Monsanto and Bayer Are Merging: Here's What It Means for the Food Industry

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By Danica Lo Posted September 14, 2016

The merger will create an R&D powerhouse dedicated to food technology, but some farmers aren't pleased.

Bayer and Monsanto announced this morning that Bayer will acquire the international agribusiness in an all-cash transaction worth $66 billion. "This represents a major step forward for our Crop Science business and reinforces Bayer's leadership position as a global innovation driven Life Science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees, and society at large," Bayer CEO Werner Baumann said in a statement.

Perhaps most relevant for the food and agriculture industries, this merger unites Monsanto's Seeds & Traits and Climate Corporation platform with Bayer's Crop Protection product line. This means that growers can easily tap into both areas of expertise for help in digital agriculture and crop protection. The merger also brings together two major R&D platforms, creating a mega R&D powerhouse with a combined annual budget of $2.8 billion, which the company says will be dedicated to innovation and providing "enhanced solutions and an optimized product suite" which in the long run will yield "lasting benefits for farmers: from improved sourcing and increased convenience to higher yield, better environmental protection, and sustainability."

"The agriculture industry is at the heart of one of the greatest challenges of our time: how to feed an additional 3 billion people in the world by 2050 in an environmentally sustainable way," Liam Condon, head of Bayer's Crop Science Division, said in a statement. "It has been both companies' belief that this challenge requires a new approach that more systematically integrates expertise across Seeds, Traits and Crop Protection including Biologicals with a deep commitment to innovation and sustainable agriculture practices."

While this all might sound good—more money to solve the world's food insecurity problems—some farmers aren't so sure. "The National Farmers Union is troubled by the latest news of a proposed Bayer AG buyout of Monsanto Co., perpetuating a disturbing trend of further consolidation in the agricultural input sector, including seeds and crop protection products," Roger Johnson, president of the National Farmers Union, told the press earlier this year. "We have continuously expressed our concern about the outcomes of further industry consolidation, such as the recent proposed merger between Dow Chemical Co. and DuPont Co. Family farmers, ranchers and consumers are the ones that lose out when we cripple competition, increase prices, and reduce innovation through industry megadeals."

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