MySheen

Global food prices continue to fall. Agricultural giants have no choice but to stay warm.

Published: 2024-11-06 Author: mysheen
Last Updated: 2024/11/06, As global food prices fall and profits are squeezed, agricultural giants are seeking to join forces to keep warm in the cold winter of the industry, which will be the first major change in agriculture in more than a decade. Citing people familiar with the matter, multinational seed giant Syngenta is working with du

As global food prices fall and profits are squeezed, agricultural giants are seeking to join forces to keep warm in the cold winter of the industry, which will be the first major change in agriculture in more than a decade. Multinational seed giant Syngenta is in discussions with DuPont to merge DuPont's agricultural division, citing people familiar with the matter.

DuPont is also negotiating an agricultural deal with Dow to expand sales of its seeds and pesticides, another person familiar with the matter said. However, these negotiations are at an initial stage and may end in vain.

Us agricultural incomes are declining and are hitting their lowest level in nearly a decade. Agricultural companies are facing challenges: pests are becoming resistant to common pesticides and many consumers are worried about the use of pesticides and genetically modified seeds.

If Syngenta and DuPont's agricultural departments merge, they will control about 27% of global pesticide sales, according to Morgan Stanley. Analysts said that since DuPont already controls 35% of the corn seed and 33% of the soybean market in the United States, the merger may require Syngenta to divest the seed business in order to successfully pass the antitrust investigation. Syngenta will keep its headquarters in Switzerland, according to people familiar with the matter.

The merger of DuPont and Dow's agricultural sector will control 17 per cent of the global pesticide market, second only to Syngenta and Bayer. Dow's seed business may also need to be divested in the merger.

However, agricultural groups worry that with the arrival of the wave of agricultural consolidation, industrial concentration will lead to an increase in product pricing power. The average cost of seeds has tripled since 1995, and the price of pesticides has risen by 13%, regardless of inflation, according to the USDA.

Bob Young, chief economist of the United States Bureau of Agriculture, said he had not seen evidence that the market was concentrated to drive up prices.

The global market for agricultural products is controlled by six large enterprises, namely, American companies Monsanto, DuPont, Dow Chemical, Swiss company Syngenta, German companies BASF and Bayer.

In August, Monsanto, a global genetically modified agriculture giant, made its second bid for Syngenta, valued at $47 billion, but was rejected again. However, Monsanto's repeated defeats have not changed the upcoming wave of mergers and acquisitions in the industry. In recent years, rumors of integration have revolved around the six agricultural giants.

 
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