An extraordinary event will take place in the agro industry this week. American agrochemistry giant Monsanto and Germany’s Bayer, a specialist in pharmaceuticals and life sciences, will officially tie the knot. Following the US Justice Department’s favourable decision, the European Union has also greenlit the $66 billion union between two of the world’s most recognisable brands. A new executive team has already been announced, and Liam Condon, head of Bayer’s crop science division, will take the reigns as CEO.
The merger has been a laboured one: in order to please regulators, Bayer had to sell its seed and herbicide department to BASF, and Monsanto agreed to retire its brand name. But the new conglomerate argues that their union was dictated by the need to consolidate their respective positions and face down future challenges: namely, feeding a global population likely to exceed ten billion by 2050.
As is to be expected with mergers of this size, there has been no shortage of voices denouncing this new behemoth, which will control 70% of the chemicals and pesticides used by farmers worldwide.
For example, on the website of the French radio station France Culture, the journalist Arjuna Andrade takes issue with the fact that the European Commission had only acted to prevent a commercial monopoly position, after noting that the EC had required only the sale of a part of Bayer’s business in order satisfy anti-trust regulation. For him, “this merger also raises the question of the omnipotence of the agro-industrial model touted by these seed giants. He takes this opportunity to paint an unflattering picture of Monsanto and concludes with a reference to Karl Marx and his critique of the German chemist Justus von Liebig: “who presents agriculture as a part of the robbery culture, because farmers, seeking maximum profit, force the soil to absorb as much nutrient as possible to improve yield”.
NGOs have also chimed in, especially in Argentina where a Twitter account called “Fuera Monsanto Bayer” was created and quickly went viral, calling for a major protest march against the merger of the two groups.
Nature versus nurture
In all fairness, Monsanto has probably one of the most toxic brand images in the world. But the company, which was founded in 1901 in St. Louis, and could single-handedly encapsulate the evolution of chemistry and biotechnology throughout the 20th century, has been the punching bag of NGOs since the 1970s. Once genetic engineering burst onto the scene in the 1980s, activists stepped up their campaigns. In a nutshell, the main criticisms levied at Monsanto are that a) it poisons humanity, b) it’s a monopoly, c) it crushes small farmers by forcing them to buy its products, d) it harms the environment, e) it promotes junk food.
With this in mind, even if the Monsanto brand will be retired after the merger, the company’s critics will most likely intensify their attacks on the new brand. Even if Bayer spun off parts of its business to please regulators, the new entity will be bigger than before and will focus on the same typically controversial topics of biotechnology and agrochemistry.
Will Liam Condon be able to shoulder this responsibility, given how sensitive public opinion is to the food industry these days? If agribusiness has won the battle of filling bellies, by ensuring enough daily calories for most of humanity, it still has to win the battle for hearts and minds by convincing people that this feat has not been achieved without paying attention to consumers’ health and the environment.
And so far, this particular battle is far from being won. You need only look, for example, at how high and how turbulent the tide of public opinion can rise on a subject like glyphosate in Europe – and especially in a country like France – to be convinced of the difficulties in store for Liam Condon. Perhaps it’s high time the newly minted CEO focus on other battlefields instead, and show that the rationale for this merger goes beyond simple financial mechanics (and the inevitable criticisms of the desire for “more and more”), and that something new will be born out of this union.
Indeed, if Bayer is to succeed, the company will need to redeem itself and show that it has taken to heart the criticisms of its opponents, the media, and consumers.
So if we were to give Condon some advice, it would be to not repeat the mistakes of the past. As we have previously shown, one of the great shortcomings of a company like Monsanto is that it has never been able to communicate in a timely manner with the general public, for the simple reason that the public has never been their intended audience. The company’s marketing was in fact aimed at promoting farming innovations, especially GMOs, and were targeting farmers and not at the end consumer. In other words, thanks to its business model, Monsanto naturally prioritised B2B communication over B2C. The latter arose a posteriori, as an aside, in order to respond to attacks from European NGOs.
Paradoxically, if one were to look at Monsanto’s own history, they would notice that environmental concerns were the main driver that pushed the company to shift away from chemicals and focus instead on seeds. After having decided in the 1980s to place its biotechnology at the heart of its business strategy, it was in the 1990s that Monsanto set up an extraordinarily modern seven-point environmental charter: “waste reduction, health operations, sustainable agriculture, protection of ground water, engaging with civil society, optimisation of farming, new technologies.”
Nevertheless, the second Green Revolution (the first one was attributed to the agronomist Norman Borlaug) remains a failure in marketing terms; despite the remarkable increase in the area planted with genetically modified crops all over the world, consumers – especially Europeans – do not perceive GMOs as contributing to progress in the agri-food industry.
Big Data to the rescue?
Condon has his work cut out for him. The new group he is leading has the critical mass and the skillset to kick-start the third Green Revolution – but how can the incoming CEO convince people, when one knows that what consumers need most right now is a reassuring message about human-centred, natural, healthy and environmentally friendly agriculture? When even retailers are embracing a mantra of “things used to be so much better” in their PR strategies and are always happy to bash agtech, how can the company recreate the bond of trust with consumers when they know that the very future of the business depends on even more technology?
Indeed, the simple fact is that feeding 10 billion people will require even more technology. Fortunately, the future is already here: artificial intelligence, big data and precision agriculture. Condon’s priority should therefore be how to communicate that it is with ‘precision’ agriculture that the world will be able to do more and better with less.
There’s no doubt that big data and artificial intelligence are fantastic development opportunities for the agro-industry. For example, according to a McKinsey study, one third of the food produced each year is wasted, totalling $940 billion. This is due to the lack of precision in the range of agricultural operations (sowing, harvesting, irrigation, transport) and to various hazards (weather, diseases, consumer demand…) But as analyst Tim Sparapani reminds us, there are many solutions proposed by new technologies that will permit better management.
Investors have been betting big on start-ups whose technological solutions using big data make it possible to improve the food chain from farm to fork. By one measure, the market for precision agriculture software is to increase by 14% by 2022. We will have to get used to the term “intelligent agriculture”. As in the 1980s, when the advent of biotechnology gave rise to a concentration of innovations in that sector, one can expect the same phenomenon occurring with big data.
Agribusiness is jumping at the opportunity offered by artificial intelligence. Just last year, the well-known tractor brand John Deere bought Blue River, a Californian start-up that makes intelligent machines for farmers to scan fields, recognize crop seeds and make it easier to get rid of weeds. If the machine sees a seed, it sprinkles it with fertilizer, if it sees a weed, it sprinkles it with pesticide, thus permitting considerable savings on input. You might imagine that this example could help consumer associations understand that enormous savings on herbicides and fuel can be achieved.
Will Bayer-Monsanto rise to the challenge?
It’s true that in 2013 Monsanto acquired The Climate Corporation for $1 billion. The start-up, founded by David Friedberg, (a former Google employee), manipulates astronomical quantities of data in order to provide farmers with weather information and services. This makes it possible to improve the precision of their work and to counteract the hazards of weather variations. As Friedberg himself stated in a New Yorker deep dive, “The people of The Climate Corporation are going to lead the world to revolutionary solutions to historic problems.” A promise that seems to live up to the expectations associated with Monsanto’s merger with Bayer.
But will this acquisition help improve the company’s image with consumers? Isn’t Bayer-Monsanto once more at risk of finding itself in the same situation as when GMOs were introduced: with a message addressed directly to farmers who easily understood the advantages, but left consumers cold? How can the company make those consumers understand that they will be the first to benefit from better weather forecasting? Especially when the environmentalist narrative is based on values such as seasonality, frugality and sourcing food locally.
Big Agro is therefore not at a loss for coming up with forward thinking solutions, and one can imagine that the Bayer-Monsanto merger will play a major part in this transformation. But how can this challenge succeed in pleasing all stakeholders: consumers, farmers, researchers, politicians and NGOs?
In broad terms, we know that consumers demand quality and good prices, farmers efficiency, researchers rationality and innovation, politicians the middle ground, and NGOs require a respect for the environment and health. However, it would seem that with precision agriculture, agribusiness will be able to meet all these requirements by being more efficient, more environmentally friendly and by providing technological solutions that require less inputs. That’s the message the industry should to try to get across to consumers and the path seems laid out for Liam Condon.
Unfortunately, nothing at this point signals to consumers that Bayer-Monsanto merged in order to bring this technology to fruition and that, if the company needs to be still bigger, it is in order to be more effective. On the contrary, so far everything suggests that the opposite will be the case.
If the path seems laid out for the group, and the horizon somewhat clear in terms of technological developments, the clouds are still massing regarding the new company’s image and reputation. Superhuman efforts will be required to square the circle… and perhaps we are right to wonder if this giant is big enough to rise up the challenge.
 Biotechnology crops have increased some 110 times over since 1996, making it the fastest adopted crop technology in the world with 2.1 billion hectares put into use, ISAAA Brief 52-2016: Executive Summary