Analysis: FELIX TEMBO
HAVE you ever imagined a lion swallowing a tiger, an elephant swallowing a rhino, or a zebra â€˜marryingâ€™ a horse? This sounds impossible but it is happening in the agribusiness industry. From the time we heard of some agribusiness giant being taken over by a chemical company from Asia, a lot of things are happening in the background.
Many multinational companies are looking out for whom next to buy or partner with in the agribusiness industry.
I have been wondering as to why there is this drive to take over rival companies.
My best guess is that Chinaâ€™s economy which ultimately led to the slump in many commodity prices, had partially led to this economic drive.
The global economy created a â€˜monsterâ€™ in the Chinese economy and once things started falling apart, everyone else has been affected. We all had put our ostrich eggs in one huge basket and we are paying for our mistakes.
I feel China was a good experience but we are still going ahead to create giant input supply companies. I honestly canâ€™t imagine what a massive company will emerge from the successful takeover of the largest seed company by one of the largest agro/pharmaceutical companies in the world.
We are talking of an equivalent of â€˜USA merging with Germanyâ€™ to become one super power; what a great super power that would be!
I have no ill feelings about this anticipated takeover, but it will have negative ramifications on weaker â€˜soulsâ€™ like the smallholder farmers of Africa.
A couple of weeks ago, I was so elated to write about the many multinational companies that are opening or establishing base in Zambia. My thinking was that competition was going to be stiff and it would work out to the advantage of the less efficient producers, who are in the majority.
My celebrations are short-lived. Think of it in this way: suppose PF, MMD, UPND and FDD merged to be one political party, which opposition party do you think would dislodge them from power? Do you think ZDDM or Mr Muliokelaâ€™s Poor Peopleâ€™s Party can be a match? Not at all! I feel deflated and my energy is slowly dwindling.
I feel that the farmers of Brazil, Argentina and the US would look through this and object to this impending takeover. There are so many reasons for my apprehension besides making the cost of technologies unaffordable for Africans.
The other reason is that these companies will become less innovative. For example, one company came up with a herbicide suitable for smallholder corn growers called Stellar Star.
It is a very good product which is a great solution for weed control.
However, another innovative solution provider responded with Lumax, which is equally a very good herbicide for smallholder maize farmers. I am sure the other players must be in their laboratories trying to come up with something more innovative than these two products.
This is what competition breeds â€“ innovations! Ten years ago, we had so many phones on the market such as Nokia, Ericsson, Sony-erricsson, and many others.
People had a wider choice and the gadgets were more affordable, but today if one thinks of buying a phone, it has to be Samsung, iPhone or Huawei; the other brands have been obliterated and it all started with one brand buying off the other.
What this has bred is a situation where, if one wants a good phone, one should have US$500 or more, yet we used to get phones of similar quality at US$100. Competition is being killed.
Secondly, I have 101 doubts whether the giant companies being created will be efficient. In their current forms, some of these companies that are thinking of merging or buying off others are already giant companies with so many units.
When you think of them adding new production lines, I guess they will be more efficient than they are.
Just watch this space, in 20 yearsâ€™ time the amalgamating companies will be talking about disbanding or selling off other production lines.
I have no problem with farmers from the developed countries but I am concerned about the resource poor farmers like those of third world countries of Africa.
Some of these technologies will become so dear that even the new production frontiers most of them are talking about will not work.
Remember that Africa and Asia are the only continents that are remaining with enough potential to feed the growing global population.
We just need to keep working hard. The current commodity slump caused by our actions in certain economies will be over.
We are just creating the â€˜witch weedâ€™ in agribusiness development of the world. Personally, I am against this drive, but what influence do l have, anyway?
This author is an agribusiness practitioner.
Analysis: FELIX TEMBO