CP Editorial: Monsanto-Syngenta merger would have been good for ag

The $46.5 billion Monsanto was willing to pay to buy out Swiss agriculture chemical manufacturer Syngenta turned out to be not enough to get the deal done. After going public in May, the deal was taken off the table almost as fast as it was proposed.

The deal was officially called off this past August. So why the quick change of heart?

According to an article in Forbes by financial journalist Antoine Gara, “The deal’s failure, Monsanto said, was the result of Syngenta’s unwillingness to engage in a merger the company believed would generate significant synergies for stockholders and increasing product offerings for farmers.”

Some farmers and agriculturalist are pleased Monsanto has given up on the deal.

In a recent article in the Wall Street Journal, Roger Johnson, president of The National Farmers Union, is quoted as saying: “American agriculture is already far too economically concentrated, leaving family farmers and ranchers at a great disadvantage in the market place.”

Fueled by documentaries such as Food, Inc., consumer concerns about how concentrated the agriculture industry has become have grown exponentially in recent years.

However, in that same article mentioned above, Monsanto CEO Hugh Grant states, “The combination of Syngenta’s position in pesticides with Monsanto’s seeds business offered ‘transformative” potential.'” Meaning this merger would have transformed the face of seed and pesticide industries.

In my view, the proposed buyout would have meant more motivation for agriculture innovation, more options for farmers, and overall, more efficiency in the U.S. and worldwide agriculture industry.

Another Wall Street Journal article described the deal as, “A union that would have reshaped the global market for seeds and pesticides.”

I agree it would have reshaped the market for pesticides and seeds, but in a positive way.

This merger would have led to more innovation. Monsanto/Syngenta competitors would have been inspired to improve their own products. Competitors might also have considered mergers of their own to compete with Monsanto/Syngenta. Pooling resources opens more opportunities for research and development.

These innovations would have taken time, but agriculture would have seen an overall positive impact in the long run as a result of the merger.

With more product options, farmers would have had more choices in how to spend their money. More product options could lead to better yields, better profits and overall more opportunity for the individual farmer.

Add this all together, and it equals what could have been a more efficient and innovative period for agriculture.

So what’s next for Monsanto? According to the latest article in Forbes, “Monsanto said the move will allow the company to refocus on core business and resume its approved share repurchase program ‘as soon as practical.’ The company also reiterated a five-year plan to more than double ongoing earnings per share by 2019.”