AfricaFocus Bulletin
February 28, 2017 (170228)
(Reposted from sources cited below)

Editor’s Note

“Multinational companies typically publish global, consolidated
accounts – and international accounting standards now allow these to
roll into one all financial information on the substance of their
economic activities, or at best to provide regional figures. This
means that country-level information on profits, revenues, taxes,
borrowings and employees, for example, are not provided. … As the
name suggests, the longstanding proposal for country-by-country
reporting (CBCR) would make multinational companies break down and
publish their results for each country. This is essential for
citizens to know what companies and their affiliates are doing where
they live, and what contributions they are making.” – Open Data for
Tax Justice announcement

For a version of this Bulletin in html format, more suitable for
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The need for CBCR, a demand first advanced by tax justice
campaigners in 2003, has become widely recognized, leading to
proposals by international bodies such as the “rich states” club of
the OECD (Organisation for Economic Co-operation and Development).
The OECD proposal for collecting and sharing such data only by
selected tax authorities, however, is in sharp contradiction to the
initial goal of public transparency. And further retreats from
transparency are already visible in initial actions by the
Republican-dominated U.S. Congress (see
http://www.africafocus.org/docs17/iff1702.php).

In response, leading tax justice campaigners have set out a roadmap
for “the creation of a global public database on the tax
contributions and economic activities of multinational companies. ”
Using new technologies to collect in standard format information
from a wide variety of public sources, the database has the goal of
making information accessible worldwide for journalists,
policymakers, tax officials, and civil society activists.

This AfricaFocus Bulletin contains excerpts from the press release
and white paper released on February 17, 2017

For more details, see http://datafortaxjustice.net

For previous AfricaFocus Bulletins on tax justice and related
issues, visit http://www.africafocus.org/intro-iff.php

++++++++++++++++++++++++++++++++++++++++++++++++++++++++

The Trump Election: Intersecting Explanations

http://www.noeasyvictories.org/usa/trump-win-reasons.php

Observations (fourth installment, Feb 28, 2017)

Much of the commentary on the narrow victory by Tom Perez over Keith
Ellison in Saturday’s election for the chair of the Democratic
National Committee has had a narrow focus, interpreting it as a
victory for the Democratic establishment over progressives who had
backed Bernie Sanders in 2016. While to some extent true, that is a
highly over-simplified view, and  neglects the wide-ranging
mobilization and rethinking within the broader context of the highly
decentralized Democratic Party, progressive movements, and their
common social base.

Several articles on Saturday’s results with more nuanced analysis:

Peter Dreier, “Three Cheers for the Perez-Ellison DNC Team To Move
the Democrats in a Progressive Direction,” Huffington Post, February
25, 2017 http://tinyurl.com/gkqmp46

David Weigel, “Why did Keith Ellison lose the DNC race?” Washington
Post, February 26, 2017 http://tinyurl.com/zq7hf9r

James Downie, “Tom Perez’s biggest problem as DNC chair: His
backers,” Washington Post, February 27, 2017
http://tinyurl.com/hqu2vxd

And, for a wide range of articles digging more deeply into the
mistakes and structural limitations of the Democratic Party and the
Clinton campaign, and their implications for current strategy, see
http://www.noeasyvictories.org/usa/clinton.php (10 articles from
Nov. 11 – Dec. 20, 2016 and
http://www.noeasyvictories.org/usa/democratic-party.php (15 articles
from Mar. 30, 2016 – Feb. 21, 2017

And you can find sources on 19 other relevant “explanations” for the
election outcome at
http://www.noeasyvictories.org/usa/trump-win-reasons.php

++++++++++++++++++++++end editor’s note+++++++++++++++++

Launch of White Paper Setting Out Roadmap for Creation of a Public
Database of Country-by-country Reporting Data

Press Release

17th February 2017

Leading tax justice campaigners and open data specialists are today
publishing a white paper setting out a roadmap for the creation of a
global public database on the tax contributions and economic
activities of multinational companies.

The open database would draw on various existing information sources
to create a central point for  publicly available country-by-country
reporting (CBCR) data to help tax authorities, tax justice
campaigners, investors, journalists and citizens to gain a better
understanding of the activities of these companies.

Multinational companies typically publish global, consolidated
accounts – and international accounting standards now allow these to
roll into one all financial information on the substance of their
economic activities, or at best to provide regional figures. This
means that country-level information on profits, revenues, taxes,
borrowings and employees, for example, are not provided. There may
be a set of results for “Africa” or “Europe”, but even then the
combination of operations in (say) Ghana and Mauritius, or France
and Luxembourg, makes it is impossible to unpick these numbers in a
useful way.

As the name suggests, the longstanding proposal for country-by-
country reporting would make multinational companies break down and
publish their results for each country. This is essential for
citizens to know what companies and their affiliates are doing where
they live, and what contributions they are making.

An OECD standard has now been introduced which will require all
multinationals of a certain scale to report this information
privately to the tax authority in their headquarters country. In
addition, there are public standards for limited CBCR data with
respect to the extractive and financial sectors in the EU, creating
multiple requirements for some multinational companies. It is
critical that this data is used effectively, and seen to be so used.

The next two to three years provide a window in which to establish a
single format for reporting, to ensure lower compliance costs for
businesses and to facilitate more effective use of the data by civil
society, media and tax authorities alike. This will both confirm the
value of CBCR and help policymakers to move towards a global
consensus on requiring a comprehensive public CBCR under a single
standard.

The paper – What Do They Pay? -  is co­authored by Alex Cobham (Tax
Justice Network), Dr Jonathan Gray (University of Bath and Open
Knowledge International) and Professor Richard Murphy (University of
London). It is the result of a partnership between the Tax Justice
Network (TJN) and Open Knowledge International (OKI) supported by
Omidyar Network and the Financial Transparency Coalition (FTC). TJN
has, since its establishment in 2003, led the way in developing and
promoting the idea of public CBCR for multinational companies. OKI,
who partnered with TJN in establishing the Open Data for Tax Justice
initiative, are pioneers in using open data to achieve tangible
policy results and human progress. The FTC has championed public
CBCR since its inception, as have many FTC members including
Christian Aid, Tax Justice Network-Africa and TJN.

The white paper is divided into four main sections. Firstly, the
authors present a set of user stories, questions, requirements, and
scenarios of usage for a database. Secondly, they look at what kinds
of information a public database could and should contain. Thirdly,
they look at the opportunities and challenges of building a public
database drawing on various existing information sources. Fourthly
and finally, the authors suggest next steps for policy, advocacy,
and technical work towards a public database.

As leading organisations in this field, TJN and OKI now propose to
establish an open database, to include all publicly available CBCR
data; to provide a venue for multinationals that wish to lead in
transparency by publishing their data voluntarily; and to make the
data, and core tools and risk measures, accessible to a wider
audience.

Alex Cobham, chief executive of the Tax Justice Network, says:

“This white paper marks an important step towards the creation of a
fully public database to track the tax behaviour of both
multinationals and jurisdictions from Luxembourg to Mauritius, and
from Bermuda to Singapore. We’re delighted that so many
organisations and experts have contributed to this process, which
has really strengthened the analysis and design. And we’re
delighted, too, at the ongoing discussions with investors and
business groups around providing and using data.

“It’s striking that civil society is leading on this process, rather
than the OECD or a global tax body. But just as civil society
created the original proposal for country-by-country reporting,
perhaps it’s right that we should also take a lead in creating the
database that will eventually deliver the full benefits – from lower
costs for multinationals dealing bilaterally with different tax
authorities, and for tax authorities exchanging information with
each other, to the benefits of the public being empowered to hold
governments and multinationals to account for their role in
international tax avoidance.”

Dr Jonathan Gray, Prize Fellow at the University of Bath’s Institute
for Policy Research and Senior Advisor to Open Knowledge
International, says:

“This new report outlines the case for a global public data project
that would transform democratic engagement around the role of
multinational corporations in our economies. A civil society
database would be more than just an information source: it would
facilitate collaboration amongst researchers, journalists and
campaigners and pave the way for an official database at an
international body such as the UN.”

Richard Murphy, Professor of Practice in International Political
Economy at City, University of London and director of Tax Research
UK, says:

“Country-by-country reporting was created to be used. Its purpose is
to show what is happening in the world and to change it. That’s why
a database holding all publicly available CBCR data is vital: with
it we can see who is doing what, and where and demand change from
the governments and companies engaged in tax abuse.”

Launched in 2016, supported by a grant from Omidyar Network, the FTC
and coordinated by TJN and OKI, Open Data for Tax Justice is a
project to create a global network of people and organisations using
open data to improve advocacy, journalism and public policy around
tax justice.

More details about the project and its members can be found at
http://datafortaxjustice.net

***************************************************************

What Do They Pay?: Towards a Public Database to Account for the
Economic Activities and Tax Contributions of Multinational
Corporations

Alex Cobham
Chief Executive, Tax Justice Network
Visiting Fellow, King’s College London

Jonathan Gray
Prize Fellow, Institute for Policy Research, University of Bath
Co-Founder, Public Data Lab
Senior Advisor, Open Knowledge International

Richard Murphy
Professor of Practice in International Political Economy, City,
University of London
Director, Tax Research UK

February 2017

[Excerpts: for full report see
http://datafortaxjustice.net/what-do-they-pay/]

Introduction

Many of the policy proposals put forward by the Tax Justice Network
(TJN) after its establishment in 2003 were so far from mainstream
thinking about tax that it was difficult to find a policy audience
with which to discuss them seriously (Murphy, Christensen & Kimmis,
2005). But by 2013, just ten years later, these proposals had come
to form the basis for the global policy agenda – including “Country-
by-Country Reporting” (CBCR) of the tax contributions and economic
activities of multinational companies.

So common is the exposé of tax avoidance by multinationals today –
think of headlines featuring Apple or Amazon, Google or Starbucks –
that it would be easy to forget how recently things changed. But the
Tax Justice Network’s first front-page media splash was only in
2007. Even the headline, ‘Revealed: How multinational companies
avoid the taxman’, has become so familiar that it would be almost
redundant today (Guardian, 2007).

Over the past decade, international media coverage and civil society
campaigning has flourished. Investigative journalists have
undertaken international collaborations highlighting the scale and
societal effects of tax avoidance strategies. In many lower-income
countries, the tax treatment of multinationals has risen to the top
of policy agendas, driven by civil society mobilisation and public
anger. In OECD countries, protesters have taken to the streets to
oppose the minimal contributions of high street companies. The issue
has caught the attention of populist political movements of various
stripes.

By 2013, issues of tax were atop the global policy agenda too. The
G8 and G20 groups of countries set the aim of reducing the
‘misalignment’ between the location of multinational companies’
economic activity, and the location of declared, taxable profits.
The OECD was given a mandate to change international tax rules to
achieve this end, including the specific remit to introduce a
country-by-country reporting standard. While there are a range of
benefits to this data being compiled and made public, the critical
development is that it is intended to show for the first time
exactly where companies do business, and the extent to which this is
aligned – or misaligned – with where they declare profits. This is
would not be a smoking gun to establish that a specific tax
avoidance structure has been at play; but it could be a powerful
instrument to help a variety of different actors to know where to
investigate further, and what the scale of the problem may be.

The OECD standard for CBCR is technically very close to the original
TJN proposal (Murphy, 2003) – but politically very far from it. The
TJN proposal was for accounting data that it always intended be made
public, to ensure the accountability to citizens of both
multinationals and of tax authorities. The OECD data, in contrast,
is to be provided privately to the tax authority in a
multinational’s headquarters jurisdiction. It may then be exchanged,
under a range of conditions, with other tax authorities in which
subsidiaries of that multinational company trade. But under no
circumstances are those tax authorities allowed to make the
information more widely accessible. Longhorn et al (2016) provide a
comprehensive analysis of various CBCR standards, their evolution
and the arguments and evidence on their value.

Knobel and Cobham (2016) demonstrate the paths by which OECD
reporting could exacerbate, rather than ameliorate, existing global
inequalities in taxing rights with respect to multinationals. In
addition to failing to respond to lower-income countries’ revenue
losses, the lack of transparency means that the current standard
will also fail to build confidence in the fair tax treatment of
these high-profile taxpayers – missing an important opportunity to
build tax morale and wider public support for tax compliance.

As things stand, if CBCR data is not made publicly available the
OECD initiative would perhaps be the least transparent transparency
measure imaginable. And yet, it marks an important step forward for
CBCR. With most major multinationals now actually facing the
obligation to comply with the OECD requirement, the argument about
transparency has turned. The question now is no longer ‘Why should
this information be collected?’ Instead, it is now ‘Why should this
information, now collected, be kept secret?’.

The OECD is in some sense a late adopter, with multiple country-by-
country reporting standards having been introduced since the
original proposal. Notably, these include public CBCR for extractive
sector companies in both the EU and US, and for financial
institutions in the EU. There were also two notable attempts to
include CBCR data in International Financial Reporting Standards,
and although both failed the fact that this was not on technical
grounds did prove that this data is within the scope of such
standards. The data is, to be clear, accounting data rather than tax
data: it reflects the location of activities, and is not an extract
from a tax return.

That some variations on CBCR have been adopted does, however, mean
that in the absence of any official attempts, there is the
possibility for civil society to take steps towards establishing a
public database of all available CBCR information. This could
support greater use of the existing data by various stakeholders,
from tax authorities to activists and journalists. The data produced
may also be of some interest to investors, many of whom are now
showing some awareness of the significance of this data.
Importantly, it also provide a platform for the creation and testing
of risk measures – above all, those that capture the extent of
profit misalignment and therefore allow tracking of progress on the
global policy aim of its curtailment. In addition, such a database
would provide an avenue for companies that embrace transparency to
begin unilaterally to publish their own CBCR.

Overall, the use of such data is likely to provide valuable evidence
not only on the underlying issues of misalignment, but also on the
challenges and opportunities of CBCR data. In particular, it may
help to resolve questions on the need for data quality and
consistency, and to motivate convergence towards best practice among
existing and possible future standards. Over time, it is possible to
imagine such a database being hosted within a more official setting
such as the mooted intergovernmental tax body that could be created
at the UN (Cobham and Klees, 2016).

For now, this report focuses on what a global public database could
look like; what public sources of information already exist and
which may be important to prioritise in addition; how far towards
ideal CBCR it is possible to reach using existing sources; and what
changes would be needed to strengthen the contribution from CBCR
towards the shared, global policy aim of reducing corporate tax
avoidance by curtailing profit misalignment.

Our aim is not to create the perfect, final product in terms of a
public CBCR database. In their “Changing What Counts” report, Gray,
Lämmerhirt and Bounegru (2016) emphasise the role that citizen and
civil society data can play as an advocacy tool to shape
institutional data collection practices. In that spirit, the aim
here is to provide not a final product but the basis for discussion,
experimentation and iterative improvement, that we hope will help to
prepare the way for a global database that is maintained by an
international public body in the longer term.

To that end, we would like to experiment assembling and aligning
data that has been published in accordance with various existing
CBCR standards and publishing requirements. This may be used to
construct an open, online database into which researchers and other
actors can enter new data as it becomes available, and which has the
potential to become a longer term global repository for public data
about the tax contributions and economic activity of multinationals,
and a useful resource for future research and policy analysis. The
proposed database could contain and support a range of different
tools and indicators, in order to facilitate different forms of
analysis and comparison across companies and across jurisdictions.
This would represent an important step towards understanding the
role of multinationals in the composition of the world economy – as
well as paving the way for an official public database.

The purpose of creating a database would extend beyond that of a
technical project to simply gather and publish existing information.
There are other things that we might expect a global civil society
database to do. As economic sociologist Donald MacKenzie argues,
economic models can be considered not just cameras which represent
the world, but also as engines which change them in different ways
(MacKenzie, 2008). By taking steps to render the economic activities
and tax contributions of multinationals publicly visible,
measurable, quantifiable and accountable, it might be expected to
change not only the dynamics of corporate reporting (as one might
expect), but potentially also the operations and organisation of
multinational firms as they adjust to new forms of publicity and
public engagement. The behaviour-changing effects of public data on
the economic activities and tax arrangements of multinationals are
certainly deserving of further attention and research.

A public database could potentially play a social function in
assembling and facilitating collaboration between different “data
publics” interested in multinational taxation. It would thus
represent an experiment in socio-technical design to organise public
activity around tax base erosion. As well as supporting links
between relevant data projects such as OpenCorporates, Open
Ownership, the Open Contracting Partnership and OpenOil, it could
act as a locus to coordinate the efforts of different actors and
groups who are interested in undertaking research, journalism,
advocacy, public policy, and public engagement work in the service
of building a fairer global tax system. This would not simply be a
matter of catering to pre-existing social groups, but also
potentially creating new kinds of associations and collaborations
between different actors. As such a public database could also be
viewed as a democratic experiment – especially if these different
groups play not only a role not only in using and consuming data,
but also in co-designing and assembling the database (Gray, 2016a,
2016b). Such a database might thus open up space for new kinds of
democratic deliberation and public engagement around how the global
economy is organised – and how some of the largest most powerful
economic actors on the planet – both multinationals and
jurisdictions including major tax havens – can be understood,
managed and held to account; as well supporting civil society
interventions around the kinds of transparency measures and data
collection processes we have in place to understand and shape the
behaviour of these actors.

*****************************************************

AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with a
particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.

AfricaFocus Bulletin can be reached at africafocus@igc.org. Please
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AfricaFocus Bulletin
February 20, 2017 (170220)
(Reposted from sources cited below)

Editor’s Note

“If the Bayer-Monsanto merger is approved, the new merged company
will control almost 30% of the global commercial seed market and
25% of the agrochemical market – making it the world’s largest
supplier of seeds and chemicals. In South Africa, it would control
about 30% of both markets. Already today, Monsanto is one of two
companies in South Africa that employs 80% of the private sector
breeders in maize and 100% of the breeders in soybean and sunflower
breeders. ” – African Centre for Biodiversity

For a version of this Bulletin in html format, more suitable for
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The dominance of giant agribusiness multinational companies in the
supply of seeds and chemicals is not new, whether at the national
level in both developing and developing countries or on a global
scale. The vast influence of these companies is felt in policies
imposed on national governments damaging to small farmers as well as
to the environment and human health, as well as in control of
pricing for agricultural inputs.

Recent years, however, have seen a further escalation of mergers
which is accelerating concentration in the industry, of which the
merger of Bayer and Monsanto is currently under review by national
regulatory agencies in South Africa and other countries. This new
report highlights the negative consequences of this trend,
particularly for smallholder farmers.

For previous AfricaFocus Bulletins on biodiversity and related
issues, documenting this and other related critical analyses on
policies in African agriculture, visit
http://www.africafocus.org/intro-ag.php

++++++++++++++++++++++end editor’s note+++++++++++++++++

The Bayer-Monsanto merger: Implications for South Africa’s
agricultural future and its smallholder farmers

February 2017

The African Centre for Biodiversity (http://www.acbio.org.za) Rosa
Luxemburg Stiftung (http://www.rosalux.co.za)

[Excerpts only: Full paper available at http://tinyurl.com/z4pkxb9]

About This Paper

This paper explores the likely implications of an approved Bayer-
Monsanto merger for the South African agricultural system. It
outlines the trend of consolidation occurring within the seed and
agrochemical industries, provides a background to the merger,
criticises the rationale given for the merger by Bayer and Monsanto
and outlines concerns should the merger be approved in South Africa.
These concerns focus on the implications for South African farmers,
smallholder farmers in particular. The paper argues that further
consolidation of an already corporate- controlled seed sector is not
needed and that it undermines the emergence of an alternative system
that would support smallholder farmers in contributing to food
security in an egalitarian agricultural economy.

Key Findings

Context

* The proposed Bayer-Monsanto merger takes place in a context of
megamergers: China National Chemical Corporation (ChemChina)-
Syngenta; DuPont-Dow. If approved, just three corporations would
control about 60% of the global patented seed market and 64% of the
agrochemical market.

* If the Bayer-Monsanto merger is approved, the new merged company
will control almost 30% of the global commercial seed market and
25% of the agrochemical market – making it the world’s largest
supplier of seeds and chemicals. In South Africa, it would control
about 30% of both markets. Already today, Monsanto is one of two
companies in South Africa that employs 80% of the private sector
breeders in maize and 100% of the breeders in soybean and sunflower
breeders.

* The merger will need to be approved by regulatory authorities in
more than 30 countries. Authorities are viewing the merger
activities in totality to assess possible implications for the
market, farmers and consumers. They will look at whether reduced
competition will lead to reduced innovation, lowered spending on
research and development and implications for increased input costs
and reduced choice for farmers and other consumers (although the
market is already significantly consolidated).

* Merger activity is being driven by the global economic downturn
and reduced demand for products by farmers because of low commodity
prices. It is also driven by the desire to reduce operational
costs, particularly for research and development processes, and to
access proprietary knowledge enclosed in intellectual property
rights, such as patents. The merger and acquisition trend is
supported by the historically low interest rates (close to zero)
being offered in the United States, the Euro zone, Japan and the
United Kingdom.

* Both Bayer and Monsanto are already engaged in big data projects
in the agricultural sector. Bayer notes that one of its prime
reasons for acquiring Monsanto is because it owns The Climate
Corporation, which has the most powerful data science engine and
the most extensive field research network. In addition, Monsanto
has its foot in several important Genome Editing initiatives: it
owns one of the two existing CRISPR licenses and has started two
joint ventures on precision agriculture with the agrotech giants
CNH and AGCO.

* Both companies would benefit from sharing patents on genetically
modified crops and existing network and distribution models as they
both plan to expand into the African market, with a particular
focus on smallholder farmers. Bayer has been in the plant genetic
engineering arena since the early 2000s and holds more patents on
transgenic plant traits (206) than Monsanto (119) in the European
Union). Having access to each other’s proprietary knowledge would
provide them with significant cost savings, particularly as the
biotech industry shifts towards using CRISPR genome editing
technology, which revolutionises transgenic interventions through
the rewriting of whole DNA-sequences, but is not yet subject to a
comparable degree of regulatory oversight as the first generation
of genetic engineering. Both traits and germplasm is needed to
remain competitive in this market.

* South Africa is the most important African market for both
companies in terms of sales and for providing a base for African
expansion. The recent request by GrainSA, Agbiz Grain, the South
African National Seed Organization (SANSOR) and the Agricultural
Research Council for a breeding and technology levy to be imposed
on winter cereals in South Africa – with the possibility of
expanding this to other crops – would effectively mean that public
resources would be used to collect royalty payments for these
companies.

* Both Bayer and Monsanto sit on industry representative bodies,
giving them a significant degree of influence on the industry – a
combined company would enjoy benefits of greater influence.

Implications

The merger between Bayer Crop Science and Monsanto would have
possible implications for the agricultural sector and the food
system in South Africa:

* It would further reduce the competition within the South African
seed sector. Evidence from the US seed market shows that mergers of
this size will change key parameters of the seed market. Bayer-
Monsanto’s dominant market position will be further enhanced, as
will both companies’ control over traits-germplasm-crop protection
products in the country.

* Quite contrary to the claims of Bayer and Monsanto managers, the
merger is likely to decrease the amount of investment and the range
of innovations. This paper argues that the potential merger must be
analysed in the larger context of a rapid privatisation of research
and development. A particularly important tool of the potential
Bayer-Monsanto seed giant would be the instrument of licensing
rights, and increased pressure on farmers through the collection of
levies is expected.

* Serious impacts are anticipated for farmers and food consumers
alike. For farmers, evidence from the last few years at both the
South African seed market and the US seed market shows that a
further increase in seed prices is very likely. The choice of
available inputs will further decrease. Given the high amount of
sunk costs that particularly Monsanto invested in the development
of partly unsuccessful genetically modified organisms, there is a
threat that the South African market will be used as a strategic
point from where to ‘dump’ old genetically modified (GM)
technologies onto the African market. On the other hand, available
micro data from households in South Africa show how any price
increase in staple food prices might affect the income poor. An
indirect effect on food prices from the merger cannot be excluded.

* A closer look at the drivers of the Bayer- Monsanto merger reveals
that the ‘efficiency argument’ put forward by the corporations
might lead to a benefit to their shareholders, but cannot be
expected to spill over to external groups, such as farmers and food
consumers.

…

Seed and Agrochemical Markets

Global agricultural input markets (seed, fertiliser, crop protection
products, farm machinery and agri-tech markets) are already
significantly consolidated, having experienced a series of
horizontal and vertical mergers and acquisitions over the past two
decades (Figure 1).

The global and regional seed market

In 1994, the four biggest seed companies controlled 21% of the
global market (AgriPortal, 2016); today just ten companies own
about 65% of the world’s proprietary seed (seed registered for
legal protection) for major crops (Wattnem, 2016). It must be noted
that in Africa 65-100% of seed used by smallholder farmers is
farmer-saved and exchanged (varies by crop and geography) (Wattnem,
2016). The global commercial seed market has an estimated value of
about US$53 billion and is expected to grow to US$113 billion by
2020 (Marketsandmarkets, 2016) with the African market contributing
less than 2% to the current value (CTA, 2015). This presents a
potentially lucrative market, but many obstacles have to be
overcome to carry out a sustainably profitable business. Some of
the bigger ones include lack of infrastructure, specialised
knowledge, institutional arrangements and political bureaucracy.

The genetically modified seed market was worth US$15.6 billion in
2011 and is expected to grow to US$30.2 billion in 2018 (AGPRO,
2013). However, a recent market report notes that conventional
seeds are expected to be the fastest growing segment of total seed
sales (Marketsandmarkets, 2016). …  Africa presents an untapped
market but with very slow processes of regulatory and institutional
development to allow GM crops to be grown. In the meantime, market
expansion will be based on conventional certified seed and
agrochemicals.

Maize and horticulture are the two biggest seed markets on the
African continent, with the maize market valued at about US$500
million and horticulture at US$250 million; most seed company
activity takes place in this space (ACB, 2015). There is more
recent interest in commercialisation of legume seed on the
continent.

The South African seed market

South Africa has a dominant commercial seed industry, which is
primarily geared to serving the needs of large-scale commercial
farmers, with a dominant focus on hybrid, improved and genetically
modified seed (DAFF, 2015). South Africa’s marginal smallholder
farmers also rely on commercial seed as a significant source of
planting material, especially for maize and horticulture, although
indigenous crops and farmer seed varieties are also used.
Multinational corporations dominate the seed industry: Pioneer Hi-
Bred/Pannar, Sakata, Monsanto and Syngenta (GrainSA, 2015). …

The value of the South African seed market was estimated at R5.62
billion in 2012/13 (TASAI, 2015). The focus of both Bayer and
Monsanto is on commodity crops: maize, sunflower, soybean, cotton
and wheat. The value of the seed market in grain and oilseed was
about R3.9 billion (about US$285 million) for the 2014/15
production season (GrainSA, 2015). …

Maize dominates the national variety list – there are 546 maize
varieties on the official list; 308 are protected by plant
breeders’ rights and 162 are genetically modified (TASAI, 2015).
There are 41 genetically modified soybean varieties on the list and
35 non- genetically modified ones, including 19 with plant
breeders’ rights protection (TASAI, 2015). Monsanto and
DuPont/Pioneer Hi-Bred/Pannar own at least 85% of the seed business
for the big commodity crops – maize, soybean (the second largest
agronomic crop in the country) and sunflower. There is intense
competition between them (TASAI, 2015). DuPont is planning to merge
with Dow, which puts pressure on Monsanto to increase its scale to
continue competing in seed and agrochemical markets. Bayer’s
strength is in agrochemicals, although it has a small seed
footprint in South Africa. Bayer introduced its cotton seed to
South Africa in 2014 and a new canola seed variety in 2015
(Breytenbach, 2015). It reportedly introduced these new varieties
into South Africa in response to a direct call from farmers asking
for alternative products (Breytenbach, 2015).

Syngenta, Monsanto, Pannar-Du Pont Pioneer and Dow form SANSOR’s
committee on genetically modified organisms (SANSOR, 2016). Any
activity that is likely to increase Monsanto’s influence in this
market in South Africa is significant given the extent of
genetically modified maize planted, the country’s staple food crop.

The global and regional agrochemical market

The global agrochemical market is estimated to be worth about
US$33.4 billion (Macaskill, 2016) with the African market valued at
around US$1.1 billion (R15-20 billion) in 2014 (Odendaal, 2014).
The agrochemical market is dominated by Monsanto (US$15 billion),
Syngenta (US$13.4 billion), Bayer (US$10.4 billion), DuPont (US$9.8
billion), Dow (with sales of US$6.38 billion in 2015) and BASF
(US$5.8 billion); Chinese-owned ChemChina doesn’t make divisional
sales figures available, but total sale figures for all divisions
(of which agrochemicals is just one) were US$45 billion in 2015
(Alessi, 2016).

The South African agrochemical market

South Africa uses more agrochemicals than any other African country,
mostly for grain crop production (PR Newswire, 2015), yet it
comprises less than 2% of the global market (Macaskill, 2016).
South African farmers spent R2.3 billion on agrochemicals in the
2014/15 season (GrainSA, 2015). The South African agrochemicals
market is estimated to grow at a compound annual growth rate of
4.5% by 2020 (PR Newswire, 2015). Major agrochemical companies
operating in the country range from Bayer Cropscience and Syngenta
to Adama, Dow Agrosciences, Philagro South Africa, BASF South
Africa, Sipcam, Monsanto and Chemtura Corporation (GrainSA, 2015).
Companies such as Bayer, Syngenta SA, Dow, DuPont and Monsanto
South Africa sit on the executive council of CropLife SA, an
industry representative body (CropLife SA, 2016).

Bayer and Monsanto in South Africa

Both Bayer and Monsanto are major manufacturers of agrochemicals,
seeds and genetically modified seed (Court, 2016). Company
confidentiality makes it difficult to ascertain market-specific
market shares for any company.

Bayer Crop Science in South Africa

Most of Bayer’s African sales are generated in South Africa, and a
key part of Bayer’s strategic focus for its business in southern
Africa is ‘expanding our seed footprint – especially for soyabeans
and wheat – through further acquisitions, in-licensing agreements
and partnerships’ (Bayer, 2016). It owns a manufacturing plant in
South Africa, has established a maize competency centre in KwaZulu-
Natal (Bayer Crop Science, 2016e) and has opened its first African
SeedGrowth Centre near Johannesburg (one of 16 in the world)
(Bayer, 2016c). The Centre will train seed company production
staff, support seed companies in upscaling processes, act as a base
for research in optimising seed treatment technologies and
demonstrate how Bayer’s equipment works (Bayer, 2016c).

It is focusing on both the large-scale commercial and small-scale
farming sectors. In March 2016 Bayer launched its ‘Committed to the
Future Pledge’ at the South African Grain Congress, in which it
promised to continue to invest more than 10% of turnover into
developing new compounds (it should be noted that this is their
core business and so does not qualify as an added benefit for South
Africa). It also promised to invest in further initiatives, like
its Bayer Forward Farms project, a knowledge platform that
facilitates the sharing of knowledge between selected farms and the
combined expertise of the broader industry (Bayer, 2016d).

It is also actively pursuing the small-scale farming market. Bayer
uses demonstration farms and training centres set up by
organisations, such as the United States farm machinery giant AGCO
to showcase its inputs (Maritz, 2016). It is involved in other
projects like this in South Africa, Ghana, Ethiopia and Morocco
(Maritz, 2016). …

Monsanto in South Africa

Monsanto is a pioneer of genetic modification of agricultural crops
(ACB, 2005) and the largest maize seed company in the country by
sales (DAFF, 2015); it also supplies 90% of soybean planted
commercially in South Africa (ACB, 2016). It has been operating in
South Africa since 1968 and has licensed its genetic modification
technology to other seed companies operating in the domestic
market. In the late 1990s it purchased domestic seed companies
Sensako and Carnia, thereby taking up a major stake in local seed
and grain markets (ACB, 2005). Monsanto sells seed for alfalfa,
canola, corn, cotton, sorghum, soybean, sugarbeets and wheat
(Stucke and Grunes, 2016). Monsanto’s purchase of global seed
company Seminis gave it ownership of plant breeders’ rights to a
range of South African vegetable seed varieties (ACB, 2005) and
access to germplasm. The Sensako purchase gave Monsanto about 45%
of the South African agrochemical market for field crops (ACB,
2015b).

In November 2016 Monsanto opened its renovated breeding centre in
Petit near Benoni, South Africa (Van Wyngaardt, 2016). The 300
hectare plant breeding farm uses imported and local germplasm to
establish new breeding crosses (Van Wyngaardt, 2016). Monsanto also
pursues the small-scale farming sector through projects, such as
Water Efficient Maize for Africa (WEMA) (Monsanto, n.d.[2]). …

ACB has extensively critiqued this programme for its use of
Monsanto’s genetically modified drought tolerant maize because the
product has not been successful in the United States, and it is
inappropriate for smallholder farmers, due to its reliance on the
use of synthetic fertilisers and agrochemicals (ACB, 2015a). The
project, which is supposedly meant to benefit small-scale farmers,
leads them onto a technological treadmill with known environmental
consequences and one that is difficult to escape. Farmers have
drought tolerant varieties of their own, which are freely saved and
thus always available and adapted to localised conditions.
Genetically modified crops were also trialled in eight African
countries in 2015 (SeedWorld, 2016a) with Monsanto’s drought
tolerant maize from the WEMA project expected to be released in
field trials in Tanzania and Mozambique in 2017.

…

2016 – The year of the mega-mergers

* July 2014: Monsanto tried to buy Syngenta for US$46 billion, but
the deal was rejected by shareholders.

* November 2015: Chinese state-owned ChemChina made a US$43 billion
bid for Syngenta, which was accepted by shareholders in February
2016. This was the largest purchase of a foreign firm in Chinese
history.

– ChemChina owns Adama (formerly Maktheshim Agan Industries), the
world’s seventh largest agrochemical company.

– The Committee on Foreign Investment in the United States approved
the deal in August 2016 (Bloomberg 2016b), South Africa in
September 2016 and Australia in December 2016 (Food Ingredients
First, 2016). South Africa attached the condition that Syngenta’s
formulation plant could not be relocated outside of the country for
an undefined period to avoid job losses (CCSA, 2016a). The deal was
also approved by the Common Market for East and Southern Africa
(COMESA) Competition Commission in September 2016 (Comesa
Competition Commission, 2016).

– The European Commission has requested additional information from
both companies and will announce its decision on the ChemChina-
Syngenta merger on 12 April 2017 (Produce Business UK, 2017).

– A possible obstacle to approval is ChemChina’s plans to acquire
another Chinese state- owned fertiliser company, Sinochem, which
was not mentioned in the applications for approval of its
acquisition of Syngenta (Noel and Baghdjian, 2016).

* December 2015: DuPont and Dow announced a merger that will give
the combined company an estimated value of US$130 billion.

– The deal was approved by the COMESA Competition Commission in
September 2016 (Comesa Competition Commission, 2016a), but still
awaits approval in Australia, the United States, Brazil and South
Africa.

– The deal is being held up by the European Commission, which has
launched a full investigation on the basis that insufficient
information has been provided (Reuters, 2016a). The Commission will
announce its decision on 6 February 2017 (Investopedia, 2016).

* May 2016: Bayer started the bidding process for Monsanto. The $66
billion bid was accepted in December 2016. If approved, the merged
company will be the world’s largest seed and agriculture chemicals
company. If the merger is not approved by competition regulators,
Bayer will pay a US$2 billion termination fee to Monsanto
(Begemann, 2016).

– The European Commission will decide on this merger by 15 March
2017 (European Commission, 2016).

– It has not yet been submitted to South Africa’s regulators.

* August 2016: Canadian Potash Corp. started negotiations to buy
fertiliser producer Agrium for US$30 billion. The deal is expected
to close in mid-2017 and will create the largest fertiliser company
in the world; it also plans to expand into seeds and crop chemicals
(Skerritt and Casey, 2016).

BASF has been left out of the scramble to consolidate and may well
have to buy up smaller companies, or sell, because it will not have
the strength to take on the concentrated power of its competitors
(ETC Group, 2016). Or it could benefit from forced divestitures of
the mergers. If all the proposed megamergers are approved, these
three companies (ChemChina-Syngenta, DuPont-Dow, Bayer-Monsanto)
will own and sell about 60% of the world’s patented seeds and
pesticides/herbicides (AgriPortal, 2016).

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