China National Chemical Corp.’s proposed $43 billion purchase of Syngenta (ticker: SYT) should vault the Chinese giant to the top of the agricultural chemicals sector, while giving the Swiss company a much-needed infusion of cash to complete some of its own goals.

The acquisition, along with an announcement that Dow Chemical Co. (DOW) and DuPont (DD) will merge, is likely just the beginning of consolidation in the chemicals industry, analysts say.

A slowing global economy and reduced spending on research and development is leading companies to seek growth opportunities outside of normal channels, says Duane Dickson, the U.S. chemicals and materials sector lead at New York-based Deloitte. Companies have been looking at available takeover targets and are finally starting to make moves.

“It’s not like any chemical company can say, ‘I can get organic growth [through] research and development,'” Dickson says. “When global growth starts to slow down, you get growth inorganically because it’s hard to get growth organically. That’s one of the big drivers. We’re really seeing the culmination of companies reviewing what’s out there, and we’re finally getting to a point where they know the business well enough to make decisions.”

ChemChina’s acquisition of Syngenta will be beneficial for both companies as it will help improve food security in China while giving the Swiss company the money it needs to meet its own growth targets, says Jeremy Redenius, a London-based senior research analyst who covers the European chemicals industry for research and trading firm Bernstein.

Syngenta revenue in 2015 fell 11 percent from the prior year. Operating income dropped 13 percent, and net income tumbled 17 percent last year.

“Syngenta is under a lot of capital pressure lately because it has struggled financially the last few years,” Redenius says. “For them to focus on acquiring to improve their business, they’re not going to get that ability from an investor base. But with ChemChina, they’re in a much better position to invest.”

ChemChina will pay 470 Swiss francs ($460) per share and a special dividend of 5 Swiss francs to shareholders once the transaction is completed, which is expected to be by the end of this year.

The Swiss company has been a lightning rod for merger and acquisition activity in the past year. Monsanto Co. (MON) attempted to purchase Syngenta last year for $46 billion, but was rebuffed due to what Syngenta thought was too low of a valuation. Monsanto then withdrew its bid.

Under the deal with ChemChina, Syngenta would remain headquartered in Switzerland, and the takeover is backed by the company’s board.

”The transaction minimizes operational disruption; it is focused on growth globally, specifically in China and other emerging markets, and enables long-term investment in innovation,” says Syngenta chairman Michel Demare, who will become vice chairman of the combined company.

China’s lack of arable land will make it necessary for the country’s farmers to improve yields in the future, analysts say.

To that end, the takeover will give ChemChina access to Syngenta’s seed technology, which is expected to help the state-run company improve food security in the world’s most populous country.

It’s good news for the Chinese, no doubt, but the announcement has some U.S. producer groups worried that the merger would reduce competition and drive up prices for inputs that are already at high levels relative to the price of corn, soybeans and wheat, all of which are at near the cost of production.

The proposed acquisition of Syngenta comes on the heels of an announcement that Dow Chemical is merging with DuPont to temporarily form a company called, unimaginatively, DowDuPont, before splitting into three separate entities in coming years.

With all of the M&A activity in the agriculture chemicals industry, farmers are concerned.

Chris Novak, the chief executive of the St. Louis-based National Corn Growers Association, which has about 40,000 active members, says Syngenta contacted him to discuss the proposed acquisition. He says company executives assured him that prices for farm inputs, including seed, fertilizer and fungicides produced by the company and sold to U.S. growers, would not increase and that supply would not decline.

Still, agriculture groups are worried about what a merger of this magnitude means to their members’ bottom lines.

“Farmers have a right to be concerned about the loss of competition in the marketplace,” Novak says. “We are going to focus on the real impact on farmers, what it means to availability and pricing of products to farmers and will we have competitive markets for the products farmers are utilizing.”

The association plans to hire third-party experts to conduct market analysis “to ensure competitiveness in the marketplace,” he says.

Producers of corn and soybeans should probably get used to M&A in their industry, Dickson says. “We’ve been seeing the trend toward more consolidation in the core chemical industries, and we’re seeing some opportunities in emerging segments or niches of the chemical industry that are going to get growth investment and spinoff attention.”

Many companies are finding in a competitive economic environment the easiest, or at least most cost-effective way, to grow is by acquisitions.

Agricultural companies such as Syngenta are prime takeover targets because there are so few in the world, and they are in an industry in which growth is assured, Dickson says. That all but ensures more M&A activity in the industry.

“Agricultural science and chemistry and the whole idea of precision agriculture and high-yield farms is a growth, area so not a surprise that [Monsanto and ChemChina] want to have Syngenta in their portfolio,” he says. There will be “3 billion more people in the world over the next 30 years, so it’s a safe bet to say the need for more food, higher yields and more-productive farms isn’t going to stop. The space has good long-term fundamentals that will likely pay back.”

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ChemChina’s Purchase of Syngenta Won’t Be the Last in the Chemical Sector originally appeared on usnews.com