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Six Left Standing

Growers may think they are in a tough business, but they should look at the large crop protection companies and be thankful. The crop protection market has been shrinking in the past couple of decades, and today just six major companies are left — Syngenta, Bayer, Monsanto, DuPont, BASF and Dow. These six have remained in business by consolidating; all of them have purchased other crop protection companies and/or seed companies.

Longtime employees of these companies can recite a litany of obsolete companies with which they were once employed. At an international Bayer CropScience press conference, it took a cheat sheet to keep track of the workers' employment histories. They may have once worked for Hoechst, Schering, AgroEvo, Rhone Polenc or Aventis. The same is true of other companies. I'll run into former Cyanamid employees who are now with BASF. Or at Syngenta, I'll see Ciba, Sandoz, Zeneca and Novartis veterans.

Is the heavy consolidation in this industry complete? I've heard both yes and no on this question. Chemical industry analyst Steve Byrne predicts there is more consolidation ahead. He says that, although these six companies are strong enough to stand alone, further buyouts are probable because growth has been flat over the past few years. He also notes that older products dominate, even though the companies are spending about 10% of their budgets on research and development. For example, nine of the top 10 global herbicides were introduced in 1986 or earlier. Only one, Callisto, has been introduced since then — in 2001.

However, Rudiger Scheitz, member of the board of management for Bayer CropScience, says there is no company left to partner with in the crop protection business, unless it is a very small company. “For us, consolidation is not possible,” he reports. Although the company won't consider further investment in the corn and soybean seed market, it may consider investing in vegetable seed companies.

What about the problem of the lack of new products? Scheitz says Bayer has maintained a strong research and development budget, even in the corn herbicide arena. “Yes, we are quite brave and will stay with our herbicide research,” he says. “I personally believe there will be new opportunities because Roundup technology is 30 years old.”

If Bayer and others continue their research, maybe there will be new blockbuster chemicals to handle evolving weed and insect challenges. The health of these large companies may depend on it.

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