Vol. XLII No. 04 January 28, 2018

AIKS’ Views on Bayer-Monsanto Merger

THE All India Kisan Sabha, has submitted a memorandum to the secretary of the Competition Commission of India on January 19, on the adverse impact of Bayer-Monsanto merger on Indian peasantry and its objection to the merger.

In the context of the Bayer-Monsanto merger, AIKS said that the notice provided by the Commission for public participation in its inquiry process as per Section 20 of the Competition Act 2002, is too short for meaningful public participation. AIKS felt that any serious debate with active public participation can only happen by facilitating proper consultation by extending the deadline, advertising in all national languages and seeking opinions of all States.

AIKS placed its position against predatory agribusinesses that seek to acquire unbridled monopoly over agricultural inputs and control the market. This move to corner exclusive monopolistic rights will adversely impact the peasantry in India. The consolidation by the spate of mergers like Dow and DuPont, Syngenta and ChemChina and Bayer-Monsanto will undoubtedly alter the contours of the agricultural input sector like never before. These megamergers will ensure that about seventy per cent of the agricultural input industry supplying seeds, agrochemicals, plant growth promoters and microbial products for the farm sector is going to pass into the hands of these three combines. Close to eighty (80) per cent of the private sector R&D investment and agricultural biotechnology related intellectual property will be under the control of these three combines.

Currently the global agricultural input business is of $ 100 billion per year. These companies are developing more of new varieties, not with just novel individual traits, but also varieties with stacked traits and cross licensing agreements that have the patent protection like effect. The current push for consolidation is for both – the integration of seeds and agrochemicals and the control over information platforms that these companies use to collect data from the farms. In India, their local R&D is devoted to the objective of collection of data for regulatory purposes and development of chemical-seed packages that are exclusive and allow them to practice tying and bundling of agricultural inputs.

It is in this overall context that the AIKS is now looking into the Bayer-Monsanto merger and this should be noted by the CCI. It reminded the Competition Commission of India the impact of practices adopted by agribusinesses like Monsanto on farmers and national agricultural development scenario in the country. The Andhra Pradesh Rythu Sangham (affiliated to the AIKS) had filed a petition before the Monopolies and Restrictive Trade Practices Commission (MRTPC) and it had indicted Monsanto for engaging in restrictive and monopolistic trade practices. The report of the Director General of Investigation and Registration (DGIR) had stated: “The trait fee being charged by the respondent not only imposes unjustified costs on the farmers by way of manipulation of prices but is also unreasonable in view of lack of competition for Bt cotton seeds.”

The Andhra Pradesh government was forced to file a contempt petition before the MRTPC against Mahyco Monsanto Biotech (India) for not obeying the order directing it not to charge trait value of Rs 900 per packet of 450 grams of Bt Cotton seeds.  The Monopolies and Restrictive Trade Practices Act passed in 1969 had set up the MRTPC as a statutory body which functioned from 1970 till 2009 when it was repealed and replaced by the CCI. The CCI is facing litigation from Monsanto in the Delhi High Court against its investigation orders. On the petition of the ministry of agriculture the CCI held in February, 2016 that a prima facie case of a gross violation of the Competition Act of 2002 by Monsanto existed. The impunity with which the company addressed these charges is well known.

AIKS believes that with the merger, the monopoly will be further consolidated and questions of technological choice, economic fairness, goal of ensuring quality inputs at affordable rates, environmental sustainability would all be at stake. The role of peasants and rural labour in agro-food value chain will be severely constrained, diminish and eventually force petty producers to exit from agriculture in large numbers.  Predatory agribusinesses like Monsanto have a history of dragging farmers and governments as well as smaller players to court, using threats and intimidation as well as making huge expenditure to make different players accept their position. Given that it has committed contempt and also dragged the CCI to Court, farmers could also be dragged into unending litigations.

The merger is cause for extreme concern regarding overlap in the market for commercialisation of hybrid seeds of different vegetables and food crops like corn, herbicides and herbicide tolerant traits as well as Bt trait for Cotton seeds. High concentration in the input market is only to be expected and the merger is preying on the larger seed and agricultural input sector. The farming community in India is the largest seed producer and nearly 70 per cent of seeds are produced in the informal sector. However, while 70 per cent of seeds are produced by farmers it is not as an organised company. Although agribusinesses control around 30 per cent of seeds they are a few organised entities and they could take-over the market like has been witnessed in the cotton seed sector.

Arguments like availability of large number of varieties gives wide choice to farmers before they buy seeds are still-born given our experience with cotton seeds. Exorbitant increase in prices and shutting out choices for farmers in seeds and other inputs, are seen. Often the seed and chemicals come as a package and with competition being wiped out, farmers will have to depend on the exorbitantly priced package of inputs leading to escalation of costs of cultivation. Crisis-hit farmers are likely to be pushed further deep into indebtedness.

§ Clearly, the merger would open doors for further consolidation in the Indian market. Concern also stems from the potential disruptive impact on account of high aggregate concentration in the product market and gradual reduction and ultimately elimination of any competition existing. The entrenched market power of the combination and collusive pricing due to cartelisation, tying farmers to a package of products, fast-paced shrinkage of choices for farmers, all of which make them more vulnerable to spike in prices. Claims such as the availability of large number of varieties in the market making it possible for farmers to weigh their options before buying the seeds they need and farmers take advantage of the immense array of choices not only in terms of source of supply but also on the type of product they wish to use on their land are far removed from the situation on the field.

Further claims that awareness levels of farmers have gone up considerably over the past few years given the various initiatives of both the government and the private sector like setting up of e-Choupals and because of better connectivity via mobile and internet with markets, seed companies, agri-chemical sellers etc, are without sound empirical basis. Similarly claims about sale of assets and divestments would resolve problem of reduction in competition is contrary to real situation wherein there is intense concentration of the market in respect of technological know-how, patents, germplasm collections and so on as far as agricultural inputs are concerned. These are motivated claims aimed at gaining unconditional approval for the merger. The CCI should look into the veracity of such claims before proceeding in this matter on the basis of the standards and norms of competition relevant to a developing country like India wherein farmers are both customers and competing producers of agricultural inputs.

Jointly both these entities have considerable significant overlap in the vegetable seeds market which would have an adverse impact on competition, and thereby choices for farmers, affordability of products, and their profitability (livelihoods). A monopoly for either Bayer or Monsanto in different vegetables and horticultural crops already exists and if one considers the combined share it is significantly higher than the nearest competitors. The dominance of Bayer in seed treatment related products for different crops also is in the nature of a monopoly which needs to be looked into. Even before the merger in many segments either of these companies have a monopoly which will only be further strengthened after the merger.   

Even as Bayer talks of divestment in different sectors and also Monsanto selling its cotton seed business to Tierra Agrotech, post the merger Bayer will seek to leverage big-data analytics and is likely to reduce the GMO platform in favour of other data platforms like Digital Farming Application. Exclusive near monopolistic hold over big data opens the possibility of its misuse and the fact that Bayer has refused to dilute its access to the Digital Farming Platform in the European Union is to be noted. Even more significantly the fact that the Russian anti-trust regulator has put this condition to allow the merger, is a matter that has to be noted.

The CCI should get Monsanto divest its stake from Mayhco to create competitive conditions. The CCI should get the combination to provide access to the relevant intellectual property for government use and humanitarian licensing, technological know-how and germplasm collections to an entity to be funded by Monsanto and Bayer which the CCI and the government will monitor.  The ICAR should be directed to develop technology platforms for sustainable agriculture to give farmers and domestic producers of agricultural inputs a real choice in the near future in India.   

AIKS sought time to collate farmer testimonies that will highlight the ground realities as opposed to claims by these predatory agribusinesses driven by the sole motive of maximisation of profits. This is all the more required because unlike other countries where competition authorities are investigating this particular merger (EU, USA, China, Brazil, Russia and South Africa), India has the maximum number of its people dependent on agriculture and for the companies, India is a strategic market to which they want unbridled access in undue haste.