Why A Bayer-Monsanto Merger Would Be Dangerous For Producers And Consumers

On Tuesday, Monsanto Company MON rejected Bayer AG (ADR)BAYRY’s $62 billion acquisition offer, arguing that it was "incomplete and financially inadequate." However, the former assured it is open to continued discussions regarding the terms of a buyout with the German chemical and pharmaceutical company.

However, many Bayer investors are not happy with this move, as they believe the company would have to incur too much debt and become too focused on agriculture.

But, it is not only Bayer shareholders who should worry. In an article published Tuesday, MarketWatch reporter Emma Court explained “why a Bayer-Monsanto merger would be bad news for anyone who farms — or eats.”

Related Link: JPMorgan: Monsanto Shares Could Hit $180 Over The Next 5 Years

A Dangerous Merger

If Bayer managed to acquire Monsanto, farmers around the world will be in trouble, experts have said, as the consolidation of two of the field’s largest players could also reduce farmers’ bargaining power and ability to choose between different products. In turn, this would result in surging seed prices, which would be also reflected in grocery retail prices, the note explained.

Leaving the well-known criticism of Monsanto and how harmful its products are aside, Robert Lawrence, a Johns Hopkins School of Medicine professor and the founding director of the Center for a Liveable Future explicated that, in terms of diversity, this deal is really dangerous. About 90 percent of soybean seeds sold in the United States come from Monsanto already, he stated, adding that the country used to count on 30 to 40 varieties of soybeans.

While genetic engineering in seeds is often questioned from a health perspective, Lawrence explained that the real hazard comes from how it hampers biodiversity. “Bred to be better in various ways, and marketed as such, genetically engineered seeds — which lack crucial genetic diversity — dominate,” Court supplemented.

Related Link: Bayer's Bid For Monsanto Might Bring "Short-Term Pain, Long-Term Gain"

The problem with a lack of diversity is that diseases and weather variations could ruin entire crops, substantially impacting consumer prices. Greg Jaffe, biotechnology project director at the Center for Science in the Public Interest also agreed with this statement, although he granted the companies the benefit of the doubt. “I don’t know if that will in the end give farmers more choice in the seeds and traits in those seeds or less choice,” he voiced. “It might allow Bayer to put more of Monsanto’s seeds in their variety [...] or they might choose to produce less varieties.”

“It’s already a very consolidated marketplace [...] All the mergers on the table really kind of cut it in half,” Patty Lovera, assistant director of the nonprofit Food and Water Watch concluded.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.