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Concentration – farmers want more choice

BERT FRÖNDHOFF | handelsblatt | 6 october 2016

PA’s digital agriculture report is featured in an article in Handelsblatt which explains why farmers fear the impact of market concentration after the Bayer Monsanto deal. They’ll face price pressure when selling and increased cost when buying seeds or other commodities.

The article explains that farmers in the US are criticising the trend of ‘one-stop-shopping’ - when agrochemical companies like Bayer and Monsanto try to provide everything from crop protection, seeds and digital technology from one source. This kind of vertical integration would result in fewer choices for farmers – combined with higher prices and less innovation. 

The article goes on to draw on PA’s analysis which shows that this is not the case. The trend towards ‘one-stop-shopping’ has two key features. Bundling of supply provides advantages in terms of better alignment and seamless integration of products for the farmers’ use. At the same time farmers need to be wary of an ‘ecosystem’ that means producers tie customers so closely they destroy competition. The article explains that PA compares this with iPad and iPhone users having to rely on Apple’s online store.

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The article goes on to say that farmers in Germany also fear that concentration and bundling of supply by fewer providers will increase. For them this shouldn’t hinder innovation and diversity. At the same time companies in many sectors are following this trend – aiming to become that ‘one-stop-shop’ providing everything like Apple today, or Bayer in future.

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