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Bayer-Monsanto merger and the environment

Dave KeatingSeptember 15, 2016

Monsanto's takeover by Bayer could create a GMO juggernaut too powerful for Europe to resist, while conveniently "disappearing" a tarnished brand, critics say. Concerns abound over concentration in the seed market.

Monsanto protest in Mexico (Photo: picture-alliance/Demotix/I. Duff Cuevas Hernandez)
Monsanto has been the target of worldwide protestsImage: picture-alliance/Demotix/I. Duff Cuevas Hernandez

This past May, environmentalists amassed in cities around the world once again for their annual "March Against Monsanto," which for four years has been protesting the world's most infamous producer of genetically modified crops. But next year, the demonstrators will longer have a Monsanto to protest against.

The protesters haven't succeeded in shutting the company down. On the contrary, the firm has become so successful that one of Germany's largest companies has acquired it for $66 billion (59 billion euros).

Monsanto's merger with Bayer, the international chemical and pharmaceutical company most famous for producing Aspirin, is the largest-ever foreign takeover bid from a German company. Both companies produce pesticides, and together would control 28 percent of the global pesticide market. Bayer's offer was sealed on Wednesday (14.09.2016).

The size of the combined company will invite close scrutiny by competition regulators. But its potentially dominant position in the agrochemical field has also raised alarm on environmental grounds.

Opponants are now pinning their hopes on the European Commission in Brussels, which still must approve or reject the merger.

But Jan Pehrke from the German nongovernmental organization Coalition Against Bayer-Dangers says a rejection is highly unlikely. "I think we can't stop the merger at this point, it's done," he says.

The commission is likel to act, he thinks - but added that this probably won't do enough. "They may force Bayer to sell its cotton business, or some of its pesticide businesses, because of competition concerns. But they can't force a rollback of the new combined concentration in the market," Pehrke told DW.

Burying a tarnished brand

The reaction has been particularly strong in Germany, where the German public is widely opposed to genetically modified crops, or GMOs. US-based Monsanto pulled out of the GMO market in Europe years ago because of the EU's de facto moratorium on growing such crops. But the company continues to be involved in importing GMO crops into the EU.

Monsanto has become the main target of the anti-GMO movement globally - particularly in Europe, where it faces ongoing controversy over its most widely-used weed killer glyphosate, which environmentalists continue to seek to ban.

Although EU authorization for glyphosate ran out this past June, the European Commission gave it a provisional extension, for 18 months.

Members of Avaaz dressed in full chemical protection gear demonstrate in front of the European Commission in Brussels (Photo: Olivier Matthys/Avaaz)
One of Monsanto's key products - glyphosate - faces a possible ban by the EUImage: Olivier Matthys/Avaaz

Many observers expect Bayer to drop the Monsanto name. Asked by the German newspaper "Frankfurter Allgemeine Sonntagszeitung" whether Bayer would bury the Monsanto brand, Bayer chief executive Werner Baumann had said: "Suffice to say that Bayer enjoys an excellent reputation and appeal worldwide. We must take advantage of that."

Though Bayer is involved in many of the same activities, it has escaped negative public perception in Europe that its American counterpart has.

Jan Perhke, who is also with the Coalition Against Bayer-Dangers, says it has been harder to make the public aware of Bayer's pesticide activities because it is involved in more diversified activity than Monsanto - which deals mostly in seeds and GMOs.

"We have tried to put the focus not only on Monsanto, and to let people know that behind Monsanto there are many agrochemical multinationals which are very big and also have very dangerous products," he told DW.

He worries that with the relatively less-tarnished and more politically powerful Bayer name behind the Monsanto GMO products, the European Union will not be able to maintain its Two-thirds of EU states to ban GM crop cultivationde facto moratorium# on growing genetically modified crops.

"We are now afraid that if a big German enterprise like Bayer is so big in GMOs, there will be more pressure to put GMOs on the EU market," he says. Bayer has known that there will be protests, Pehrke thinks.

"They have announced that they will offer a tour to investors to tell them why the merger is good, and why the bad reputation of Monsanto isn't going to have an influence on the profits of Bayer."

Gigantic Bayer logo visible on a roof over Berlin (Photo: Tobias Kleinschmidt dpa/lbn)
Bayer executives say they are willing to meet with environmentalists to discuss their concernsImage: picture-alliance/dpa

Lessons learned

For their part, Bayer executives appear keen to avoid early mistakes that led to Monsanto having such an image problem in Europe - such as a lack of engagement with policy-makers and environmental groups. Baumann told the "Frankfurter Allgemeine Sonntagszeitung" that the company is inviting campaigners to talk to Bayer's management.

"As much as I talk to our investors to convince them of the plans, the offer also stands for environmental groups and other nongovernmental organizations," he had told the newspaper. "Our way of doing business may differ from the way Monsanto does. I can assure you that we would conduct these businesses based on the same standards as our other operations."

And exactly those other operations have shielded Bayer from public criticism, even as it faced controversy over some parts of its agriculture business. This includes production of neonicotinoid pesticides, which are accused of killing bees and harming biodiversity.

Brandon Mitchener, a spokesperson for Monsanto in Europe, said the company has historically been required to weather the same amount of criticism as Bayer - even if Monsanto is more in the news now because of the glyphosate issue.

"Monsanto, Bayer, Syngenta and other companies are all in the same boat regarding the need to defend our activities in agriculture," Mitchener told DW. "The people who oppose any innovation in agriculture are just as opposed to the neonicotinoids manufactured by Bayer and Syngenta as they are to the glyphosate products and GM seeds sold by all three."

A wheat field in California (Photo: REUTERS/Lucy Nicholson)
At stake in the merger: the foods we eat, among numerous other productsImage: Reuters/L. Nicholson

Seed concentration concerns

Aside from the enhanced political heft of the new combined entity, a concentration of seed patents is also a major concern. The proposed merger comes in the context of a flurry of mergers and acquisitions in the agrochemical sector recently, as investors look to cut costs in the face of declining agricultural commodity prices.

Canadian fertilizer giants Agrium and Potash in September announced their intended merger.

In February, ChemChina purchased Syngenta, making it the biggest player in the agricultural chemical market.

And last year, American chemical firms Dow and DuPont announced a $130 billion merger to create DowDuPont, which will control an estimated 40 percent of the corn and soybean seed market in the United States.

More merger announcements in the sector could be on the way, although all are subject to regulatory approval.

Sven Giegold, a Green member of the European Parliament from Germany, worked on an online petition to stop the Bayer-Monsanto merger.

Giegold says agrochemical consolidation is out of control, and is putting the future of farming at risk. The European Union must draw a line in the sand with this merger, he insists. And he frames this in the context of the free market.

Sven Giegold, Green member of the European Parliament
German Green representative Sven Giegold has started a petition calling on the EU to block the Bayer-Monsanto mergerImage: Sven Giegold

"The Greens are defending the idea that in a market economy, there has to be tough competition," Giegold told DW. "There is already strong monopolization in the seeds and pesticides sector - more concentration in the market is unwanted," he said.

If there are only a few competitors on the seed market, farmers will be forced to buy those, often in combination with pesticides, he pointed out.

Already in 2013, the top six companies in the commercial seed sector controlled 75 percent of the agrochemical market and 63 percent of the market. The recent flurry of mergers could put all this into the hands of just three companies. If few companies own the patents for seeds, small farmers could become completely dependent on them.

Billions against Bayer?

Giegold acknowledged that for the moment, concern over the merger is strongest in Germany.

"Right now there is a concentration of concern in Germany, because Bayer is among the companies with the worst reputation of all German companies, because of a history of scandal," Giegold said. "Monsanto has become a negative symbol internationally, but this is less the case for Bayer."

But Katherine Paul, associate director of the Organic Consumers Organization that organizes the Millions Against Monsanto movement, says any name switch will not cause the anti-GMO campaigners to lose focus.

"We can easily move from our 'Millions against Monsanto' campaign to a 'Billions against Bayer' campaign," she says. "The public is well aware that while Monsanto has become the poster child for corporate corruption as well as corruption of the food and farming system, Monsanto isn't alone."

Civil society groups are planning a symbolic "tribunal" against Monsanto this October in The Hague. There will be no representative of Bayer or Monsanto at the event, but the activists hope to attract public attention to what they feel are the dangers presented by the newly enlarged agrochemical giant.

Pehrke also confirmed that the Coalition Against Bayer-Dangers will indeed rename the March Against Monsanto to the March against Bayer.