merger

Will Dow and DuPont merger increase maize prices in SA?

Many countries concerned, disappointed with merger

The merger of the international companies Dow and DuPont, providing input products to the South African agricultural market, has been approved.

This comes after similar approvals in places like the USA, China, Brazil and Europe were met with disappointment. Like in other countries, South Africa’s Competition Commission approved the merger with predetermined conditions.

Conditions

Dow must, among other things, make 81 of its maize hybrid breeds and seven of its open pollinated cultivars available to third party registration in South Africa. This will allow smaller maize seed producers to make new cultivars available in South Africa and give them access to present Dow’s germplasm to the rest of the world, says the commission.

The commission also requires that Du Pont sells its pest control business in South Africa. The merger process, with a 2015 transaction value of US$130 billion, was greeted with skepticism in agricultural circles as part of a similar mega-merger between international input providers.

The South African Competition Commission has already approved the pharmaceutical company Bayer’s acquisition of the seed company Monsanto. ChemChina, a Chinese owned company recently merged with the chemical and seed supplier Syngenta.

Concern

There  are already concerns about the effects these consolidations may have on input prices.

The USA’s National Farmers Union labelled its authorities’ approval of the Dow-DuPont transaction as deeply disappointing.

The merger of such companies increases farmers input costs and reduces encouragement for other input providers to compete, the organization said.

Other critics point out after Monsanto, Du Pont is the world’s largest seed company and Dow the fifth largest. This kind of merger is  also considered a serious threat to diversity in food production worldwide.  Analysts say until now, the so-called Big Six has controlled the world’s seed and crop protection industry.  They are BASF, Dow, Bayer, DuPont, Monsanto and Syngenta. After all the proposed mergers have been completed, the club will be reduced to just four members.

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