When Bayer and Monsanto became the latest agribusinesses to announce intentions to consolidate, they pointed to “increased innovation” as a primary benefit for farmers.

“I’ve talked to a lot of growers who recognize that in reality, farmers are really better served by companies who have more capabilities, more of a research and development engine who can generate more products and more innovation,” Robb Fraley, Monsanto chief technology officer, told journalists during the merger announcement. 

It’s going to take more research and development for farmers to maintain profitability and feed the world, he said. The combined Bayer/Monsanto entity would spend $2.8 billion on research and development annually, which is about twice what Monsanto invests today, Fraley said.

What does this promised innovation actually mean to farmers? While many fear input prices rising and choices dwindling, some point to the promise of innovation as a silver lining.

​For example, Nebraska farmer Dave Warner says his main worry is the possibility of higher prices. “On the backside, innovation will probably be better and we’ll get stuff to the industry faster,” Warner told Farm Journal Media’s “AgriTalk” radio program.

If ultimately approved by regulators, the deals between Bayer/Monsanto, Dow/DuPont and Syngenta/ChemChina would leave more of the market in fewer hands—82% of the corn seed market and 76% of soybean, according to Farm Journal research.

Companies are aware making better products and services is the only way to win and keep customers.

“If we do not find and develop new products that meet the constantly shifting needs of farmers, we will not thrive as a company,” James Collins, executive vice president of DuPont agriculture division, told the Senate Judiciary Committee in hearings on the deals. “Continued investment in innovation and discovery to improve our product offerings is a requirement, not a choice,” he said.

In an age where every acre is managed with precision, farmers want to know what to expect when it comes to the timing of new products, prices and how the regulatory approval process will impact these deals.

“For a large company to merge several research and development pipelines is an extremely cumbersome, tricky, costly and lengthy process,” says Taron Ganjalyan, managing director of Links Analytics, a Netherlands-based risk and investment management advisory firm with large-scale consolidation experience. “It’s not realistic to expect short- or even medium-term gains in the pipeline.”

Ganjalyan cites basic logistics and integration challenges as the main roadblock for these companies. Each of the new entities will need to reorganize once combined, which takes time and tends to divert focus from research and development, he says.

“To develop a product, even with quadruple the staff, is still going to take a long time,” he says. “Seeing benefit to the farmer in the next 12 to 18 months is extremely unrealistic.”

On the other hand, some see benefits to uniting companies with strong seed divisions (such as Monsanto, DuPont Pioneer and Syngenta) with chemical companies (such as Bayer, ChemChina and again Syngenta). 

“It makes sense for the chemical side of the house to hook up with the genetics side of the house,” says Bob Young, American Farm Bureau Federation’s chief economist. “That’s certainly what happened on the Dow/DuPont side and the Bayer/Monsanto side.”

Teaming up seed and chemical efforts could help companies create new product systems parallel to one another, which could eventually reduce products’ time to market.

“For example, a new herbicide could come forward with a new herbicide trait,” says Adrian Percy, Bayer head of research and development. “Imagine bringing the new herbicide and trait together rather than the trait waiting 10 to 15 years after the herbicide.”

Syngenta says they’re looking forward to broader foresight in research and development. “ChemChina is not publicly traded, so this transaction will allow Syngenta to focus more intensely on long-term research and development instead of having to focus on satisfying short-term investor expectations,” says Paul Minehart, Syngenta head of corporate communications in North America. ChemChina, owned by the Chinese government, is the country’s largest pesticide producer.

As these companies look to the future, some farmers expect fewer choices and higher prices. With five major seed and chemical suppliers being reduced to three, some fear fewer options for farmers.

“One thing I expect is even if [the consolidating companies] get the green lights [from regulators], we’ll see a lot of uncertainty in terms of what products remain, what are killed and what geography it affects,” Ganjalyan says. “When you see an 8% to 15% jump in market share you’ll see significant impact on prices. We anticipate a 15% to 18% increase in prices in the long-term.”

These are rough estimates, he adds, and only time will tell. 

It’s uncertain how prices and competition will be affected because the deals are not yet decided. In addition, companies are hesitant to provide details, such as what they’ll keep or divest, as it could derail their progress. 

Dow AgroSciences defended its upcoming merger’s impact on competition at a recent Senate Judiciary Committee hearing.

“I emphasize this is a procompetitive combination that will enhance, not diminish, our ability to compete in the global seeds and crop protection markets,” says Tim Hassinger, Dow AgroSciences president and CEO. He says complementary portfolios, a greater level of scale and efficiency that creates savings for the company (and subsequently their customers) and a combined research and development team leads to fair competition and innovation.

While the number of companies from which farmers can buy products decreases some say the newly combined companies will still fight to maintain farmer business and be first to the market with new products. 

“I think [farmers] are justified in some of their concern,” Young says. But he believes if companies achieve consolidation, the resources behind innovation and the dollars invested will inspire them to fight “tooth and nail” for every farmer’s business.

U.S. and foreign regulatory hurdles will likely still plague farmers’ access to new technology. Whether it’s U.S. or foreign regulatory bodies, companies will still need to provide information, money and time for product approval before new products hit the marketplace.

“Think about how long it takes [agribusinesses] to bring a new product to market. They have a tremendous regulatory fight, and even once it’s approved, you’ve still got to fight litigation. So you’ve got to have deep pockets,” Young says.

It takes approximately $100 million and 10 to 20 years to bring a new product to market from research and development through regulatory approval. The wide span can often be attributed to an uncertain regulatory approval time range.

“In terms of U.S. and European Union regulatory bodies, companies need to be at least a certain size to get through this process,” Ganjalyan says. He says even with a larger scale business, research takes time, which means the regulatory process might not be any faster than it was before.

While companies wait for final decisions, farmers should anticipate noticeable changes if and when the deals are approved. Right now companies are entertaining the “what-ifs,” but if approved they’ll have all-new challenges. For example, challenges could include reorganizing multibillion-dollar businesses, staff cuts, product distribution and management and other logistical-type concerns.

“This is the most critical risk for farmers when mergers go ahead,” Ganjalyan explains. “Farmer livelihood depends on the right seed and chemical at the right time and the right place; [access to] this could be in jeopardy if companies are not keeping their eye on the ball.” 

Farmers should keep their seed and chemical reps close throughout the process to reduce that risk, he adds.