31 / 40
Concentration of market power
in the EU seed market
31
5 seed companies have around 75% of the EU market share. In the case of sugar beet, just 4 companies own
around 86% of the market and 8 companies together own 99% of the EU market.
Concentration is also evident in the wheat market, which is normally considered as a non-concentrated market.
Two companies, Limagrain and KWS, have substantial market shares in this crop. Unfortunately in some sectors
data are incomplete, not open for public scrutiny, and so do not permit a full understanding of the market shares
of other large operators.
Is the EU seed market too concentrated? According to the American economist Philip H. Howard, a rule of thumb
is that when four firms control 40% of a market, then that market is no longer competitive:
“In a number of
agricultural input industries this threshold has been exceeded in recent decades. It is estimated, for example,
that the top four pesticide firms currently control 59% of the global market, and the top four seed firms control
56% of the global proprietary (e.g. brand-name) seed market”
.
89
Why is this a negative evolution? First of all because of the potential risk of decreased agro-biodiversity on the
fields and long-term food security. Secondly it will prevent competition and drive up input prices for farmers, as
we have seen in both the EU, the US and elsewhere.
Howard states:
“An important consequence is that when concentration reaches a certain threshold, the largest
firms are able to ensure stable profits by ceasing to compete on the basis of price. This does not require gathering
secretly together to fix prices (though this does occur), because firms of this size are able to simply signal their
intention to raise prices or restrict output, with others following suit. The potential for highly concentrated
markets to be non-competitive refers primarily to price and/or output, because competition may remain fierce in
other arenas, such as expenditures on advertising, and research and development. One motivation for continuing
competition in these arenas is that they serve as barriers to entry to other firms, thus protecting an oligopoly‘s
high rate of profit.”
90
Various other recent reports
91, 92
indicate that the level of concentration differs from crop to crop, but nevertheless
the so-called Herfindahl Index (HHI, used to calculate the level of market concentration) is under 1000 is for some
crops but for others well above 1500, which indicates concentrated markets.
93
89.
Visualizing Consolidation in the Global Seed Industry: 1996-2008
, P. H. Howard, Sustainability 2009, 1, 1266-1287
Who Owns Nature? Corporate Power and the Final Frontier in the Commodification of Life
, ETC Group, Ottawa, CA, USA, 2008.
90. Philip H. Howard,
Visualizing Consolidation in the Global Seed Industry: 1996-2008
, Sustainability journal, 2009, 1, 1266-1287, Basel. p. 1270,
http://www.mdpi.com/2071-1050/1/4/1266/pdf91. Schenkelaars et al, 2011,
‘Drivers of Consolidation in the Seed Industry and its Consequences for Innovation’
92.
Evolution de L’organisation de la recherche et du secteur des semences
, Fugeray-Scarbel & Lemarie. 2013
93. If one would calculate the HHI for GMO crops, this would be much higher for the simple reason that the number of biotech-patents are mostly
owned by only 4 companies: Monsanto, Dupont, Syngenta and Bayer. It is precisely one of the many reasons why Greens as a political group have
always been consistent in their opposition to biotech-agriculture.