US: NFU calls on FTC to oppose ChemChina-Syngenta deal
In public comments to FTC Secretary Donald S. Clark, NFU President Roger Johnson asserted that the deal further consolidates the highly globalized agricultural inputs sector. This decreases competition amongst the few companies that dominate the marketplace, limiting choice and raising prices for family farmers.
“ChemChina’s proposed takeover of Syngenta would disrupt trade flows and accelerate the international consolidation of food and agribusiness industries,” said Johnson. “We urge you to stand up for family farmers and ranchers and oppose the merger.”
Johnson noted that the ChemChina-Syngenta merger occurs against a complex industry backdrop, marked by highly concentrated agricultural biotechnology and seed markets. The global agricultural input marketplace is in the midst of a third wave of consolidation, as the Syngenta acquisition occurs alongside the proposed Monsanto acquisition by Bayer and a merger between Dow and DuPont.
“For 30 years, major agribusiness companies have been acquiring small companies, consolidating the marketplace and increasing their market share,” said Johnson. “Because these companies hold so much market power, family farmers have had less choice, less competition, and higher prices for their inputs.”
Johnson also noted that because ChemChina is owned by the Chinese government, the post-merged ChemChina-Syngenta would have a significant edge over its rivals in accessing the Chinese market. China’s seed market is the second largest in the world, and the largest international seed companies only capture 20 percent of the Chinese market.
“The Chinese government provides a host of benefits to its domestic enterprises that make them more competitive than international firms that operate without state subsidies,” said Johnson. “These firms receive below-market interest rate loans from state-owned banks and often the debt from these loans is forgiven or significantly written down. China’s policy to ensure food self-sufficiency provides an unfair subsidy for domestic food processing, meatpacking and agricultural production.”
Johnson pointed to the Chinese meat processing company Shuanghui (now known as WH Group) purchase of Smithfield Foods in 2013. Just two years later, Smithfield’s exports to China rose 50 percent and accounted for 97 percent of all U.S. pork exports to China.
“The ChemChina-Syngenta merger creates trade barriers and uncertainty in international markets. And alarmingly for American farmers, it further consolidates the international agricultural inputs sector. The FTC should reject ChemChina’s proposed purchase of Syngenta,” Johnson concluded.
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