Dow DuPont Merger Potentially Good for Ag?
A proposed merger between two giants of American business, DuPont and Dow, could ultimately result in an agricultural company more focused on farmers than either is today.
At least that's one interpretation of the proposed $130 billion deal, which would create the biggest chemical company in the United States and the second largest in the world.
Iowa State University management professor David King says what the two companies are proposing is that after they merge, they will then split the behemoth into three distinct companies. One of those would offer everything for agriculture that DuPont Pioneer currently has, plus Dow's fertilizer business.
"They'll be able to make, probably, better investments," King said of the new ag company's leaders. "They'll probably listen to (farmers) more than they would otherwise because they'll be their only primary customer."
King said regulators will take a close look to determine whether it's anticompetitive and he said the architects of the plan likely kept that in mind as they drew up plans for the three distinct businesses that will ultimately results.
But critics of industrial agriculture say the deal will hurt competition.
"Just a handful of large chemical companies including Dow and DuPont already control most of the seed supply used to grow crops like corn and soybeans, as well as the herbicides that genetically engineered seeds are designed to be grown with," said Wenonah Hauter, executive director, Food & Water Watch in a statement. "Any merger that consolidates this market into fewer hands will give farmers fewer choices and put them at even more economic disadvantage."
Iowa Republican Sen. Chuck Grassley, chair of the Senate Judiciary Committee, issued a statement of caution:
"Vigorous enforcement of the antitrust laws is imperative to maintaining an open, fair and competitive marketplace. I'll be listening to Iowa farmers and consumers about any concerns they may have with this proposal, and the Judiciary Committee will be exercising its appropriate oversight function."
King said the regulators could request changes to the proposal or its timeline, perhaps specific requirements around how long the big corporation can last before being split. He said financial markets reacted positively to the announcement but added, "with mergers and acquisitions the outcome is generally unknown."
Iowa-based DuPont Pioneer is a major employer and King said he thinks ultimately the reconfiguration "could actually be good news for Iowa, Des Moines and the people at DuPont Pioneer."
What it means for farmers in the rest of the country will remain to be seen.