EUROPEAN-SEED.COM I EUROPEAN SEED I 17 seeds but the fallout from UPOV’91 and patent laws can devolve into national legislation that criminalizes peasants for exchanging – or even saving – seed. ChemGen pressure on policies ranging from input subsidies to public research to rural infrastructure can have collat- eral damages that imprison farmers and imperil livelihoods; the bigger the com- pany, the louder their voice. It is wrong to look at the immediate deals as the final round. If these deals go through, and that’s highly debatable, then the signal is given that not only is this level of concentration acceptable – even in the food system – but, that other levels of vertical and horizontal integration might be possible. THE BOX ETC Group is concerned that if or when the current round of deals goes through, there is enormous technological and commercial logic for the farm machinery industry to merge with the surviving ChemGens. At least since the new millennium, the dominant farm machinery compa- nies have invested heavily in satellite and sensor information and Big Data man- agement. With this data, the machinery companies stand to know more about the inputs and outcomes of every field than any other company and even the farmer. Machinery companies have the “box” in which the other input companies have to put their seeds, pesticides and fertilizers. The same machinery company, and/or its satellites and drones, may be on the field several times during the growing season and the same company has the “box” that collects the harvest. Information tech- nologies are making it possible for the machinery sensors to know exactly what is going into the field and what is coming out down to a few square centimetres – and to connect that information to pre- vious growing seasons, current markets, and projected weather forecasts. This information also positions the companies to make the best deal (and conditions) for farm insurance. The machinery com- panies Big Data also aligns with the Big Data being pursued so aggressively now by ChemGens. Not to suggest that digital DNA is identical to weather forecasting, but they do have the field, the food and the farmer in common and their Big Data meets in the same cloud. FARM MACHINERY The farm machinery companies are also giants. The world’s largest, John Deere, has sales that approximate the global commercial seed industry. It is only if the three deals go through that the sur- viving ChemGen could be of a scale that could match the top farm machinery companies. The CR4 for farm machin- ery companies is about 55 per cent. This figure still lurks below the horizon for many anti-competition regulators and could make a sideways move into seat and pesticides manageable. And, despite their size, the machinery majors are not popularly known. Machinery doesn’t raise the same hackles as Monsanto – or pes- ticides. Since 2013, Deere and company has established joint ventures and/or other arrangements with each of the six Gene Giants now en route to becoming three ChemGens. Other major machinery companies such as CNH and AGCO have been making similar deals. There won’t be a second round of machinery mergers until the current merger is played out. A move might be two to five years down the road or even further. But it is reasonable... and the reason for us all to be worried now. FOLLOW THE MONEY To be clear, ETC wasn’t really following the science – we were following the money. There were lots of other sound reasons why pesticide companies would buy seed companies. But, one of the logical options facing an R&D driven firm was to inves- tigate the commercial benefits of linking their seeds to their chemicals. In the end, the money led the way and the science and technology followed. As it was with Ciba- Geigy and Sandoz so it might become with John Deere and Bayer/Monsanto. A BRIDGE TOO FAR Can the deals be stopped? Yes. The three deals together are a bridge too far. Every day they draught more and more attention from both the public and politicians. While we may – or may not – be able to alter the mergers in Brussels or Washington DC, three developments may ultimately block the mergers. First, the growing alarm for food security may compel policymakers to act to strengthen anti-competition pol- icies and even to undertake a full review of the agricultural input sector with the potential to roll back agreed-to deals and break up monopolies. Second, the inter- national community may take up the proposals of UN agencies like UNCTAD and begin the arduous work of establish- ing a UN competition office. The Trump administration in the US inadvertently makes this option more plausible because no government expects the US to be part of any new international treaties and no one trusts the US to do an adequate job regulating itself. In this highly negative political environment, the UN becomes an attractive forum where other governments can act without US intervention. Thirdly, G-77 countries have their own anti-com- petition offices in every right to block the mergers within their own sovereign territories. Emerging markets – Brazil, Argentina, China and India – account for one third of global pesticide sales and that’s the growing part of the market. If one or two of these countries say no to the mergers, shareholders may get cold feet and force management to back off regard- less of what is being agreed in Brussels and Washington. In fact, even a handful of small countries in any region of the world could catalyze opposition that will spread too much of the global South. Opposition from small countries doesn’t have to happen immediately. It can roll out over many months, but its impact could be cumulative and devastating. They could also force other governments in countries to agree to establish an international treaty in order to placate opponents. Politicians never get points for supporting corporate concentration but they do get points for opposing Monsanto. The story is far from over. It costs roughly $256 million to bring a new pesticide to market but it only costs $136 million to introduce a new GM variety. – Pat Mooney, ETC Of course, discussion about a future massive round of mergers based on Big Data technologies is extremely unpopular with the input companies trying to get together now. This is not something they want talked about. History has a lesson here as well. In 1981, ETC Group (then called RAFI), seeing the takeover of seed companies by pesticide and pharmaceutical compa- nies, warned that the research strategy of the companies might be to create a co-dependence between their proprie- tary seeds and their proprietary chemi- cals. The companies were livid. Beyond the companies, science journals and agricultural societies insisted that – if not scientifically impossible – any hook-up between a plant variety and a herbicide would face enormous technological and market barriers and farmer hostility. Ciba-Geigy (remember them?) invited me to Basel to show me the error of my ways and the scientists at Sandoz told me that the only market for an herbicide tolerant plant variety might be for Johnson’s grass in Texas. Now, we all know the data on herbicide-tolerant GM varieties.