This article is an edited excerpt from Titans of Industrial Agriculture: How a Few Giant Corporations Came to Dominate the Farm Sector and Why it Matters, published in February 2025 by MIT Press.
The agricultural inputs industry is big business. Every year, farmers around the world spend hundreds of billions of dollars on farm machinery, fertilisers, seeds, and pesticides.
Although agricultural inputs are a huge sector of the global economy, a relatively small number of very large corporations collectively command the lion’s share of the market. For the world’s farmers, the names of these firms are all too familiar. In agricultural seeds and pesticides, they are Bayer, Corteva (formed in 2018, a year after the merger between Dow and DuPont), Syngenta Group, and BASF.
The household names in farm machinery – such as tractors and combine harvesters – are John Deere, CNH Industrial, AGCO, and Kubota. When farmers need fertiliser, they are often buying from Nutrien, Mosaic, Yara, and CF Industries. Other large firms in these sectors are also vying for market share, but these are by far the biggest.
It is remarkable that the sector looks the way it does today – with only a handful of global firms providing such a large share of the world’s farm inputs – considering that just a few hundred years ago, agricultural inputs were not usually widespread market commodities at all. Farmers typically saved their own seeds to plant the next season; used available waste materials and crop rotations to ensure that plants received sufficient nutrients; intercropped plants to keep pests at bay; and used hand or horse-drawn implements that they could craft themselves to till the soil and harvest crops.
In my recent book, I explain how just a few agribusinesses grew into “titans of industrial agriculture”, with the power to shape and dominate the markets for farm machinery, fertilisers, seeds and pesticides. Each of these four industries has a specific history, from initial widespread commodification in the early to mid-1800s to dominance by just a few very large firms by the early to mid-1900s.
Tracing these separate trajectories, however, reveals that they share some broad similarities. The firms that rose to the top benefited from distinct market, technology, and policy advantages that enabled them to gain power and wealth. Once these firms became large and dominant, they leveraged various dimensions of their power and wealth to shape markets, technological innovation, and government policy processes in ways that enabled them to grow even bigger as they acquired their rivals, even as they often changed names while undergoing consolidation.
The most recent round of consolidation has occurred over the last decade, generating immediate apprehension from many quarters, including farmer organisations, civil society groups, environmental NGOs, policymakers, and academics. Importantly, their worry was not just about the market dominance of a handful of large agribusiness firms following the megamergers of the previous decades, although that is certainly a big concern. They were also troubled by the firms’ promotion of a technological model associated with wider social and ecological costs, as well their growing political power to shape policy and legislation.
Market power typically works like this: if one of a small number of dominant firms raises prices well above their production costs, then the other top firms usually follow suit because there is less competition from smaller firms to keep prices low. Price increases of this type can occur via coordination, explicit or implicit, among the dominant firms.
Economists typically consider a 40% market share among the top four firms to be the threshold beyond which market distortions are likely to occur due to market power. If a merger is likely to result in a 60% or higher market share among the top four firms, regulators typically apply additional scrutiny.
In the immediate aftermath of the post-2015 megamergers, several organisations issued reports on the extent of concentration that resulted across the agricultural inputs sector. According to estimates in these reports, concentration ratios of the top four firms (CR4) remained high and have intensified after the mergers were completed. From 2018 to 2020, the top four seed and agrochemical firms – Bayer, Syngenta Group, Corteva, and BASF – controlled 60-70% of the global pesticides market, and 50-60% of the $45 billion global seed market.
The concentration figures for these sectors are higher than they had been in earlier decades. According to the US Department of Agriculture (USDA), the global CR4 in crop seeds and biotechnology was approximately 20% in 1994, 30% in 2000, and around 50% in 2009. For pesticides, the global CR4 was approximately 30%, 40%, and 50% in those same years.
In the fertiliser sector, although global firms increasingly dominate the market, most of the available data on concentration are at the national level. In 2019 in the United States, four companies – CF Industries, Nutrien, Koch, and Yara-USA – supplied 75% of nitrogen-based fertilisers, and just two companies – Nutrien and Mosaic – supplied 100% of North America’s potash fertiliser. One firm, Mosaic, was estimated to supply nearly 90% of the US market for phosphorus-based fertilisers.
In the farm machinery sector, the top four firms – Deere, Kubota, CNH Industrial, and AGCO – captured around 45% of the global market, and the top six held nearly 50% of the global market. In the United States and Canadian national markets, Deere accounts for around 60% of sales of heavy-duty tractors.
Concentration ratios differ depending on markets for specific kinds of inputs. When those more specific markets are considered, concentration levels are often much higher because some are only served by a few firms. For example, genetically modified (GM) seeds comprise around half of the global seed market, and even before the recent mergers, virtually all of the market for GM traits was dominated by the top six firms.
In countries that plant significant acreages of GM crops, the concentration in the seed sector is starkly evident. In the United States, where genetically modified seeds account for most of the corn and soybeans planted, concentration in those markets is especially high.
In 2018–2020, the top four seed companies controlled 84% of the US corn seed market and 78% of the US soybean seed market. Two firms alone – Bayer and Corteva Agriscience – controlled 72% of the US corn seed market and 66% of the US soybean seed market. This kind of concentration is not surprising when one considers that three firms – Bayer, Corteva, and Syngenta – own 95% of the patents in the United States for GM corn, 78% of the patents for GM soybeans, and 93% of the patents for GM canola issued between 1976 and 2021.
Analysts have raised concerns that the dominant firms within a sector may command more market power than even these measures signal, because their common shareholder ownership structure is not reflected in concentration ratios. Common ownership is a pattern for many of the firms in the agrifood system, whereby a significant proportion of shares in each of the companies is owned by the same large asset management firms. As shareholders, gigantic asset management firms such as BlackRock, State Street, and Vanguard are in a position to pressure the CEOs of these firms to deliver higher returns, which can lead to elevated prices across all firms in which they own shares.
The market dominance of the top four firms can point to where market power may reside in the economy, but is not always a perfect measure of the exercise of that power. Not only is concentration tricky to measure, but the capacity it potentially confers to firms to raise prices well above their production costs does not necessarily mean firms are doing so in practice.
To determine whether dominant firms are flexing their market power, economists also look at other metrics, such as price markups (the amount that firms charge for their products above their marginal costs) and corporate profit ratios. These other measures provide a good indication of whether the firms that dominate in concentrated sectors are exerting their market power in ways that are excessive or socially harmful.
Recent research has determined that markups and profits are indeed rising as markets become more concentrated. Economists Jan Eeckhout and Jan De Loecker have shown that globally, the average markup firms charge has increased significantly. Prices were around 1.1 times higher than marginal costs in 1980 and rose to nearly 1.6 times higher than marginal costs in 2019—with rates in North America (1.76) and Europe (1.64) having increased more than in other parts of the world.
The increase in markups was especially sharp in the 1980s and 1990s, and again after 2010—periods when there were rampant merger and acquisition waves in many economies. New research shows that corporate profits as a share of sales increased between the 1980s and mid-2010s, from around 1-2% of sales in 1980 to around 7-8% of sales in 2016. By 2021, corporate markups and profits in the United States had increased to their highest recorded level since the 1950s.
The seed sector is one of the most highly concentrated input industries, especially when considering genetically modified seeds in specific markets. Concentration ratios are just one aspect of this. Beyond the market for seeds themselves, the ownership of intellectual property (IP) for seed traits is also concentrated in the hands of just a few firms.
USDA found that in 1990, the top four companies held 41% of intellectual property protection for corn in the United States, with just one firm, Pioneer, owning 38%. By 2010, the IP ownership of the top four firms had risen to a whopping 93%. As of 2022, the top four firms owned an incredible 95% of the IP for corn, 97% for canola, 84% for soybean, and 74% for cotton. These very high levels of IP concentration far exceed that of wheat – a non-GM crop for which much of the breeding takes place in public sector institutions – which has an IP concentration among the top four firms of 51%.
There is a great deal of concern that corporate concentration in the seed sector – for sold seed and in IP for genetically modified traits – gives dominant firms the power to establish prices above levels that would prevail in a more competitive market. USDA reported that prices for genetically engineered seeds increased by 700% between 1990 and 2013, while prices for other field crops increased by 218%. Ascertaining whether these price increases are the product of concentration or other factors, such as technology licensing fees, is tricky because most of the required data are not publicly available. Rather, the data are often kept behind paywalls by private sector data companies.
It can cost upwards of six figures to attain the twenty years of seed price data necessary to show trends over time. Technology licensing fees, which make up a large proportion of genetically modified seed prices, were easy to track in the United States until recently because they appeared on a separate line in the seed contracts that farmers signed with firms. These fees have since been rolled into seed prices, however, making it hard to separate their effect.
At the time that the megamergers in the seeds and chemicals sector were unfolding, studies predicted that prices would likely increase around 2-6% due to the resulting concentration. The predicted effect of the Bayer-Monsanto merger on cotton seed prices was much more pronounced, with an anticipated 17.4-19.2% increase.
Further, the turmoil on global agricultural markets caused by the COVID-19 pandemic and the Russian invasion of Ukraine has made it especially difficult to parse out the various concentration effects on seed prices in recent years.
The seed companies insist that their products enable farmers to achieve greater overall agricultural productivity, which should offset any price increases. However, the vast majority of the agricultural biotechnology traits marketed by top firms are not designed to increase yield. Rather, nearly all of the traits marketed by seed firms are for herbicide tolerance or insect resistance. Of course, protecting seeds from weeds and insects can result in greater output per field, but the evidence is scant that GM seeds outperform conventional seeds to the extent that it covers the additional cost.
USDA data show that the prices of farm inputs, led by seeds, have increased more rapidly in recent decades than the prices farmers have received for their crops. As the American Antitrust Institute notes, “Seed price increases have outpaced yield increases over time – the very problem that biotechnology is purportedly designed to solve.”
Beyond pricing impacts, critics have pointed to practices among firms in the agricultural biotechnology sector that make it difficult for new firms to enter the marketplace, such as licensing and cross-licensing of seed traits and varieties.
As a 2022 USDA consultation on concentration in the seed sector revealed, large firms are able to dictate unfavourable terms to smaller-scale seed dealers, who have little choice but to comply because they have no alternative sources for specific traits. The large biotech seed companies were also criticised in submissions to that same consultation for their efforts to prevent other firms from producing generic versions of their products when their patents expired. One comment filed in the consultation noted that BASF allowed the license for its LibertyLink seed trait to lapse several years before the patent was due to expire, thereby ensuring that the trait was removed from the public domain.
Farmer livelihoods are directly affected by the market power of the input companies. When fertiliser prices rise suddenly and sharply, for example, it cuts into farmers’ own profitability, especially when fertiliser prices rise more than crop prices. In the period just prior to the recent mergers (1990–2015), the cost of farm inputs, especially seeds, rose more quickly than the prices farmers received for their crops. Although it is hard to calculate exactly what the cumulative costs of these price increase were, antitrust analysts C. Robert Taylor and Diana Moss estimate that “damages from supra-competitive pricing of fertilizer likely amount to tens of billions of dollars annually, the direct effects of which are felt by farmers and ranchers.”
Since 2020, farmers in developing countries have been especially hard hit by rising fertiliser prices. In the first six months of 2023, prices rose by as much as three times world prices in East and Central African countries. Small-scale farmers in sub-Saharan Africa in particular have had difficulty accessing imported fertiliser because of the higher costs and high debt levels in those countries that limit the ability of national actors to borrow funds to purchase fertiliser imports.
The impacts of higher farm input prices also extend to consumers of food the world over, as increased farming costs are translated into higher food prices. Civil society critics have argued that the recent megamergers will likely have an adverse effect on those who are already in poverty by making food less affordable. A 1% increase in the price of fertiliser translates into a 0.45% increase in the price of food commodities.
The unaffordability of fertiliser in the developing world has led to reduced use and lower production, which further constrains food availability and in turn puts upward pressure on food prices. The cost of a healthy diet has increased in all regions of the world since 2019, and in 2020, 3.1 billion people could not afford a healthy diet – an increase of 112 million compared to 2019. The sharp increase in food price inflation in 2021 and 2022 only exacerbated this trend.
These impacts impose huge costs by reducing individual agency within food production systems and limiting opportunities for diversity that are necessary for more resilient food systems. The exercise of market power by the dominant input firms also exacerbates inequality more broadly in society. There is growing recognition that as the top firms in the economy have exercised their market power, inequality has increased.
One dynamic that has raised concern among economists is that as the top firms have increased their markups and turbocharged their profits, the share of the national income that is allocated to workers has declined from roughly 65% in the 1970s to around 59% in 2017.
These kinds of broader inequalities that arise from the exercise of market power, including among the agricultural input firms, privilege corporate executives and financial investors over all others in society.
The further, massive, uptick in profits of the dominant agricultural inputs firms in the 2020–2023 period raises new questions about the market power of these firms in the context of market turmoil caused by the COVID-19 pandemic followed by the Russian invasion of Ukraine. The key concern is that the dominant firms used the uncertain situation to raise their prices by more than their own costs increased, which the firms themselves confirmed in their own financial statements. In exercising these various aspects of their market power, the firms have imposed enormous costs on food systems by making both food and farming more expensive and less accessible.
This article is an edited excerpt from ‘Titans of Industrial Agriculture: How a Few Giant Corporations Came to Dominate the Farm Sector and Why it Matters’, published in February 2025. Buy here from MIT Press.
Jennifer Clapp is Canada Research Chair in Global Food Security and Sustainability and Professor in the School of Environment, Resources and Sustainability at the University of Waterloo. She is a member of the International Panel of Experts on Sustainable Food Systems and previously served as Vice Chair of the Steering Committee of the High-Level Panel of Experts on Food Security and Nutrition (HLPE-FSN) of the UN Committee on World Food Security (CFS).
- Opinion
- By Austin Frerick
- 17 June, 2024
