Volatility

January 19, 2016

Concentration in the Poison Sector (Dow/DuPont; Syngenta; Monsanto)

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The year 2015 was a year of concentration in the already uncompetitive poison sector. For many years the pesticide and seed markets have become increasingly dominated by a small handful of corporations – Monsanto, Syngenta, Dow, DuPont, and a few others. The GMO phenomenon has greatly accelerated this trend, as the world’s most powerful governments and corporate sectors have boosted biotech worldwide as capitalism’s last great hope to break the bonds of physics and biology. This has profound religious, economic, and paramilitary implications we’ll discuss in depth as we proceed. For today we’ll stick with the proximate phenomenon of sector concentration.
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First came Monsanto’s bid to buy Syngenta, which Syngenta rejected with some disdain. Most onlookers thought it looked like a good fit – Monsanto’s seeds and traits to complement Syngenta’s more diversified pesticide line. But Syngenta evidently was not as interested in Monsanto’s GMO line as conventional wisdom thought it should be. In August Monsanto gave up for the time being after Syngenta had rejected at least three Monsanto bids. As the year wore on Monsanto announced two major rounds of contraction. In October the company announced it would cut 2600 jobs (12% of its work force), buy back stocks (down 30% since February at that time), and undertake a “restructuring” including cutting research and development spending. (Around the same time Syngenta and DuPont announced more modest contractions.) Later that month the company said it would close three R&D centers which focus on genetic engineering and breeding development, cutting another 90 employees. Both GMO and Roundup sales are down compared to the previous year. The new year looks no less bleak as Monsanto announced a third contraction. The company announced deeply depressed Roundup and GM maize sales, larger than expected losses, and will cut another thousand employees. Monsanto’s fundamentals are not looking good.
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In November the Chinese conglomerate ChemChina made its own bid for Syngenta. The company rejected this first bid, but is now said to be in “advanced talks” with ChemChina. Its chairman now says Syngenta is merger-minded, but continues to disparage a potential Monsanto deal. When the music stops Monsanto’s going to be left without a chair! In December Monsanto also announced it would not proceed with projected construction of a seed factory in Iowa. DuPont also cancelled three Iowa projects. The climax was the announcement that Dow and DuPont will merge and then split into three companies including one dedicated to agrochemicals. The proposed agrochemical spinoff would represent $19 billion in combined sales from the two companies. This would make it the largest GMO/pesticide company in the world. The Dow/DuPont deal evidently spurred Syngenta to enter the final round of negotiations with ChemChina, in part because of the increasing unease of Syngenta’s shareholders. The company’s chairman has hinted that he thinks Syngenta could become China’s primary supplier of GM technology and primary Western partner for China’s long-planned attempt to build its own GMO/pesticide conglomerate and assert itself globally in competition with the US-based cartel.
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According to the business papers, the proximate reason for the woes and tensions disturbing the sector has been the prolonged sagging of agricultural commodity prices. The downturn has caused many farmers to cut back on their high-input, highly expensive commodity crop production, and this in turn has been affecting the profits of Monsanto and others for a few years now. This in turn makes them disreputable on Wall Street. It’s great to see agribusiness hurting under the same vicious circle of high input prices, low harvest prices, and the imperative to “Get Big or Get Out” they help force upon farmers. (Roundup Ready crops, for example, were specifically designed to accelerate Get Big or Get Out. They were never seriously claimed to increase yield by the acre. Rather, they were supposed to make it easier to cultivate a greater acreage. The farmer would allegedly “make it up on volume”. Thus they were intended to accelerate farm consolidation.) And this increasing sector consolidation will just squeeze the oligopolists further and render all the economic pathologies worse. The fundamentals look bad.
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As a rule mergers among oligopolists are the sign of a superannuated, calcifying, decadent sector. It means companies are running out of ideas, losing confidence in the sector and in themselves. It’s the most extreme version of buying your ideas, patents, and products rather than being an innovator and entrepreneur who develops these yourself. Dow and DuPont believe they’re reaching dead ends and each needs to buy what the other has. Dow needs Pioneer germplasm*, DuPont needs Dow’s genetic engineering expertise and patents. Everyone recognized how Monsanto was trying to achieve this with its Syngenta bid. But Syngenta seemed not to want any kind of deal at all with them. Evidently Monsanto has nothing it wants, at least not at the price Monsanto offered. Meanwhile a few years ago BASF’s GMO operation was driven out of Europe completely. Those two may end up having to get together.
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[*Dow’s germplasm situation is interesting. If you look at ISAAA data, it looks like prior to the Enlist system Dow’s only solo commercialized GMO line has been some varieties of Widestrike cotton, while their other projects have involved contributing transgenes to joint products with DuPont and Monsanto. If you look at Dow’s seed company holdings, they’re relatively meager compared to those of DuPont and Monsanto. I’ll suppose that for those joint projects Dow had to rely on the other company to contribute not only transgenes of its own but much or all of the genetic framework.**
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Then there’s the curious fact that for several years running Dow’s been surprisingly willing to sit quietly for regulator-imposed delays. First there was the USDA delay while the agency ran a full Environmental Impact Statement. Then came the EPA’s imposition of various restrictions on Enlist commercial plantings in 2015, and most recently EPA’s temporary revocation of Enlist Duo’s registration. It’s almost as if Dow is nervous about its own product for some reason. It’s not displaying much of the aggressiveness we’re used to from the GMO corporations. Do they doubt some fundamental of the product, like perhaps the quality of their own seed genetics? That would be part of the explanation for why Dow was so ardent for this merger.]
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Another force driving the sector toward trying to diversify through consolidation is fear of the political countermovement against agricultural poisons. Monsanto is especially vulnerable, dependent upon Roundup for about 70% of its revenues. Roundup accounts for half its sales, while GMOs dependent upon it make up much of the rest. This is why Syngenta had little interest even in Monsanto’s GMO business. In 2015 the entire world learned for keeps what campaigners, Monsanto, and regulators have long known, that glyphosate causes cancer. With the WHO’s announcement the clock is now ticking, counting down the rest of glyphosate’s legal life. The people will now slowly but surely force the complete banning of glyphosate-based poisons. The bell is tolling for Roundup, Monsanto knows it, and so they must find new products or die. They’re hyping everything in sight, from slapping new ad slogans on old, pointless, narrow-market products to touting the idea of RNA interference GMOs. But if these ever came to market they’s still be the same kind of shoddy insecticidal GMOs which in Bt form are already a failure with a gradually diminishing market.
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The fact is that the structural reason driving the current consolidation is that GMOs are a shoddy product and don’t have much of a market or a future in themselves. On the contrary, there’s a growing consensus inside and outside the sector, including on Wall Street, that the pesticides remain primary, with the GMOs being secondary to these and dependent upon them. Their fundamentals are bad. In other words the finance sector now agrees with what GMO critics have said from the start, that GMOs in the real world are nothing but pesticide plants, poison plants. (As opposed to GMO hype and hoaxes of the pro-GM activists and the corporate media.) Although Wall Street is poor at acknowledging its own pyramid schemes, it knows how to call them out in other sectors. GMOs are a scam.
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None of this is a surprise and confirms what we critics said all along. These are poison companies, their number one activity and goal is to manufacture and sell poison, therefore the primary proximate goal of GMOs must be to sell more poison. It’s actually astonishing that anyone was ever willing to believe such a self-evident absurdity as that the likes of Monsanto or DuPont would ever market a product which would cause them to sell less of their primary products. Yet that’s what the peddlers of the “GMOs lessen pesticide use” lie would have you believe.
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Sure enough: 1. With the deployment of GMOs, pesticide use always increases.
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2. It has to, since these are poison plants and are designed only to sustain poisons being sprayed upon them (in the case of herbicide tolerant GMOs), or to handle only certain “target” pests (Bt products). The rest must still be met with sprays and seed coatings. Bayer and Syngenta didn’t participate in GMO deployment and support the GMO idea in general because they thought they’d sell less neonics.
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3. Both of these GMO genres, the only ones which exist and the only ones in the pipeline, are failures. They can be called “successful” only according to the Failure is Success form of planned obsolescence and the ever-escalating, ever more expensive stacking-and-pesticide treadmill.
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GMOs have a tenuous future. Everyone knows that herbicide tolerant and insecticidal GMOs are running out of room. Once SmartStax, 2,4-D, and dicamba fail, what then? That’s why there’s such a propaganda campaign touting CRISPR, “gene editing”, RNAi. The sector is trying to convince itself, Wall Street, governments, commodifiers, food manufacturers and retailers, and the world at large that there’s a whole new GMO frontier to be opened up. To be sure, elites everywhere want to believe this, since capitalism as such badly needs it. But so far this is all in the realm of fantasy, and there’s no reason to believe it will ever break free of the land of lies, where the “first generation” of GMOs remains to this day.
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The media claims GMOs mean gene editing for agronomic and product quality traits? I’m afraid not. Today’s GMO reality is the collapse of the Roundup Ready system and the sector’s reactionary, luddite answer: To double down on proven failure by regressing to GMOs tolerant of older, even more destructive herbicides. This is the context in which the evolution-denialist system is promulgating the backward, luddite “solution” of corn and soybeans engineered to tolerate the retrograde herbicide 2,4-D, one of the two primary components of the chemical weapon Agent Orange. This is one of the dark age poisons which Monsanto and the US government originally promised would be permanently relegated to the scrap heap by the Roundup Ready system. Dicamba is another such regressive chemical being poised by Monsanto for a comeback.
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There’s the real GMO future as demonstrated by the actions, rather than the media lies, of the corporations and regulators. And this bears out the fact that, contrary to the moronic techno-hype and fundamentalist cultism of GMOs, the real fundamental of corporate agriculture remains the most regressive, stupid, blunt-instrument, flat-earth technology of all, pesticides. The best irony since the IARC finding has been the spectacle of our intrepid futurists, who always tried to hold aloof from the dinosaur pesticide technology while exalting their idolized space-age GMO technology, having to reduce themselves to the level of Roundup shills. This too proves something we always said about them, that for all their high-flown scientism pretensions, they’re really nothing but gutter Monsanto bootlicks. This is the real character of the GMO sector – antiquated, backward, an economic and innovation bottleneck, shoddy, tawdry. This is borne out by one consistent thread which runs through all the sector consolidation events. Monsanto’s contractions, Monsanto’s proposals to Syngenta, the Dow/DuPont merger (see several of the links above) – all involve cutting research and development spending. In other words the sector has reached the point where it thinks more in terms of stock buybacks and scrounging whatever technology and patents it can buy rather than developing anything on its own. To some extent this is inherent to any big corporation and any oligopoly sector. But it’s especially congenital to the agrochemical sector, which was always based on accelerating planned obsolescence toward its inevitable culmination in the complete exhaustion and obsolescence of the entire paradigm.
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The sector faces another problem – GMOs are reaching market saturation. The cartel won’t be able to force a market for them in Africa unless it can either grab the land to turn it into vast industrial plantations to grow CAFO feed for Asia, and/or convince enough smallholder farmers to fall for the same scam Monsanto used on cotton farmers in India. (But Bt cotton has already been tried and rejected in three African countries, and the word is out.) But can the several African governments play the same carnival-barker role the Indian government did? This is the Monsanto/Gates Foundation “New Alliance” plan, with massive corporate welfare to be financed by the taxpayers of the US, UK, and Africa, geared to the complete subjugation of African agriculture to land-grabbing and monoculture production for commodity export.
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Even if the sector can overcome the stiffening political resistance and inherent agronomic resistance (pests and diseases which flourish) to this scheme, how much and how long can the Asian middle class prop up its demand for this forced supply? The agribusiness sector is the most supply-driven of all and is 100% dependent on forcing artificial markets into being, for example convincing people to whom it never occurred before that they want to eat a lot more factory farm meat. Obviously a sector whose entire existence is based, not on real demand, but on puffed up fictive “demand” which can dry up at any time, and which will dry up as the masses lose the capacity for luxury spending, is built on sand. Here again, everyone recognizes the basic bubble, pyramid scheme character of the whole sector. It’s ironic that GMO jargon uses the term “pyramid” for another of its scams.
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China’s stock and real estate bubbles are cruising for a big fall. With any significant Asian recession, the whole Africa plan collapses for lack of even a theoretical market. Or if by then the sector has already forced full-scale commodity monoculture upon Africa and is generating huge amounts of GM maize and soy there, they’ll have to dump it on the rest of the world and further crash those commodity prices.
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Meanwhile, unless the cartel can seize control of the land in India they’ll soon be run out of the country. Anywhere on earth there’s still a large mass of small farmers, corporate agriculture is in a race to grab the land before their products are worn out and cast out. Although the sector’s propaganda continues to flog the long-debunked lie that GMOs can be good for small farmers, in reality only where the land is concentrated into vast commodity plantations can the sector maintain its GM seed sales. Soon this will be true of pesticides as well.
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Meanwhile, as we discussed earlier, the seeds accelerate the obsolescence of the pesticides, which then also renders the GM seed lines obsolete. This has been a campaign of planned obsolescence; the sector wants to force farmers to buy ever higher stacks and deploy an ever more complex multiple-pesticide choreography. But at the same time this accelerates the discrediting of the whole pesticide plant concept at the same time that it renders GMOs and pesticides less and less affordable. Sector oligopolists are in a race against time and resistance, and they’re not getting ahead as fast as they’d hoped. Monsanto originally expected to have attained near-complete monopoly for the sector by sometime in the first decade of the century. Obviously they’re falling well short and very late of that goal. Thus the oligopolists are reaching the point where they have to consolidate among themselves.
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The fact is that both the GMOs and the pesticides are ill-conceived, ultimately self-destructive product types. It’s not just that many of the products, such as most of the GMOs, shoddily constructed. The basic idea underlying all the products – using poison against agricultural weeds and pests, and synthetic inputs including transgenes to meet other agricultural challenges – is bad in principle. The entire agrochemical sector is built on sand. The fundamentals of all these companies and their sector as a whole are bad.
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What’s going on is more profound than the superficial accounts of the business section, focused as it is on stock prices and quarterly “earnings”. The sector is following its destiny in accord with the Poisoner imperative, a structural economic, political, religious, and biological campaign. Although Wall Street and politics are forcing these companies to make certain accommodations with reality, such as recognizing the primacy of pesticides over GMOs on the most reality-based level, nothing has changed for them ideologically. They are committed to the total domination of their program of eugenics via genetic engineering. They’re just in an ever more pressing race against time, as the ecological resistance, expressed biologically, economically, and politically, is becoming stronger by the year.
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Although the companies of the GMO cartel grudgingly recognized their need for high-quality agricultural germplasm such as could be bought through Pioneer, their original disdainful arrogance was no accident, nor has this fundamental ideology changed. Reality may have forced itself upon Monsanto when the company finally bowed to the need to put its transgenes into good crop varieties (and thus it embarked upon its odyssey of buying seed companies – as always, Monsanto never innovates anything, just steals or buys the work others have done), it did so under duress and to this day doesn’t really believe in it. Deep down any techno-cultist, for example a GMO fanboy, thinks the technology he idolizes is the only meaningful reality and has nothing but contempt for everything else. That’s why pro-GMO activists are so ignorant of every branch of science – genetics, biology, ecology, botany, entomology, agronomy, physiology, medical science, you name it – and have such contempt for knowledge as such. They spew the word “Science” but take great pride in knowing nothing about it, its content or how it works. No one becomes a religious zealot of genetic engineering because he has respect for natural or agroecologically bred genetics. He does it because he has fear and loathing for anything which is not under the control of high-technology engineering. To be precise, their idolatry is for the idea of such technological control. The fact that in practice GMOs are such an imprecise, stupidly executed, shoddily performing product doesn’t matter to the cultists, only their shining idea. Which is good for them since by now they have no choice but to be shills, not only for the mythically “hi-tech” products of genetic engineering, but for what until not long ago they themselves sneered at as dinosaur technology, sprayed and slathered pesticides like Roundup.
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The history of genetic engineering displays a level of combined ignorance and arrogance on the part of its practitioners and controllers which is astonishing. Monsanto started out thinking they’d take their Roundup Ready gene and their Bt gene, stick them into any old public domain maize variety, and then just mass produce it for every farmer the world over. Robb Fraley’s notion, which the company tried to follow at first, was that they’d do exactly what Microsoft had done with software, their transgenes being the Windows-type “software”, with the crop and its genetics being the basically stupid, meaningless “hardware”. This is typical of the delusion that on the one hand things like computer software, patents, corporations, money, are real things, while on the other something like agricultural germplasm is mystical “information”. They simply tuned out anyone who tried to tell them agriculture doesn’t work that way. This delusion is endemic to scientism and corporatism and is connected intimately with the monoculture mentality those cults also share, in agriculture as well as every other realm of thought and action.
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But in fact the ecological reality is the only reality, and agroecological ideas are the only ideas that can truly work for agriculture as well as ecology, and for a healthy economy and polity as well. But nothing about Monsanto, Roundup, or GMOs – corporate control, profits, patents, the idea of precision control and manipulation of physical genomes – touches reality at any point, while the poisons can only destroy, never create or sustain. The fundamentals are bad. From the most hermetic, short-run Wall Street preoccupations to the most profound intellectual and ecological arcs, the fundamentals are bad.
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This is the real reason the poison sector’s confrontation with nature, its attempt to subjugate the ecology by force, only drives itself further into no man’s land. Today the GMO cartel feels insecure enough that it must retrench the only way it knows how. Tomorrow it will perish completely.
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**Charles Benbrook’s “Free Pioneer” idea would be good if there was a way to do it. In spite of Breen’s assurances that the new agricultural spinoff won’t cut productive jobs at Pioneer, just “middlemen”, that’s often not the way it works. Pioneer could still be worth something to agriculture, whereas the rest of DuPont, and all of Dow, is worthless and destructive. That in itself usually means the worthwhile, constructive part gets gutted.
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Pioneer is still part of unsustainable commodity agriculture, but it is an important repository of germplasm and breeder expertise, and in theory it could be refurbished for a mission more in line with agroecology, if it could be liberated from the corporate clutch.
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In the meantime, Benbrook is right, the one thing guaranteed is that this merger will further squeeze farmers and reduce their seed choices. Which will be a further opportunity for we who are exhorting GMO farmers to switch to non-GM, and industrial farmers in general to switch to organic.
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Food and Water Watch has a petition to the Justice Department urging them to block the merger.
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Monsanto really is in some serious trouble with its Roundup vulnerability. With glyphosate on the ropes politically, Monsanto could go down quickly if there were a domino effect of bans. If people wanted to get together to focus on getting glyphosate banned everywhere possible, it could become a permanently crippling blow.
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4 Comments

  1. […] than GM seeds) than Monsanto and therefore relatively better positioned (but over the long run the fundamentals are bad for all of industrial agriculture), Syngenta evidently is being subject to stick-ups by both China […]

    Pingback by GMO News Summary, February 5th 2016 | Volatility — February 5, 2016 @ 5:17 am

  2. […] in all this, their reality and the idea of them. All GMOs are of course designed to maximize the production and use of pesticides. In the specific case of Bt brinjal, an especially worthless product in […]

    Pingback by Symbol of Poisonism: Pull the Plug On Bt Brinjal | Volatility — February 13, 2016 @ 3:36 am

  3. […] and general stock bubble] but in direct defiance of the real fundamentals of the sector. We see the basic lack of connection with reality which has always been evident with agricultural GMOs and genetic engineering in general. When an […]

    Pingback by GMO News Summary February 19th, 2016 | Volatility — February 19, 2016 @ 9:26 am

  4. […] obsolete. On the contrary, it was always obvious that the newer product was also meant to increase sales of the older one. . The two state governments have formed a joint committee to come up with a plan. It sounds like […]

    Pingback by Indian Agriculture, Crises and Solutions | Volatility — February 22, 2016 @ 4:37 am


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