Right now, at this very minute, the slow but very purposeful reverberations of consolidation are moving through the crop science sector of global agriculture.

The face of the industry is set to be reshaped and changed in the weeks and months ahead, leading to a greater concentration of power in the hands of fewer players than ever before.

The trigger for this shake-up in the global agrichemical sector took place in December last year, when the two largest chemical companies in the US, Dow and Dupont, announced a $130bn merger.

Both companies are veterans of American industry. Dow is almost 120 years in business, while DuPont is more than 200 years old.

The proposed merger of these two giants is a direct response to the shrinking margins their businesses have faced in recent years and an attempt to find cost-saving synergies.

Three years of depressed grain prices have eroded farmer incomes to the point where growers have significantly cut back spending on everything from machinery to crop chemicals to new seed varieties.

Added to this, important markets for agricultural inputs, such as Russia and Brazil, have been dealing with weakening economies while the value of their respective currencies has deteriorated significantly, effectively pricing them out of products in US dollar terms.

The most recent deal to take place in the agrichemical sector was announced last week, when the Chinese state-owned chemical company, ChemChina, agreed a $43bn takeover of the Swiss-based seed and chemical company Syngenta.

For Syngenta, the rationale behind agreeing to the deal was straightforward. The new merged entity of Dow and DuPont would have dwarfed Syngenta, while the other US chemical giant Monsanto had already approached Syngenta on three occasions earlier in 2015 about a possible takeover.

Syngenta management were resistant to a takeover by Monsanto, and the deal with ChemChina effectively allows Syngenta’s structure to remain as is, with the possibility of a minority stake being listed publicly down the road.

Syngenta’s decision to go with ChemChina is seen as a major blow to Monsanto, which had craved a deal with the Swiss giant for years.

Monsanto is one of the US’s oldest and most established companies and a global heavyweight.

However, the merger of Dow and DuPont and this latest deal between Syngenta and ChemChina has left Monsanto in a position where in the space of a few short months it may no longer be the largest player in a market it once dominated.

Food security

From the Chinese perspective, this is more than just an ordinary acquisition. Instead, the deal represents a major step to securing a more sustainable food production system to feed the Chinese population of 1.4bn.

According to the World Bank, just over half the land in China could be considered agricultural, while less than 12% of China’s land is deemed arable. Coupled with this natural constraint, crop yields in China are more than 40% lower than in the US. Genetically modified (GM) crops are likely to help bridge the gap in yields, and Syngenta is one of the largest producers of GM seeds, with close to 7,000 different varieties.

While GM crops are currently banned in China, there is a realisation among authorities that these rules will have to change if the country is to feed itself.

The plan in Beijing is to significantly modernise Chinese agriculture over the coming decade. In its most recent policy document for agriculture, known as Document No 1, China’s state council called for a “cautious roll out of GM technology”.

However, while the opinions of policy makers may be shifting, GM crops are viewed with widespread public scepticism in China.

Changing consumption

Still, the roll out of GM crops in China in the future is more likely than not.

Meat consumption in China has increased sixfold over the last 40 years and will only continue to accelerate. Pork, beef and poultry production has grown by an estimated 1.7m tonnes per year over the last 10 years.

Just the increased amount of animal feed required as nutrition for more animals alone will put a strain on Chinese grain supplies, making the move to GM crops for use as animal feed at the very least all the more likely.

What is for certain is that officials in Beijing are looking to reduce the country’s reliance on imports and increase the productivity of domestic agriculture.