look at other crops, like canola,
where Bayer and Monsanto have dominant positions in seeds and traits. Canadian
canola grower associations have already expressed concerns about the possible
merger, and last week called for a “timely and rigorous review” by regulators.
The Texas A&M economists estimate that seed prices would
rise by 2.3 percent for corn and 1.9 percent for soybeans.
The cost of seed accounts for just over 30 percent of the
variable cost (excluding fixed costs such as land) of producing corn and soybeans,
and 10 percent or 17 percent of the cost of growing cotton, depending on
whether it is irrigated on dryland, respectively.
The results appear to support concerns among cotton growers
about the Bayer-Monsanto combination as well as a conclusion by the National
Corn Growers Association that the Dow-DuPont merger wouldn’t undermine the corn
seed market.
‘We do not make policy prescriptions regarding regulatory
approval of the proposed mergers,” the economists write. “However, our results
suggest that these proposals warrant careful scrutiny by regulators, including
careful considerations of the potential effects on crop production costs and,
ultimately, consumer prices for food and fiber.”
Executives
with the companies were questioned sharply at a Senate Judiciary Committee hearing
last week about the possibility of divesting some of their seed assets,
including cotton in the case of Bayer-Monsanto and canola in the case of
Dow-DuPont.
Jim Blome, president and CEO of Bayer CropScience, told the
senators there were several companies that would be interested in the
Bayer-Monsanto cottonseed holdings. Executives of Dow and DuPont are already in
talks with the Justice Department, but the companies have not said what they
might be required to sell.
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