Bigger, at least in terms of business, is generally seen as better.
That certainly extends to farming where neighbours have bought out and absorbed neighbours for decades dating back essentially to the end of the First World War, at least here in Canada.
Of course farm consolidation is not unique to Canada. It is a rather general trend in terms of dryland farming areas around the world.
The idea of growth for farmers is all about creating economies of scale and buying more fertilizer or agricultural protection products in order to reduce costs. You are able to spread the costs of the overall farm operation over more acres and that should allow better gross returns.
But on the flipside, there are concerns that corporate growth through mergers may not be a great thing for farmers because the concept of competition holding prices in line is reduced.
Not that farmers have much say in things.
Go back to the days I was in high school and farm machinery dealerships were still selling products from Allis Chalmers, Co-op Implements, White, Cockshutt and a handful of other companies that have long fallen by the wayside. Farmers can of course still purchase farm equipment but whether prices are controlled by competition better today than a few decades ago is a question for economists.
It is a question that is very current for producers today, since a number of major mergers have taken place in the past couple of years which will effect competition in areas which directly impact farming.
Dow Chemical and Dupont officially announced a $130-billion merger to form ag-chem giant DowDuPont. A few months later ChemChina made a $43-billion move for Swiss agriculture chemicals and seed giant Syngenta AG.
Then in September 2016 Germany’s Bayer swooped in for Monsanto in a $66-billion takeover during the same week as Potash Corp of Saskatchewan’s merger with Agrium to create the largest fertilizer giant in the world valued at $36 billion.
Business suggests competition remains and the number of companies is not the key to keeping prices in line.
That has some definite truth to it, since we still have a number of Canadian banks, but their products, services and fees are largely clones of one another.
And gas station prices at the pumps move in virtual lockstep regardless of the company sign in front.
It comes down to balance. Competition can exist with limited competitors and be a mirage with many in the field.
Although ultimately the larger business gets, farm or otherwise, the closer to dominating control we may get.
