The world of global industrial agriculture is a commercial effort on a grand scale. While tempting, it really is too big a boast to suggest industrial ag might feed us all. Clearly there are billions who feed themselves without a significant contribution from industrial ag interests. But whether such a grandiose boast is tenable or not, industrial agriculture remains an enormous enterprise; as well it probably should be. If you haven’t milked a cow or picked fresh produce you are easily among one of the largest majorities on this earth today. In the US its estimated that less than 2% of the population is involved in production ag (read: farming). Similar estimates describe agriculture in Germany, and the majority of the industrialized world. Agriculture as an industry, however, makes up an incredible piece of our economy. Most involved in agriculture are not working on the farm. The little farm I brag about owning is not the main source of my daily bread – but I have milked a cow and picked fresh vegetables. Perhaps I might consider myself somewhere between the 2% and the rest.
There are quite a few other workers in a similar place to my own. Workers in the agriculture sector who have firsthand knowledge of production ag, but are not making the majority of their income from the same. I’m thinking here especially of colleagues who do agricultural research like plant and animal breeding, research to combat disease, to improve husbanding efforts, to improve food safety, to expand nutritional frontiers. Many of these latter activities can be too complex to be solved by the men and women actively working their land or their flocks/herds. The US government recognized the value of investing in research all the way back in the middle of the 19th century. The commercialization of these research efforts has a shorter history. Without going into the specific history of the corporatization of agricultural research in the US I do want to draw a little sketch about where some of the companies involved find themselves today.
As 2016 begins to wind down the corporate ag sector is imploding in terms of numbers of major players. The consolidation had been going on for more than a year and looks to be with us for another year or two until some regulatory interests weigh in. If this is all news to you, then a simple online search of names like Syngenta, Dow, DuPont, Monsanto, or Bayer could bring you up to speed. I personally know a handful of fine folks in all the named companies. Indeed, I also know a fair sized group who could sport more than one of these names on their vita. And many of these acquaintances are salt of the earth… they’re fine folks.
In October of 2015 I posted a short piece about the then announcement that Monsanto was going to lay off 2,600 employees. At about the same time Monsanto was actively looking for a takeover target . (Syngenta was the most hyped target for a Monsanto purchase at that point in time).
Most of the rationale for the massive reduction in force was because of a fall in corporate income. And from a purely capitalist perspective there was a need to realign costs with income. Monsanto was not alone facing tight budgets [though I did secretly enjoy pillorying them for their smug justifications]. Perhaps oversimplified – but the narrative of the time (and still a fair representation of today’s situation) was that ag income was very tight due to expanded inventories of raw materials like corn, soy, and wheat. The food shortages of 2007, 2008, with their attendant high commodity prices had already become an historical footnote.
Earlier this year Monsanto went from being a potential buyer to being a potential target. And pending regulatory approval, Bayer Crop Science might end up owning a significant piece of what today is Monsanto. Over a year ago one could easily find plenty of market discussion of Monsanto’s bid for Syngenta being a play for a tax inversion.
Today, if the Bayer purchase succeeds, Monsanto will have effectively backed into a tax inversion. Pretty clever, no?
But let me return to those 2,600 folks Monsanto promised to ditch last year… I know a few of them personally. Will the bleeding stop there? Not likely. One might reasonably presume there will be more shrinking of R&D efforts if any or all of these mega-mergers moves ahead. Perhaps more of my colleagues will be asked to find other employment. These are not sinister folks. Several of the affected are highly trained professionals – in whose company I’d be proud to be included (except for the unemployed part).
I have to imagine the ag economy will rebound. Opportunities for highly trained professionals will once again return to former levels. Further improvements in crop and livestock genetics will be found, further insights into crop and livestock management will be forthcoming. Weather will continue to play a critical role in total crop production. When the weather hits hardest prices will spike and incomes where there is food will be good. On the opposite hand, when food is abundant there will be arguments against the prevailing rates of research investment. At that point one has to wonder “How much is enough?”. If we return to a time when anyone is hungry because we can’t produce enough food, then I’d suggest we did too little to prevent it when we had the chance.
_____________________________________________________________________________________________________ Bayer/Monsanto business card image credit: http://naturalsociety.com/monsanto-discussions-acquire-bayer-crop-sciences-6113/
The story in the link was posted in March of ’16. Interestingly it suggests Monsanto was pursuing the Bayer Crop Science division of Bayer. You can hear the management of Bayer telling the Monsanto folks: No, take two aspirin and call us in the morning.