Jacob Bunge reported earlier this week at The Wall Street Journal Online that, “Corteva Agriscience Inc.’s first day as a stand-alone company is a milestone in an agricultural deal making spree that has left the farm sector more consolidated than ever.
“The seed-and-pesticide maker, formed from the 2017 merger of Dow Chemical Co. and DuPont Co., began trading on the New York Stock Exchange on Monday as an independent entity. Corteva’s shares fell 8% in their first day of trading to $24.81, while shares in competing seed and pesticide makers climbed, and major U.S. stock indexes were little changed.
“Corteva’s debut follows Bayer AG’s $63 billion purchase last year of Monsanto, the biggest seed company, and Syngenta AG’s $43 billion sale to China National Chemical Corp., commonly known as ChemChina, in 2017.”
Mr. Bunge noted that, “That consolidation has reshaped the roughly $100 billion global market in seeds, pesticides and biotech plant genes, as low crop prices and trade disputes pressure farmers’ incomes. Some farmers say they worry that fewer providers will lead to higher prices and less choice. Democratic presidential candidates, including Senators Elizabeth Warren and Bernie Sanders, have called for a moratorium on further agricultural mergers and for the breakup of the biggest companies.
“Seed makers pursued mergers to combine research efforts and cut costs, as the agriculture industry trudged through a period of low crop prices brought on by big harvests and growing grain stockpiles. Farmers are consolidating too, seeking to reduce their own costs and drive better bargains for crop seeds, fertilizer and tractors. U.S. net farm income in 2018 was half the 2013 total, the U.S. Department of Agriculture estimated.”
The Journal article added that, “Corteva, Bayer and ChemChina together now represent about $50 billion worth of seed and pesticide sales annually. Bayer and Corteva combined make up about 60% of U.S. seed sales, according to data compiled by Sanford C. Bernstein. Fertilizer suppliers, including Nutrien Ltd. and Mosaic Co., have struck their own multibillion-dollar merger deals in recent years.
“Corteva plans to ramp up competition with Bayer this year in genetically engineered seeds. This spring Corteva began selling farmers new biotech soybean seeds, partly developed by Dow, that can survive a herbicide known as 2,4-D.”
