Latin America Remains a Hot M&A Market for Global Agribusiness
15 August 2023 Merger and acquisition activity is all part of the natural order of mature markets, writes Javier Chavarro in a recent article in AgriBusiness Global DIRECT. Latin America is not different with several key deals having recently taken place. While there is enormous opportunity to gain economies of scale, M&A activity can create concern for those not directly involved.
The acquisition of Monsanto by Bayer a few years ago raised concerns among farmers and environmentalists in Latin America due to the dominance it creates in the seed and pesticide markets. The article suggests that this consolidation could lead to higher prices for farmers and a reduction in biodiversity.
Another significant M&A brought together Dow Chemical and DuPont. This deal has also raised concerns about market concentration and potential negative impacts on farmers through reduced competition and higher prices for agricultural inputs.
The Syngenta by ChemChina deal has faced scrutiny from regulators in several countries, including Brazil with some concerned the acquisition could lead to increased Chinese influence in the Latin American agribusiness sector.
Other M&A activity includes the acquisition of Nidera by COFCO, the purchase of FMC’s crop protection business by FMC Agricultural Solutions, and the merger between Agrium and PotashCorp.
These deals are part of a broader trend of consolidation in the agribusiness sector. It suggests that this consolidation could have both positive and negative impacts on Latin American agriculture. On one hand, it could lead to increased investment and technological advancements. On the other hand, it could result in reduced competition and increased market power for a few dominant players.
Regulators need to carefully review these M&A activities to ensure that they do not harm competition or negatively impact farmers. All stakeholders should actively engage in the regulatory process to voice their concerns and ensure that their interests are protected.
Overall, the recent M&A activities in the Latin American agribusiness sector and their potential implications raise concerns about market concentration, increased prices for farmers, and reduced biodiversity. It also emphasizes the importance of regulatory scrutiny and stakeholder engagement to mitigate these potential negative impacts.
Read the full article in AgriBusiness Global DIRECT.
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