February 9, 1998
Global Enterprises Dominate Commercial Agriculture
Consolidation is taking place in all sectors of the global
economy. While the volume of mergers and acquisitions in 1996
set an all-time high, 1997 deals shattered that record. As of
November 1, 1997, mergers and acquisitions involving U.S.
companies alone exceeded US$744 billion -- far surpassing
1996 figures of US$648 billion.
While most deals are struck in the industrial North,
consolidation is a global phenomenon. According to the United
Nations Conference on Trade and Development, global mergers
and acquisitions accounted for a record US$275 billion or 79%
of all global foreign direct investment in 1996. In other
words, four-fifths of cross-border investment worldwide was
the result of mergers and takeovers.
Rural Advancement Foundation International (RAFI) has been
monitoring alliances and mergers in the seed industry for two
decades. Commercial plant breeding and seed sales are no
longer the domain of small breeders and regional companies;
they are now clearly dominated by agrochemical/pharmaceutical
companies. The top ten seed companies control about 40% of
the global seed market, valued at approximately US$15
billion. The top ten agrochemical corporations accounted for
US$25.1 billion, or 82% of all agrochemical sales in 1996.
Global agrochemical sales were US$30.5 billion in 1996, up
more than 15% since 1994.
Over the past 18 months, Monsanto has invested nearly US$2
billion in seed company and related acquisitions. In November
1997, Monsanto acquired a major tropical germplasm base with
the acquisition of Brazil's Sememtes Agroceres -- giving
Monsanto an estimated 30% market share in the Brazilian maize
seed market. In January 1997, Monsanto took a giant bite out
of the hybrid maize seed market with the US$1.2 billion
acquisition of Holdens Foundation Seeds. An estimated 25% to
35% of the maize acreage planted in the U.S. is based on
germplasm developed by Holdens. According to industry analyst
Dain Bosworth, Monsanto's goal is to get its bioengineered
seed products on at least half of the 40 million maize acres
that Monsanto now has gained access to by acquiring major
seed companies.
Monsanto isn't the only multinational corporation
consolidating the maize market. In August 1997, DuPont (U.S.)
acquired 20% of Pioneer Hi-Bred, the world's largest seed
company, for US$1.7 billion. The two companies will jointly
invest US$400 million in an agricultural research effort and
form a new company, Optimum Quality Grains.
AgriBiotech, a U.S.-based seed company founded in 1995, wants
to control 45% of the market in forage and turfgrass seed by
the year 2000. AgriBiotech has made 14 acquisitions of seed
companies since 1995 -- with more pending. The company's
annual sales have shot up from US$4.7 million in 1995 to
US$230 million in expected revenues for 1997. The company
says that its takeovers would not have been so lucrative
without changes in U.S. plant breeders rights and patenting
laws that put limits on farmers' ability to save and re-sell
proprietary seed.
World's Top 10 Seed Companies Ranked by 1996 Sales
Company 1996 Seed Sales
(estimated in US millions)
1. Pioneer Hi-Bred Intl. (U.S.) $1,721
2. Novartis (Switzerland) $991
3. Limagrain (France) $552
4. Advanta (Netherlands) $493
5. Grupo Pulsar (Mexico) $400
6. Sakata (Japan) $403
7. Takii (Japan) $396
8. Dekalb Plant Genetics (U.S.) $388
9. KWS (Germany) $377
10. Cargill (U.S.) +$300
Source: RAFI Communique, November/December 1997.
Contact: RAFI International Office, 71 Bank St., Suite 504,
Ottawa, Ontario K1P 5N2, Canada; phone (613) 567-6880; fax
(613) 567-6884; email rafican@rafi.ca.
RAFI-USA, P.O. Box 640, Pittsboro, NC 27312; phone (919) 542-
1396; fax (919) 542-0069; email communique@rafiusa.org; http:
www.rafi.ca
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