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Agricultural Mergers: Implications On Innovation, Farming, and Politics

Austin Wang

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agriculture

Agricultural mergers have turned the so-called big agriculture into giant agriculture. In the past four years, six of the world’s largest agricultural companies have participated in mergers. As the chemical and seed providers consolidate, their pricing power increases while small farmers lose control over their supply prices. On the other hand, increased consolidation can improve companies’ efficiency and ability to innovate.

Merger Timeline

  • December 2015: Dow Chemical and DuPont complete a merger before splitting into three smaller, specialized agriculture and chemical firms, per Fortune‘s reporting.
  • February 2016: State-owned China National Chemical Corporation acquires Switzerland-based Syngenta for 43 billion dollars, according to Reuters.
  • June 2018: According to reports by CNBC, German pharmaceutical and life sciences Bayer completed a $60 billion deal to acquire pharmaceutical giant Monsanto.

A Bad Deal for Farmers

One of the largest potential consequences of these mergers is a decrease in competition. Four firms now control over 80% of the agricultural market. With fewer providers of seeds, pesticides, and other agricultural essentials, each large firm is able to charge higher prices. Small farmers have little to no negotiating power and end up facing higher prices.

Over 200 farm, food, and rural groups have supported a bill in Congress that would halt agricultural and grocery mergers. Several organizations have claimed that farmers will pass on some of their supply costs to consumers as well. Decreasing farmer salaries and high consumer food prices could also threaten food security against the backdrop of a growing population.

Rising input prices are especially problematic for small scale farmers with low margins. If large firms exercise their pricing power while the trade war is already diminishing farmers’ profits, many farmers could be forced out of their livelihoods. While firms have little incentive to raise prices enough to drive out farmers, it’s clear that farmers have lost even more of their already minimal autonomy in the market.

Furthermore, large agricultural firms have historically participated in unethical practices. For example, Bayer-Monsanto has been hit with almost 11,000 lawsuits for its weed-killer Roundup which has been accused of causing cancer. Problematically, with fewer firms in the agricultural market, most farmers end up using the same product. Despite earlier rumors of Roundup causing cancer, millions of farmers had no choice but to continue using it.

Motivating Political Platforms

Politicians have taken notice of farmers’ concerns. To address decreasing competition in agricultural markets, presidential candidate Bernie Sanders has announced a platform for revitalizing rural America. He plans to strengthen anti-trust legislation to prevent further consolidation in the agricultural markets.

Implications on Innovation

Supporters of large agricultural mergers primarily focus on the potential innovation these new firms could bring. Theoretically, these mergers will create companies with enormous amounts of capital and intellectual property for further innovations. In the past, large agricultural firms have been responsible for creating incredibly efficient GMO crops and pesticides that have improved agricultural yields.

As our world’s food needs increase, we may need giant firms to further innovate and increase yields. Yet these innovations often result in significant environmental harms. Pesticides can adversely affect local flora and fauna as well as introduce toxic chemicals into the soil. In the long run, it is difficult to say whether efficient, industrial farming will ensure our food security better than smaller-scale, more environmentally friendly farming practices.

The Role of Anti-Trust Review Boards

Despite concerns over pricing power, these mergers were ultimately approved by anti-trust review boards. Furthermore, many of these mergers were accompanied by divestitures of smaller branches or specific products. It is possible that these mergers have not actually affected competition in agricultural markets much. After all, many companies already have enormous market shares in their particular pesticide or seed products. Mergers may not make the already oligopoly-like climate on the agricultural industry much worse.

Conclusions

Altogether, it’s difficult to say whether agricultural mergers will actually increase innovation. Firms are incentivized to innovate in order to compete with other firms’ products. With fewer firms in the market, there may actually be a decrease in innovation since there are fewer products to compete with.

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Politics

Europe’s Ambitious Green Deal: A Plan To Neutralize Its Carbon Footprint By 2050

Grit Daily

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Through a new Green Deal, the EU plans to neutralize Europe’s carbon footprint by as early as 2050. While the plan is ambitious, it highlights the need for world leaders to work together. After all, it will take extensive collaboration to fight against climate change once and for all.

What Does The Green Deal Encompass?

The Green Deal encompasses everything from plastic bans to tightening restrictions on carbon emitting industries like oil and gas. At the same time, it will limit trade deals with countries that are not part of the Paris Agreement.

Europe is already leading the world in climate change efforts. And the Green Deal will jumpstart its position as one of the greatest initiatives for climate change thus far.

The ultimate goal for the Green Deal is to create a global response, particularly with the looming threat of trade embargo’s and restrictions on trade with countries that are not making an effort to combat climate change.

This turns attention toward places like the United States, which motioned to withdraw from the Paris Agreement in 2017.

In other countries, particularly in places like Indonesia and throughout the undeveloped world, the needed infrastructure for the level of change has not been set up.

Things like adequate waste management and access to clean drinking water mean that beaches and oceans are often littered with plastics, while carbon emissions are high due to a lack of regulations. (Though these numbers are in-line with emissions from more developed countries as well.)

The Details of the New Green Deal

The new Green Deal unveiled at the annual climate conference in Madrid earlier this month will unite most European countries to neutralize carbon emissions by 2050.

The union hopes to reach this goal by focusing its efforts on investing in industries that want to cut their emissions significantly.

This means new innovations for the steel industries, as well as vehicle and renewable energy.

These new laws could also see tighter restrictions on goods that are imported from places that don’t put heavy restrictions on carbon emissions.

Places like China, which are leading suppliers of consumer goods worldwide, are also one of the biggest carbon emissions culprits in the world.

The EU hopes to leverage its Green Deal restrictions to incentivize other countries to make smarter climate decisions.

What The Green Deal Means For Transportation and Shipping Companies

The reality of this Green Deal is that many transportation and shipping companies will have to acquire special permits in order to operate within the EU.

Maritime shipping companies, for example, will likely need to register their vessels and acquire permits in order to dock.

The EU could limit how many vessels operate in an effort to cut back on carbon emissions.

But the new Green Deal does not stop there. The EU also plans to invest greater efforts into plants and the preservation of nature.

Initiatives to plant more trees and stop deforestation throughout Europe will begin in the near future. Recently, the EU banned all pesticides that could negatively impact native bee populations.

Meanwhile in Germany, the country is working to convert its local train operations to more eco-friendly options than coal burning.

In France, the country’s recent single-use plastic ban will see a significant change in consumer habits over the next couple of decades. By 2025, the country hopes to use at least 60% biodegradable materials instead of plastics.

Hoping To Create a Domino Effect

Europe may be ahead of the curve when it comes to adjustments for climate change. But it has grander visions.

Now, it hopes to begin a domino effect by uniting governments around the world for a greater cause.

Note: This article was originally posted at Grit Daily by Julia Sachs and edited and syndicated with permission.

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Sustainability

PG&E Will Pay $13.5 Billion In Damages For Camp Fire And Three Other Wildfires It Started

Maddie Blaauw

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This past week, Pacific Gas and Electric reached a $13.5 billion settlement for the four fires the company started, including the PG&E Camp Fire. A portion of this will go to victims of the fires. Another part is for rebuilding infrastructure damaged by the fire. PG&E estimates that the damage it caused totals over $30 billion. However, by declaring bankruptcy, the electricity provider hopes to settle all claims with a lower payment.

Compensation for Four Separate Fires, Including the PG&E Camp Fire

PG&E claims that the $13.5 billion dollars will be retribution for four fires in the last ten years: the PG&E Camp Fire of 2018, the Tubbs Fire of 2017, the Butte Fire on 2015, and the Ghost Ship Fire in Oakland in 2016. 

While some of these cases are still in court to determine the legal liability of PG&E, the reason that the company has opened up to a $13.5 billion settlement is because it believes that it will be found guilty, and hopes to pay less this way.

PG&E’s bankruptcy puts it in danger of having the state take over. Additionally, the federal government convicted PG&E of six felonies after a gas pipeline explosion in 2010. The company remains on probation because of this event.

Many agree that this PG&E settlement is the company trying to calm survivors of the fires, while not raising any more regulation from either federal or state governments

The PG&E Camp Fire and Others Could Have Been Prevented

The PG&E Camp Fire currently holds records as the deadliest and the most destructive wildfire in California history. The damages from it totaled an estimated $16.5 billion. The fire destroyed 18,804 buildings.

Flames scorched 153,336 acres of land that was home to both people and California’s beautiful forests and wildlife.  And perhaps the most painful number of all is the total deaths. 85 people died in an event that was ultimately preventable with proper power line care and maintenance. 

The Tubbs Fire in 2017 held the records that the Camp Fire broke. It was the most destructive wildfire in Californian history at the time, but no longer holds that title.

The Wildfires Caused Severe Damages

Damages caused by the fire total $1.3 billion, in 2017 USD. The Tubbs Fire destroyed an estimated 5643 structures, and destroyed 36,807 acres of nature and civilization. 22 people died. 

The Butte Fire in 2015, though not as costly as the Camp Fire, still burned about half as much land. The lower cost is likely due to a lower concentration of homes and towns on the land.

However, this means that the fire burned through more natural habitat and oxygen-producing trees. The damages cost about $2 billion, and 863 buildings burned, supporting the former claim.

Fatalities Occurred

The fatalities caused by the Butte Fire were the lowest of the four the company is addressing. Two people died. Nonetheless, it is painful to know that these two deaths could have been prevented.

Finally, the Ghost Ship Fire, which took place in a warehouse in Oakland in 2016, caused 36 fatalities. The people were trapped inside the building and the blaze prevented firefighters from getting to them. 

So in total, land burned by these four fires alone totals 126,479 acres. That’s nearly 200 square miles. Undoubtedly, though, of the greatest importance is the death toll of 145 lives.

So it’s understandable that many would be enraged by the lowering of the PG&E settlement from $30 billion to $13.5 billion.

Knowing, Yet Doing Nothing

PG&E cited in reports of the events that lead to the fires that the company had previously observed, but not fixed, many of the causes.

For example, both the company and the California Fire Department have stated that the cause of the PG&E Camp Fire was dry vegetation around the transmission lines.

The transmission lines were neither upkept nor equipped well enough to handle the hot, dry summer that California saw in 2018, even though climate scientists had predicted that the lengths of droughts and the temperatures of the summer months would increase. 

PG&E ignored the conclusions of these scientists instead of treating power lines to withstand such changes. 

Politicians Outraged By Company Response to PG&E Camp Fire and More

The Californian governor is enraged by the inactivity of the company. Many in the state’s government are also upset with the lack of improvements to deal with the reality that climate change is bringing to the state.

In May of 2019, he stated, “All should be mindful of PG&E’s history of over two decades of mismanagement, misconduct and failed efforts to improve a woeful safety culture… [PG&E] has not demonstrated that it understands the gravity and urgency of the situation.” 

Overall, the utility has failed the communities that it serves on two fronts: inadequate inspection of power lines, and lack of action to fix a hazard found during the inadequate inspection of power lines.

By confronting these two problems and becoming more efficient in these two areas, the company could have arguably prevented every single fire that it hopes to address in the $13.5 billion PG&E settlement.

We Can’t Keep Ignoring These Wildfires

The effects of climate change are real and are having real, quantifiable impacts on the country.

Companies that have been profiting while ignoring climate change need to step up and address potential causes of tragedy before changes in the weather escalate the small, fixable item into a forest fire that kills 85.

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Sustainability

Latest IUCN Report Shows Ocean Deoxygenation Is Happening At An Alarming Rate

Haider Sarwar

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While many people don’t personally witness the ramifications of climate change, marine life is starting to take a serious toll due to ocean deoxygenation. Today, more than 700 oceanic sites are suffering from oxygen loss. In comparison, ocean deoxygenation only affected 45 sites in the 1960s.

That’s not to mention ocean deoxygenation will even more greatly impact marine ecosystems with the most biodiversity. This immense increase in anoxic oceans has led to a bleak outlook on the future of our oceans. What does it all mean for marine life?

What The IUCN Report Says About Ocean Deoxygenation

A study that began in 2000, the IUCN released a report just yesterday named Ocean Deoxygenation: Everyone’s Problem. The title alone draws heavy focus to the underrepresented deoxygenation of the oceans.

More specifically, the carbon emissions that humans primarily create have led to reduced levels of oxygen in oceans.

Not just greenhouse gases, nutrient run-off from agriculture also decreases oxygen. Chemicals from everyday life pollute the sea every day and lead to eutrophication.

IUCN’s report indicated that climate change is affecting the most biodiverse regions of the ocean. Moreover, the deoxygenation will disrupt “basic processes.” This means that deoxygenation is disrupting the cycle of life and predator/prey relationships.

It’s a big problem because it could lead to the endangering of some species and overpopulation of other species.

Unfortunately, the researchers estimated that the oceans would lose 4% of its oxygen worldwide by 2100. Furthermore, they recommended that world leaders and politicians pay more attention to this growing problem.

The report noted that even with corrective actions, a lot of the damage done might be irreversible.

What Ocean Deoxygenation Means For Marine Life

Ocean deoxygenation will primarily affect areas with high biodiversity. That is, it’s driving all of the high-energy fish to shallower waters. This is because the deeper parts of the ocean are starving for oxygen.

The high-energy consuming fish, the tuna and sharks of the ocean, will have higher chances of being overfished.

While the population of the fish that we depend on dwindles, the jellyfish and microbes that stay in the deeper parts will flourish.

Mainly because their predators have fled for more oxygenated areas, the overpopulation of these microbes will occur. “If we run out of oxygen it will mean habitat loss and biodiversity loss and a slippery slope down to slime and more jellyfish,” said Minna Epps from IUCN.

It’s Everyone’s Problem To Solve

The effects of climate change are now a reality. The bleak report put out by IUCN illustrates the overarching problems and what can be done.

While corrective methods may prove to be less than efficient, an attempt must be made. Climate change won’t just stop at our oceans; it’ll affect every part of nature. Ocean deoxygenation is everyone’s problem to solve.

And the least we can do is not pollute our oceans.

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