Johannesburg - American seed company
DuPont Pioneer and South Africa's Pannar Seed on Friday rejected an
economist's view that their proposed merger would increase seed
prices in South Africa.
The merger would benefit the country's
agricultural sector, they said in a statement.
"Recent statements by the
commission and others that... the transaction will result in a 12%
increase in the price of hybrid maize seed are patently incorrect.
"(They are) misleading and do not
reflect the evidence in the proceedings before the Competition
Tribunal or the Competition Appeal Court (CAC)."
In the short-term prices could increase
by 1.6%, they said, basing this on "the most conservative
"Importantly, the appeal court
found that even when assuming this 'worst-case scenario' the benefits
of the merger swamp any potential short-term price effects."
The companies said the CAC held that
the innovation benefits of the merger would create a more competitive
adversary for Monsanto, the dominant firm in South African maize seed
Earlier, economist Mike Schussler said
droughts, input costs, and the merger of these two companies could
push food prices higher.
Schussler said the merger could push up
domestic seed prices, which were already climbing at an average of
18% a year.
"The fact that two multinational
firms are likely to benefit by between R189m and up to R300m at the
expense of the South African consumer, makes this a perfect storm."
Schussler was briefing media on the
current state of food prices and threats to the food sector.
He said input costs such as
electricity, fuel and labour would still cause high food prices in
South Africa, even when the drought in the US ended.
DuPont Pioneer and Pannar Seed had
filed an answering affidavit with the Supreme Court of Appeal, in
response to the Competition Commission's application for leave to
appeal the CAC's approval of their merger.
The merger has been the subject of
litigation involving the Competition Tribunal and Competition
Commission, which blocked the merger before the CAC overturned their