Market leadership, or monopolization?
So, ChemChina bought out an agricultural conglomerate, Syngenta. Both are not based in the U.S. Specifically, ChemChina is an agribusiness behemoth, and only getting larger. What will this do to competition in the agribiz industry? What will this do to the quality of food, and type of seed available? Will this globalization and concentration result in an episode of humanity putting all of its eggs in one basket? Thinking disease and such (Irish potato famine anyone?) as well as GMOs producing unforeseen consequences.
AND...ChemChina is a 'business' in Communist Red China. The government there owns all of the businesses in China (or at least a majority share). Who competes with the government?
Pull quote extraordinaire..."...this is of particular concern since state-owned businesses frequently do not act in economically rational or predictable ways.”
ChemChina’s purchase of Syngenta could be beneficial to American farmers. Aside from the lack of trust from farmers that are unwilling to purchase seeds or other inputs from a Chinese-owned company there is great potential to benefit the U.S. If Monsanto’s 2015 bid had been successful there would be antitrust concern. Syngenta selling to ChemChina however isn’t expecting to have any impacts upon lawsuits, so it should be much less complicated. Except for the untrusting farmers who are willing to go to some other company to purchase seeds and other things. However, the deal ChemChina offered is much better than the one Monsanto offered. Also GMO’s are more likely to be accepted sooner rather than later. GMO’s are a big help to farmer’s and although long term impacts are yet to be seen, this could make a big difference in the agricultural business. Competition will also remain strong in this market for seeds, crop protection and crop nutrients. This also relates to one of Mankiw's economic principles, that trade can make everyone better off. Syngenta is now able to specialize with ChemChina who is said to be quite popular in the marketplace for crop protection.
ReplyDeleteCompetition in the agricultural chemicals and seeds market will decrease after state owned Chem China recently purchased Syngenta, a large Swiss based agricultural firm last month. The quality of the products sold will also likely decrease, because of the decrease in competition between producers in the market. But all of this is speculative because state-owned businesses often don’t follow market trends, or patterns. The future is uncertain, but a decrease in market competition due to a decrease in the number of producers will likely lead to an increase in price and a decrease in product quality.
ReplyDeleteChemChina buying out Syngenta creates the opportunity for another disaster. Maybe not in the sort of the Irish potato famine, but still a major issue. The future can be speculative on the quality of goods that the agribusiness market will provide. Because in economists eyes the decrease in competition should make the quality of products go down, but, we really won’t be able to tell until it happens, because the majority of ChemChina is owned by the supposedly "People's Republic Government of China," a communist government, the future of ChemChina, and in fact, the agribusiness industry, lies in the hands of those who will use it to take over the industry and form a monopoly. Then, the issue of some sort of consequences really arise.
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