On Monday, German drugs and chemicals manufacturer Bayer stunned the market with a whooping - $62 billion – all in cash offer to buy St. Louis-based Monsanto. As the largest ever all-cash takeover sent the share holders into frenzy, millions of farmers who hold no stakes in these companies may have a higher stake at risk.
Monsanto, is currently locked in a legal battle with the Indian government and has been blamed for crop failure which led to thousands of cotton famers committing suicide in the past.
Who are Bayer & Monsanto?
Bayer a German company makes drugs and farm chemical and has 1,17,000 employees worldwide. The takeover would make the conglomerate world’s largest seed and farm chemical company. Monsanto manufacturers genetically modified seeds and weed-killers. With 21,183 people working for them it has strong presence in many parts of the world, including India.
What it means for India
India has one-fourth of the total cotton growing area of the world, yet China with only half of India’s cotton area growing is the world’s largest producer of cotton. India’s yield per hectare is less than 70% of the world average and guess who controls 90% of India’s cotton seed supply – Monsanto.
When BT cotton was introduced in India, it promised better yield, lesser fertilizer use and increased tolerance to pest and in the initial years the results were promising. But soon farmers had to use more fertilizers and pesticides as pests became resistant to chemicals and also seed prices skyrocketed.
The big question is if Bayer joins hands with Monsanto, will they also be in a position to control seed and farm chemical prices? Experts say that, if the takeover happens then three major companies will be controlling 75% of the farm chemical industry and over 60% of seed supply of the world and it will lead to increased prices.
India already has started to feel the heat of increase in prices. According to Cotton Advisory Board, farmer’s expenditure per hectare has increased threefold in 2007 – 2012 period alone. Earlier this year, crop failures led the Indian government to cap Maximum Selling Price (MSP) of GM cotton seeds and also cut the royalty fees by 74%. Monsanto Mahyco Biotech (India) Ltd (MMBL), has challenged the order in court stating that government does not have the power to do so.
Responding to a threat by Monsanto on leaving the country, Agriculture even Minister said that India doesn’t mind the company quitting the market. Though India is hoping to develop its own GM cotton, many feel that it’ll be difficult for country to work it out, stressing on the power of a company like Monsanto wield. So, in the present conditions, the takeover if happens is for sure to have an impact on Indian farmers.