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Farmers Face the Consequences
of a Consolidated Seed Industry
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
Farmers Face the Consequences
of a Consolidated Seed Industry
1
!!"
About the Farmer to Farmer Campaign on Genetic Engineering
The Farmer to Farmer Campaign on Genetic Engineering is a network of 34 farm orga­
nizations from throughout the United States that endorsed the Farmer Declaration on
Genetic Engineering released in December 1999. The Farmer to Farmer Campaign on Ge­
netic Engineering seeks to build a farmer driven campaign focused on concerns around
agricultural biotechnology and to provide a national forum for farmer action on these
issues.
Acknowledgments
The Farmer to Farmer Campaign on Genetic Engineering wishes to thank the John Mer­
ck Fund, Farm Aid, Frances Fund, Inc., and the Cornerstone Campaign for their support
of this report.
2
The author appreciates the time and guidance of several people, including Bill Wenzel,
Michael Sligh, Bill Freese, Neva Hassanein, Dan McGuire, Mary Hendrickson, and Paul
Rozwadowski.
Table of Contents
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The Story of Seed Corn: Stacked Traits Lead to Historic Prices, Less Choice
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Soybean Sticker Shock: More Farmers Searching for Conventional Seed
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
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3
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T
he seed industry has quickly consolidated. The U.S. Department of Justice (DOJ) announced in August 2009
that it would investigate alleged anticompetitive conduct in the seed industry largely because a few dominant
!"#$%&'(%)'&*"'+%#,)-%'. %*-/%$//0%$,11+23
Ten companies account for about two-thirds (65 percent) of the world’s proprietary seed – that is, branded varieties
subject to intellectual property protections – for major crops. Economists say that an industry has lost its competi*45/%)-6"6)*/"%(-/&%*-/%)'&)/&*"6*4'&%"6*4'%'. %*-/%*'1%.',"%!"#$%789:;%4$%:<%1/")/&*%'"%-4=-/"3%>&%$//0?%*-/%*'1%
.',"%!"#$%6))',&*%.'"%@<%1/")/&*%'. %*-/%1"'1"4/*6"2%#6"A/*%6+'&/?%6&0%:B%1/")/&*%'. %*-/%)'##/")46+%#6"A/*?%(-4)-%
includes both proprietary and public varieties. This level of concentration has proven problematic, reducing choice
and increasing prices for the average American farmer.
Several factors have contributed to concentration in the seed industry. Extensive concentration is a consequence
of weak antitrust law enforcement and Supreme Court decisions that allowed agricultural biotechnology and other
plant products to be patented. Together, these factors have created unprecedented ownership and control over plant
=/&/*4)%"/$',")/$%4&%#6C'"%!/+0%)"'1$3
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time – to patent inventions that result from publicly funded research projects on the theory that the law would
increase innovation. With passage, industry funding of public research surged and public funding dropped dramatically. The result has been the privatization of public research, leading to restrictions on the free exchange of basic
research, less public analysis of new varieties, and diminished innovation. Though industry funding of universities
may not be something to criticize on its own, these trends are troubling.
Executive Summary
4
Dozens of mergers and acquisitions followed the expansion of agricultural biotechnology. Many smaller companies
)',+0%&'*%)'#1/*/%(4*-%+6"=/%!"#$%*-6*%'(&/0%#,)-%'. %*-/%=/&/*4)%"/$',")/%E6$/%4&%$//0?%6&0%+4)/&$4&=%=/&/*4)$%."'#%*-/$/%!"#$%(6$%)'$*+23%M*%+/6$*%O<<%4&0/1/&0/&*%$//0%)'#16&4/$%-65/%E//&%+'$*%4&%*-/%+6$*%*-4"*//&%2/6"$%
6+'&/3%D,"*-/"#'"/?%E4'*/)-&'+'=2%"/$/6")-%0/#6&0$%!&6&)46+%"/$',")/$%*-6*%#'$*%$#6++/"?%.6#4+2K'(&/0%)'#16&4/$%0'%&'*%-65/3%P6"=/%!"#$%4&5/$*4&=%4&%*-/$/%*/)-&'+'=4/$%6&0%/6"&4&=%"'26+*4/$%."'#%+4)/&$4&=%6="//#/&*$%Q,4)A+2%
achieved a market advantage that led to numerous buy-outs.
As smaller, independent companies vanish from the landscape, farmers see fewer options and higher prices in the
marketplace. This report documents these trends in corn and soybeans using industry sources, government data, and
personal interviews with farmers and seed industry representatives.
L4$),$$4'&$%'&%$//0%4&0,$*"2%)'&)/&*"6*4'&%*214)6++2%)/&*/"%'&%*-/%0'#4&6&*%!"#?%*-/%R'&$6&*'%8'#16&2?%(-4)-%
achieved the No. 1 position in less than a decade by capturing the markets for corn, soybean, cotton, and vegetable
seed. Its position is most evident when looking at acreage. Today, its genetically engineered (GE) traits are planted
on more than 80 percent of U.S. corn acres and more than 90 percent of soybean acres.
Three major trends have emerged in the Monsanto-dominated seed marketplace that prove challenging to farmers.
QH"""6.5'&#.2"%#.2$".02#$,5$5".0"5$$8"8#.B$0"()"#&),@')"D$$5"D&#"13"'#,.'5
STLM%!=,"/$%$-'(%*-6*%*-/%#'$*%$,E$*6&*46+%1"4)/%4&)"/6$/$%')),""/0%16"6++/+%*'%*-/%"4$/%4&%UV%)"'1%1+6&*4&=$?%(4*-%
*-/%#'$*%$4=&4!)6&*%1"4)/%4&)"/6$/$%')),""4&=%(4*-4&%*-/%+6$*%./(%2/6"$3%8'"&%$//0%1"4)/$%4&%O<<H%(/"/%#'"/%*-6&%B<%
percent higher, and soybean seed nearly 25 percent higher, than 2008 prices. These mark the steepest year-to-year
increases to date.
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Higher seed prices have also resulted from Monsanto leveraging its market share to stack various traits into single
varieties. In 2008, Monsanto executed an “expanded trait penetration” plan to increase sales of seed comprised of,
or “stacked,” with three different traits. The strategy is aggressive and effective: First capture ample market share
through attractive pricing structures and then increase prices once “penetration goals” are met. Because each trait
fetches a separate royalty for Monsanto, as seed traits are stacked, prices grow.
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Monsanto also boosts triple-stack seed sales by effectively eliminating other options in the marketplace. As the
industry consolidates, seed options narrow, and farmers lose access to important varieties they once relied on. Con5/&*4'&6+%7&'&KUV;%'1*4'&$%-65/%04#4&4$-/0?%6&0%$4&=+/%6&0%0',E+/%*"64*%)'"&%56"4/*4/$%6"/%6+$'%#'"/%04.!),+*%*'%
+')6*/3%D6"#/"$%"/1'"*%*-6*%4*%4$%4&)"/6$4&=+2%-6"0%*'%!&0%J*%)'"&%(4*-',*%*-/%9',&0,1%9/602%*"64*3%R'&$6&*'W$%06*6%
)'&!"#$%*-4$%*"/&03
To drive farmers toward triple stack varieties, Monsanto implemented more dramatic price increases for single trait
and double stack varieties while reducing single trait and conventional options in its own brands and subsidiary
companies. Little attention has been given to this emerging trend, where demand does not factor in as much as a
lack of choice.
To be sure, there is great demand among farmers for GE corn and soybeans. Yet demand for conventional varieties is growing at the same time that farmers are seeing these varieties slip away as the industry consolidates. Higher
Roundup Ready soybean seed prices have sparked renewed interest in conventional soybeans. In 2009, numerous
university extension agents reported that conventional soybean sales had doubled and demand could not be met. In
.6)*?%*-4$%2/6"%#6"A/0%*-/%!"$*%"/0,)*4'&%'. %UV%$'2E/6&%6)"/$%$4&)/%*-/4"%4&*"'0,)*4'&%4&%GHHX3
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
Monsanto’s dramatic price increases are unmatched. The company’s traits and the technology (royalty) fees tied to
them stand out as the driving force behind increased seed costs. These fees vary by crop type, but all have increased
substantially over the years. The Roundup Ready trait in soybeans added $6.50 per bag in 2000 and has nearly tripled
since then, now costing $17.50 per bag for the same trait – sometimes attributing to nearly half the price of a bag
of Roundup Ready soybean seed.
5
This report explores how the renewed demand for conventional soybeans is a result of various factors: high seed
and glyphosate costs, glyphosate-resistant weeds, high premiums for conventional soybeans, and the ability to save
non-patented varieties of conventional seed. Taken together, buying conventional soybean seed leads to cheaper
1"'0,)*4'&%)'$*$?%6))/$$%*'%#'"/%1"'!*6E+/%#6"A/*$?%6&0%*-/%6E4+4*2%*'%$65/%6&0%4#1"'5/%$//03%
All of these impacts to farmers are best understood by examining the role patent law has played in encouraging concentration. Over the course of decades, Congress has visited intellectual property protection for breeders of living
organisms and consistently argued that sexually reproducing plants should not be awarded patents for fear of curtailing innovation, threatening the free exchange of genetic resources, and increasing market concentration. When
Congress passed the 1970 Plant Variety Protection Act (PVPA) the law represented a compromise. It provides plant
developers a temporary, legal protection of plants while exempting farmers and plant researchers.
J,*%4&%GHI<?%*-/%Y6*/&*%6&0%F"60/#6"A%Z.!)/%7YFZ;%6(6"0/0%*-/%!"$*%[,*4+4*2\%16*/&*%N%16*/&*$%.'"%4&5/&*4'&$%N%*'%
6%+454&=%'"=6&4$#3%F-/%T,1"/#/%8',"*%,1-/+0%*-/%YFZ%0/)4$4'&?%-'+04&=%*-6*%16*/&*%+6(%4$%&'*%$1/)4!)6++2%/])+,0/0%
in the PVPA but leaving the door open for Congress to make PVPA the exclusive protection for sexually reproducing plants.
Because patents remove a farmer’s right to save seed – an important form of competition – they have led to investigations of farmers for patent infringement (illegally saving patented seed) that at times infringe upon privacy and
property rights.
Executive Summary
T'#/%'. %*-/%)'&)/"&$%40/&*4!/0%4&%*-4$%"/1'"*%6"/%&'*%&/(3%F-/2%-65/%E//&%*-/%.'),$%'. %$/5/"6+%6&*4*",$*%)6$/$%*6"=/*4&=%+6"=/%!"#$3%F-/$/%)6$/$%1"'540/%56+,6E+/%)'&*/]*%6&0%6.!"#%*-4$%"/1'"*W$%!&04&=$3%D'"%/]6#1+/?%Texas Grain
Inc. v. Monsanto Company alleges that Monsanto’s licensing agreements with hundreds of seed companies restrain
competition and future innovation by turning smaller seed companies into exclusive licensees of Monsanto products. Seed companies enter into these licensing agreements to access limited use of Monsanto’s technology, such
6$%*-/%9',&0,1%9/602%*"64*3%F-/%+6($,4*%1'4&*$%*'%!&6&)46+%04$4&)/&*45/$%.'"%$/++4&=%)'#1/*4*'"$W%1"'0,)*$?%(-4)-?%
if proven in court, means these businesses are essentially forced to maintain Monsanto’s market share or risk being
!&6&)46++2%1/&6+4^/03%
As the industry consolidates, seed
options narrow, and farmers lose
access to important varieties. Lit­
tle attention has been given to
this emerging trend, where demand
6
does not factor in as much as a
lack of choice.
We hope this report spurs the federal government, seed
industry, and farmers to acknowledge and confront the issues resulting from a highly concentrated seed industry. The
DOJ’s August 2009 announcement that it is inviting input
on competition issues affecting U.S. agriculture – including
industry concentration and issues relating to patents and intellectual property – is a necessary examination long overdue.
Our recommendations go beyond the examination of anticompetitive conduct in the seed industry, but they do start
*-/"/3%Z,"%$1/)4!)%"/)'##/&06*4'&$%4&)+,0/_
2) Change patent law and establish Plant Variety Protection Act as sole protection. By establishing the PVPA
as the sole means of intellectual property protection over plants, farmers could regain the right to save seed and the
right to choice, as plant breeders would have better access to plant genetics that are currently off limits to innovation
because of patents.
3) Change the Bayh-Dole Act (Patent and Trademark Law Amendments Act). The Bayh-Dole Act as applied to seed patenting and agricultural innovations should be re-evaluated and reformed to prohibit mandates for
seed patenting and exclusive licenses relating to technologies and innovations developed through publicly funded
research.
4) Rebuild public plant breeding and public cultivar development programs. Now is the time for the USDA
to make this major recommitment to reinvigorating our public breeding and public cultivar development programs
so we can ensure that the needs of farmers and the general public are met and that research is conducted in an open
and honest way.
5) Remove the restriction on research from licensing agreements. Independent research relies on access to
protected products for purposes of innovation and information sharing. Patent owners should not have the power
to prevent performance and safety testing of their products.
6) Enact farmer contract reforms and establish a federal “Farmer Protection Act.” Restoring fully the federal
rights of farmers to negotiate fair contracts, and including explicitly the right of farmers to negotiate collectively,
(',+0%="/6*+2%)'&*"4E,*/%*'%"/$*'"4&=%6%.64"%6&0%'1/&%1+624&=%!/+0%6&0%E/**/"%/&$,"/%.,*,"/%)'#1/*4*45/%6&0%*"6&$16"ent market behaviors.
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
1) The Department of Justice should closely examine anticompetitive conduct in the industry. Biotechnol'=2%!"#$%-65/%#/"=/0%(4*-%'"%6)Q,4"/0%6%$4=&4!)6&*%&,#E/"%'. %)'#1/*4*'"$?%6&0%*-',=-%$'#/%-65/%0"6(&%6&*4*",$*%
scrutiny, no meaningful action has been taken to deal with anticompetitive players.
7
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T
he concentration of economic power in agriculture has led to grave consequences for American farmers and
rural communities. Today, reduced competition in agricultural markets means farmers face increasingly high
input prices and diminished choice and innovation.
D6"#/"$%6"/%.6#4+46"%(4*-%6%)'&)/&*"6*/0%6="4),+*,"6+%$2$*/#%E/)6,$/%*-/%&,#E/"%'. %!"#$%."'#%(-4)-%*-/2%)6&%E,2%
their inputs and to which they can sell their products has dropped precipitously. Economists say an industry has lost
4*$%)'#1/*4*45/%)-6"6)*/"%(-/&%*-/%)'&)/&*"6*4'&%"6*4'%'. %*-/%*'1%.',"%!"#$%789:;%4$%:<%1/")/&*%'"%-4=-/"31 Many
6="4),+*,"6+%$/)*'"$%-65/%/])//0/0%N%4&%$'#/%)6$/$%-65/%0',E+/0%N%*-4$%E/&)-#6"A3%D'"%/]6#1+/?%.',"%!"#$%)'&*"'+%
#'"/%*-6&%I<%1/")/&*%'. %E//. %16)A4&=`%*-"//%!"#$%)'&*"'+%6E',*%a<%1/")/&*%'. %$'2E/6&%)",$-4&=`%6&0%*-"//%!"#$%
-6&0+/%@@%1/")/&*%'. %b',"%#4++4&=32%%D6"#$%*-/#$/+5/$%-65/%Q,4)A+2%)'&$'+406*/0%$4&)/%*-/%GHB<$3%F-/%&,#E/"%'. %
farms has decreased over the years, while the size of farms and the average age of farmers have steadily increased.
Input industries are included in the trend and in fact demonstrate even higher levels of concentration in some sectors. Six companies account for 75 percent of the agricultural chemical market worldwide.B The fertilizer market is
$4#4+6"+2%",+/0%E2%6%-6&0.,+%'. %!"#$?%6++%'. %(-4)-%/6$4+2%#64&*64&%#6"A/*%1'(/"%4&%6&%4&0,$*"2%04.!),+*%*'%1/&/*"6*/3%%
F-/%$//0%4&0,$*"2%4$%'&/%'. %*-/%#'$*%)'&)/&*"6*/0%4&%6="4),+*,"/3%F-/%*'1%.',"%!"#$%6))',&*%.'"%:B%1/")/&*%'. %*-/%
global commercial seed market, which includes both public and proprietary varieties sold. They also account for 50
percent of the global proprietary seed market. (The term proprietary refers to branded seed subject to intellectual
1"'1/"*2%1"'*/)*4'&$3;%F-/$/%$6#/%!"#$%6+$'%-'+0%0'#4&6&*%1'$4*4'&$%4&%*-/%6="4),+*,"6+%)-/#4)6+%#6"A/*3:
The prevailing leader, the Monsanto Company, accounts for about 60 percent of both the U.S. corn and soybean
seed market through subsidiaries and technology (i.e., genetically engineered traits, such as Roundup Ready and Bt)
licensing agreements with smaller companies. When looking
Economists say an industry has $1/)4!)6++2%6*%=/&/*4)6++2%/&=4&//"/0%*"64*$%4&%*-/%S3T3?%#'"/%
lost its competitive character when than 90 percent of the soybean and cotton acreage, and
more than 80 percent of corn acreage, is planted with one
the concentration ratio of the top
or more of Monsanto’s traits.
Introduction
8
four firms is 40 percent or higher.
Many agricultural sectors have ex­ T/)*4'&%G%'. %*-4$%"/1'"*%40/&*4!/$%*-/%$//0%4&0,$*"2%+/60/"$%
6&0%/]1+'"/$%/5/&*$%*-6*%6++'(/0%6%-6&0.,+%'. %!"#$%*'%6)-
ceeded – in some cases doubled quire enormous market power. In general, extensive concentration is a consequence of weak antitrust law enforcement
– this benchmark.
and Supreme Court decisions that allowed agricultural biotechnology and other plant products to be patented. Together, these factors have created unprecedented ownership
6&0%)'&*"'+%'5/"%1+6&*%=/&/*4)%"/$',")/$%4&%#6C'"%!/+0%)"'1$3
Section 2 examines the impacts to farmers in the context of choice and pricing. As the market power of the largest
$//0%!"#$%="'(?%$'%0'%*-/%1"4)/$%.6"#/"$%162%.'"%$//03%Z&/%)+/6"%)6,$/%4$%*-6*%!"#$%4&)"/6$4&=+2%[$*6)A?\%'"%)'#E4&/?%
genetically engineered traits – each tied to a royalty payment – into single varieties. Accompanying this trend are less
expensive and quality options in the seed marketplace, especially conventional varieties, which fetch a premium price
E/)6,$/%*-/2%0'%&'*%4&)+,0/%=/&/*4)6++2%/&=4&//"/0%*"64*$3%F-/$/%6+*/"&6*45/$%6"/%-6"0/"%*'%!&0%4&%6&%4&0,$*"2%+/0%E2%
a few players focused on biotechnology. And in the case of soybeans, where the Roundup Ready trait is proving to
be a short-lived technology, demand for these alternatives outstrips supply.
One important finding is a general
fear in agricultural communities
that simply talking about the seed
industry’s shortcomings will result
in repercussions against them per­
sonally. This report gives voice to
their stories.
Z*-/"%+/=6+%)6$/$%4&5'+54&=%16*/&*$%6&0%$//0%*"64*$%1'4&*%&'*%*'%.6"#/"$%E,*%R'&$6&*'%6&0%'*-/"%1'(/".,+%!"#$3%
The report also documents various antitrust allegations against industry leaders. The Department of Justice’s (DOJ)
August 2009 announcement that it is exploring competition issues affecting agricultural industries and weighing the
appropriate role of antitrust and regulatory enforcement provides some hope that the government will address unfair conduct, and not turn a blind eye to anticompetitive mergers and acquisitions in the seed industry.
The implications of a concentrated seed industry are no longer discussed in future tense. As this report explores,
industry sources, government data, and personal interviews with farmers and seed industry representatives all attest
to historic price increases and reduced options in the corn and soybean marketplaces. The purpose of this report
is to document these trends. Some sources were uncomfortable sharing their identity publicly because they feared
E6)A+6$-%."'#%4&0,$*"2%16"*&/"$?%&6#/+2%R'&$6&*'3%Z&/%4#1'"*6&*%!&04&=%4$%6%=/&/"6+%./6"%4&%6="4),+*,"6+%)'##,&4ties that simply talking about the seed industry’s shortcomings will result in repercussions against them personally.
This report gives voice to their stories.
Regardless of one’s opinion on agricultural biotechnology, concentration in the seed industry means farmers are
E/-'+0/&%*'%6%./(%#6C'"%!"#$3%M$%)'&)/&*"6*4'&%('"$/&$?%.6"#/"$%+'$/%#'"/%1'(/"%4&%6%'&)/%54E"6&*%6&0%4&0/1/&dent production process. Finding our way back demands a serious examination of current seed industry structure
and conduct, as well as an open and honest review of patent law as it pertains to the most fundamental piece of
agriculture: seed.
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
T/)*4'&%B%04$),$$/$%*-/%)'&$/Q,/&)/$%'. %16*/&*$%'&%)"'1$?%4&cluding the impacts to public breeding programs and small seed
companies. Patents have allowed for a culture of secrecy to develop around patented research that threatens the transparency
of public programs; reduces access to genetic resources that
ensures future innovation; and restricts independent testing
that would provide farmers useful information about products
they are purchasing. Furthermore, the enforcement of patents
on seed shows a troubling pattern of investigations and litigation that can infringe on farmers’ privacy and property rights.
9
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Section
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Section 1:
Seed Industry Concentration
everal factors facilitated seed industry concentration. Though once a public resource, seed has become increasingly privatized to the point where a hand.,+%'. %+6"=/%!"#$%&'(%)'&*"'+%#,)-%'. %*-/%$,11+23%>&%*-/%
face of weak competition law enforcement, biotechnol'=2%6&0%6="4)-/#4)6+%!"#$%6)Q,4"/0%6&0%#/"=/0%(4*-%
dozens of smaller competitors. The rapid expansion of
agricultural biotechnology, and the Supreme Court decisions that allowed these plant products to be patented,
led to unprecedented ownership and control over plant
genetic resources.
The defunding of public plant breeding programs also eliminated many public seed varieties from
the marketplace, and shifted research efforts to meet
*-/%&//0$%'. %1"456*/%!"#$%4&5/$*4&=%4&%*-/4"%('"A3%8',pled with the 1980 Bayh-Dole Act, which allows universities to patent publicly funded research and products,
university-industry relationships accelerated the privatization of important plant genetics that would otherwise
be publicly available to farmers and other breeders, and
therefore compete with private products. This section
/]1+'"/$%-'(%6%-6&0.,+%'. %!"#$%)6#/%*'%)'&*"'+%#,)-%
of our seed supply. One company in particular, Monsanto, has successfully captured the markets for most
major crops in less than a decade.
!"M*&#'"6.5'&#)"&D"G@,0'"^#$$8.0/
10
D6"#/"$% (/"/% *-/% !"$*% *",/% 1+6&*% E"//0/"$3% F-"',=-out the 19th century farmers conducted extensive crop
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
breeding with new seeds provided free of charge from
public sector, some established their own research and
the U.S. government, many of which came from overbreeding programs. By 1965, more than 95 percent of
5
seas. Most farmers depended on seed saved from their
U.S. corn acreage was planted to hybrids.8
own harvest or a neighbor’s harvest, and did not buy
The public sector started to reduce produclarge quantities from commercial suppliers. At the time
tion of cultivars for crops where the private sector had
these were small-scale, family-owned operations that
increased output, such as hybrid corn. But both basic
grew varieties produced in the public domain.
research to build new germplasm pools and cultivar
The public sector eventually took on more
development continued in the public sector, especially
breeding efforts and provided new seed varieties to
in regions that were not served or underserved by the
farmers and small independent seed companies at afprivate sector.9
Accompanying successes in plant breeding and
fordable prices. Public breeding programs advanced
other areas of agriculture was the consolidation of
American agriculture tremendously. They effectively
farms themselves. The number of farms and farmers
increased yield in major crops, and were the strongest
in the U.S. declined dramatically in the latter half of
E6$/%'. %$)4/&*4!)%A&'(+/0=/%(4*-%*-/%E/$*%"/$/6")-%.66
*-/%O<*-%)/&*,"23%>&*/"/$*%4&%!&6&)46+%$,11'"*%.'"%1,E+4)%
cilities. %%Y"456*/%!"#$%6*%*-/%*4#/%(/"/%$#6++%4&%&,#E/"%
and offered few products.
plant breeding also started to decline, a trend that con%
L,"4&=%*-/%!"$*%-6+. %'. %*-/%O<*-%)/&*,"2?%1+6&*%
tinues today.10
The private sector expanded rapidly in the
breeding developed simultaneously in both the public
1960s and 1970s, especially after plant variety protecand private sector. The public sector was well funded
tion legislation stimulated
and continued to set the
benchmark for quality, espe- Congress long argued that sexual­ commercial breeding of major
cially as evidence surfaced ly reproducing plants should not be crops, such as soybeans. The
1970 Plant Variety Protection
that some new private seed
awarded
utility
patents
for
fear
of
Act (PVPA) provided the pricompanies were falsely advertising the performance curtailing innovation, threatening the vate sector an incentive to expand in the seed marketplace.
of their seed.7 Farmers still
free exchange of genetic resources,
played an important role in
Many seed companies did not
selectively harvesting seed and increasing market concentration. have proprietary rights on the
for their own use and to
seed they sold but the PVPA
share with other farmers as well as researchers.
provided a temporary, legal protection of plant prod%
F-/% GHB<$% ,$-/"/0% 4&% 6% =6#/K)-6&=4&=% $//0%
ucts – with a few exceptions – to plant developers.
development: hybrid corn. Before the 20th century,
The PVPA represented a compromise by Conseed corn consisted almost entirely of open-pollinated
gress, which had long argued that sexually reproducvarieties that farmers saved. Despite the inability to
ing plants should not be awarded utility patents – “patsave and re-propagate the new hybrid varieties, farments for invention” – for fear of curtailing innovation,
ers quickly adopted the high-yielding seed. Private seed
threatening the free exchange of genetic resources, and
companies capitalized on the feat and expanded in the
increasing market concentration. But in 1980, the Patcommercial marketplace, largely because farmers who
/&*%6&0%F"60/#6"A%Z.!)/%7YFZ;%6(6"0/0%*-/%!"$*%,*4+planted hybrids bought all new seed each year.
ity patent on life in the landmark case of Diamond v.
New seed companies entered the scene solely
Chakrabarty. The Supreme Court upheld this decision
to produce hybrid corn. While most produced and
in 2001, the implications of which are explained in Sec$'+0%-2E"40%$//0%)'"&%0/5/+'1/0%E2%+6"=/"%!"#$%'"%*-/%
*4'&%B3
11
Section 1:
Seed Industry Concentration
12
This decision provided the budding agricultural biotechnology industry with enforceable intellectual
1"'1/"*2%1"'*/)*4'&$3%F-/$/%!"#$%",$-/0%*'%16*/&*%=/netic resources and plant breeding technologies – including those developed in the public domain – making
4*% 04.!),+*% .'"% '*-/"% )'#16&4/$% *'% )'#1/*/% 6&0% ,+*4mately slowing innovation. New restrictions on seed
saving were also enforced. For example, soybean farmers only recently stopped saving most of their seed. In
1982, purchased seed made up about half of soybean
acreage.11 Today nearly all the soybeans planted are
patented varieties with seed saving restrictions.12
%
F-/$/%!"#$%6+$'%",$-/0%*'%1,")-6$/%4&0/1/&dent seed companies to leverage existing breeding programs and established regional markets in pursuit of
commercializing biotechnology seed traits.GB Many of
*-/$/%+6"=/"%!"#$%*-6*%6)Q,4"/0%'"%#/"=/0%(4*-%0'^/&$%
of smaller companies were established multinational
pharmaceutical, petrochemical, and food corporations
that had only recently entered the seed business. By the
GHI<$?%$'#/%'. %*-/$/%!"#$%(/"/%*-/%+6"=/$*%$//0%)'#panies in the world.G:
The mergers and acquisitions that followed
the expansion of agricultural biotechnology allowed
!"#$%*'%Q,4)A+2%4&)"/6$/%#6"A/*%$-6"/%4&%6%&,#E/"%'. %
ways. For one, buy-outs come with intellectual property rights, so companies can avoid expensive licensing
agreements tied to traits and other genetics as well as
1"'!*%."'#%'*-/"$W%4&&'56*4'&$3
%
F-/$/% !"#$% -65/% 6+$'% )614*6+4^/0% '&% 1"'1"4/tary biotechnology products by leveraging economies
of scope.15 That is, a particular genetically engineered
(GE) trait can be bred into several crop types, as we
have seen with the Roundup Ready trait now commercialized in canola, corn, cotton, and soybeans. Because
*-/$/%!"#$%6"/%#,+*4&6*4'&6+?%*-/2%)6&%/]16&0%4&*'%4&*/"&6*4'&6+% #6"A/*$%/6$4/"%*-6&% $#6++/"%!"#$?%4&)"/6$4&=%$6+/$%6&0%1"'!*$%*-6*%$,11'"*%.,"*-/"%"/$/6")-%6&0%
development.
C*$"X0.B$#5.')[O0875'#)"+&-%@$E
Legislative changes transformed how industry and
universities do business. In 1980, Congress passed the
J62-KL'+/%M)*?%(-4)-?%.'"%*-/%!"$*%*4#/?%6++'(/0%,&4versities to patent technologies and other products that
result from publicly funded research projects. Universities had previously regarded patents as at odds with
*-/4"% &'&K1"'!*% /0,)6*4'&6+% #4$$4'&?% E,*% .'++'(4&=%
Bayh-Dole, they began to earn royalties in exchange
for licensing their inventions to private companies.16
Industry funding for academic research surged after
Bayh-Dole as public support diminished, increasing
."'#%cI@<%#4++4'&%4&%GHI@%*'%c:3O@%E4++4'&%4&%+/$$%*-6&%
a decade.17
%
F-/% E4'*/)-&'+'=2% $/)*'"% -6$% E/&/!*/0% *-/%
most from Bayh-Dole arrangements.18 Investments in
plant biotechnology research largely focus on crops and
*"64*$%(4*-%*-/%="/6*/$*%1"'!*%1'*/&*46+%.'"%+6"=/%!"#$%6$%
'11'$/0%*'%&'&K1"'1"4/*6"2%$'+,*4'&$%*-6*%E/&/!*%*-/%
wider public.19
Coupled with changes in patent law, Bayh-Dole
-6$%6++'(/0%1"456*/%!"#$%*'%=64&%#'&'1'+4/$%*-"',=-%
patents on research results discovered through their
donations to public breeding programs.20 As a result,
farmers and researchers have less access to seed developed in the public domain. Patents also eliminate a
farmer’s right to save seed, and as more germplasm is
held in private hands, small breeding companies and
public researchers have a harder time accessing breeding material to further innovation and increase competition.
Industry’s funding of public universities may
not be something to criticize on its own, especially in
light of dwindling public funds. But with the industry’s expanded role in funding some troubling trends
have emerged. Industry funding often comes with
strings attached that dictate terms of research, includ4&=% )'&!0/&*46+4*2% 6="//#/&*$% 6&0% "/$*"4)*4'&$% '&% *-/%
As the seed industry became more concentrated, private research
‘dropped or slowed,’ and those companies that survived consolidation are
‘sponsoring less research relative to the size of their individual markets
than when more companies were involved.’
duce seed for which there is a large market, public plant
breeding programs have historically focused on local or
regional markets – markets that have been abandoned
as companies consolidate, public breeders vanish, and
local seed production and distribution infrastructures
are lost.25
_*$#$"!#$"_$"?&I`
Seed industry concentration is becoming worse. Seed
companies have rapidly consolidated to the point
where ten companies account for about two-thirds (65
percent) of the world’s seed for major crops, including
corn, soybeans, canola and cotton (see Figure 1).
As previously mentioned, economists say that
an industry has lost its competitive character when the
)'&)/&*"6*4'&%"6*4'%'. %*-/%*'1%.',"%!"#$%789:;%4$%:<%
percent or higher.26 In the case of seed, the top four
!"#$%6))',&*%.'"%:B%1/")/&*%'. %*-/%=+'E6+%)'##/")46+%
seed market, which includes both public and proprietary varieties sold. When looking at the proprietary
9./7#$"QJ"C&%"C$0"+&-%,0)"M*,#$"&D"1@&(,@"G#&%#.$',#)"M$$8"R,#S$'"F;<<PHf
Company
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TOTAL GLOBAL PROPRIETARY SEED MARKET:
2008 Seed Sales
Million
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Percent of Global
Proprietary Seed Market
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$28.4 BILLION
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f:&I"8&$5"0&'"%7(@.2@)"5*,#$"-,#S$'"5*,#$"D./7#$5",5"'*$)"%$#',.0"'&"5$$8"5,@$5"5%$2.D.2,@@)J"6&I$B$#W"&0$"#$2$0'",#'.2@$"0&'$5"'*,'":&I"!/#&M2.$02$5".5"'*$"D.D'*"@,#/$5'"5$$8"%#&872$#".0"'*$"
I&#@8"FM&7#2$L"gM7.'&#5U".0'$#$5'"/#&I".0":&I"70.'Wh"R,)"QYW";<<=W",'"*''%LbbIIIJ.08)J2&-b%&5'5b57.'&#5[.0'$#$5'[/#&I5[.0[8&I[70.'JH
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
interchange of basic research and information due to
patents on university research.21 Worse than secrecy
is evidence that companies manipulate results before
publication to serve the interests of private investors.
It is also not uncommon for university professors and
,&45/"$4*4/$%*'%'(&%$*')A%4&%*-/%5/"2%)'#16&4/$%!&6&)ing their research.22
Ironically, the biotechnology industry would
not exist if not for the free exchange of basic research
done independently from market constraints.OB Now
with proprietary restrictions in place, innovation is inhibited because university researchers cannot access
important plant genetic resources. Furthermore, some
universities have spent more money on legal fees to
defend intellectual property than what they earn from
patenting and licensing these products.O:
Clearly, both sectors of plant breeding – private and public – depend on the other for resources,
E/%4*%!&6&)46+%'"%6="'&'#4)3%>&%*-/%.6)/%'. %)'&$'+406tion, the need for public plant breeding programs to
produce cultivars for the public domain is more im1'"*6&*%*-6&%/5/"3%d-4+/%+6"=/"%!"#$%*214)6++2%'&+2%1"'-
13
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15
Seed vs. Trait
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Section 1:
Seed Industry Concentration
16
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seed market, which is made up of branded seed subject
*'% 4&*/++/)*,6+% 1"'1/"*2% 1"'*/)*4'&$?% *-/$/% .',"% !"#$%
account for 50 percent of the global proprietary seed
#6"A/*3%F-/$/%$6#/%!"#$%-'+0%0'#4&6&*%1'$4*4'&$%4&%
the agricultural chemical market.27
According to the American Antitrust Institute,
weak enforcement of antitrust laws has facilitated consolidation in the seed industry and harmed farmers who
buy large quantities of agricultural inputs – especially
seed – by turning them into “price takers” who must
pay what the input companies demand.28 The role of
the DOJ is to investigate and prosecute violations of
antitrust laws, which prohibit unfair business practices,
such as anticompetitive mergers, and are designed to
support competition in the marketplace. Figure 2 illustrates rapid consolidation in the seed industry through
acquisitions and mergers between 1996 and 2008.
R&05,0'&U5":&-.0,02$".0"M$$8
Discussions on seed industry concentration typically
)/&*/"%'&%*-/%0'#4&6&*%!"#?%*-/%R'&$6&*'%8'#16&2?%
which, as documented in Figure 2, achieved the No. 1
position through a series of acquisitions, mergers, and
partnerships with competitors in its industry. It took
less than a decade for the company to capture the corn,
soybean, cotton, and vegetable seed markets. Today,
its GE traits are planted to more than 80 percent of
U.S. corn acres and more than 90 percent of soybean
acres.29 In the company’s 2009 third-quarter report,
cG3:%E4++4'&%'. %4*$%cG3I%E4++4'&%1"/K*6]%1"'!*%)6#/%."'#%
seeds and genetics.
Monsanto stands out as the most aggressive
player in expanding market power and enforcing intellectual property rights. It owns the most widely adopted
seed technologies, maintains substantial market power,
and leverages this success by increasing prices at historic rates and implementing strategies to steer farmers
toward expensive seed options, as explained in the next
section.
Only a few major seed companies have maintained their independence in the last decade. Many of
States Hybrids, which includes licenses with approximately 200 seed companies, Monsanto controls roughly 60 percent of the U.S. corn seed market through
direct sales and seed trait licensing agreements (see Fig,"/%B;3BI Monsanto’s level of control is best conveyed in
trait acreage, since more than 80 percent of U.S. corn
acreage is planted to its patented traits.
The longtime market leader, Dupont/Pioneer
e4KJ"/0?%&'(%"6&A$%$/)'&0%(4*-%6E',*%B<%1/")/&*%#6"A/*%$-6"/%'. %)'"&%$//0?%0'(&%."'#%:<%1/")/&*%4&%O<<G3%
Syngenta ranks third at roughly 10 percent.BH Dow is
catching up through several recent acquisitions of corn
9./7#$" TJ" R&05,0'&U5" M$$8" R,#S$'"
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with Monsanto obtaining the number one position
only recently. Monsanto’s corn seed trait revenues now
constitute the bulk of Monsanto’s trait revenues. The
company’s leading corn brand, DeKalb, increased its
market share from 16 percent in 2005 to 25.5 percent
in 2008. Monsanto’s holding company, American Seed
Inc. (ASI), tripled its market share in this time, now
carrying 11 percent of the corn market with its 25 franchises. BX?Ba Counting Monsanto’s licensing arm, Corn
M&)($,05
!5/#&I
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
these companies have, however, entered into several
agreements (and disagreements) with Monsanto regarding shared rights to patented traits.B<
Monsanto’s spate of seed company acquisitions includes its 1997 purchase of Holden Foundation
Seeds, the largest foundation corn seed provider in the
U.S. Holden’s parent lines are in approximately onethird of independent hybrid corn sold in the U.S.BG By
comparison, Greenleaf Genetics, another foundation
corn seed company created by DuPont and Syngenta
in 2006, has only a 2 percent market share.BO
When the DOJ approved Monsanto’s acquisition of DeKalb Genetics in 1998 it ordered Monsanto
to license Holden subsidiary’s corn germplasm to more
than 150 seed companies.BB This, the agency said, would
“ensure that the merger does not reduce competition in
biotechnology developments in corn.”B: Competition
in corn has only lessened since then.
Findings from the U.S. Department of Agriculture’s Economic Research Service (ERS) show
that fewer players means less innovation. As the seed
industry became more concentrated, private research
“dropped or slowed,” and those companies that survived consolidation are “sponsoring less research relative to the size of their individual markets than when
more companies were involved.”B@ Fewer companies
engaged in researching and marketing seed means less
choice for farmers, contrary to the argument that consolidation leads to more options in the marketplace.
!MO
+&#0"M','$5"
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62%
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2&-b.0B$5'&#5b%#$5$0','.&05J,5%
17
companies, including six in 2008 alone.a
Monsanto’s international presence grew last
year with its acquisition of Cristiani Burkard (SCB), the
largest Central American hybrid seed company. Monsanto will expand market power where SBC already
does business: twelve countries throughout North,
Central and South America and the Caribbean, including more than 900 dealers in Central America alone.:<
M&)($,05
Section 1:
Seed Industry Concentration
18
Monsanto maintains a dominant position in soybeans
through its Asgrow brand (acquired in 1997) and ASI
holding company, and by licensing its Roundup Ready
trait to other seed companies. Monsanto controls near+2%B<%1/")/&*%'. %*-/%#6"A/*%04"/)*+2%*-"',=-%$//0%$6+/$%
and more than 60 percent when taking into account
proprietary ownership of traits licensed to approximately 200 other seed companies through its Corn
T*6*/$%e2E"40$%1"'="6#%7$//%D4=,"/%B;3:G Because Monsanto’s patented genetics are in nearly all U.S. soybean
acreage – 91 percent in 2009 – the company owns these
traits (even in other companies’ brands) and thus enjoys unprecedented market power in soybean seeds and
traits.:O
Monsanto clearly dominates two major U.S.
!/+0%)"'1$3%J,*%*-/%)'#16&2W$%#6"A/*%1'(/"%/]*/&0$%
much further, reaching into the cotton, vegetable and
$,=6"% 4&0,$*"4/$% N% 6&% /#14"/% '. % 16*/&*$?% 1"'!*$?% 6&0%
plant genetic resources that have launched Monsanto
into the position of seed industry leader.
a
In 2008, Dow acquired four domestic companies (Triumph Seed, Dairyland
Seed, Renze Hybrids, and Brodbeck Seed) and two international companies
(Coodetec Paracatu Hybrid Corn Seed and Sudwestsaat GbR)!
+&''&0
R'&$6&*'% $/*% 4*$% $4=-*$% '&% *-/% !E/"% #6"A/*% 4&% GHHI%
through a $1.5 billion proposal to purchase the nation’s
largest cotton seed company, Delta and Pine Land.
Though it dropped the deal under antitrust scrutiny,
regulatory hurdles did not stop Monsanto when it tried
again and succeeded in 2007. Delta and Pine Land
came with more than a dozen of its own domestic and
international subsidiaries and provided Monsanto instant control of 95 percent of the biotech cotton seed
market.:B
n$/$',(@$5
More recently, Monsanto worked to capture the vegetable seed market. Not only did acquiring Seminis in
2005 make Monsanto the largest vegetable seed company, it gave Monsanto the market boost it needed
to become the dominant leader in the entire seed industry. As the world’s largest fruit and vegetable seed
!"#?%T/#4&4$%$,11+4/0%#'"/%*-6&%B?@<<%$//0%56"4/*4/$%
to growers in more than 150 countries.:: Monsanto
now controls the genetics that supply 21 percent of
the global vegetable seed industry, largely for tomatoes,
peppers, squash, and cucumbers.:@ Farmers and backyard gardeners have long relied on Seminis seed and its
associated brands. Some farmers fear that Monsanto’s
ownership impacts the availability of their favorite vegetable cultivars.:X
Monsanto increased its market share in vegetable seed by acquiring Netherlands-based De Ruiter
Seeds in 2008. De Ruiter supplies vegetable seed to the
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2.,@"-$,05"'&"8$B$@&%"'*$.#"&I0"13"'#,.'5J"+&-%,0.$5"
@.2$05$" '*$" '#,.'" '&" (#$$8" .0'&" '*$.#" .08$%$08$0'@)"
8$B$@&%$8" 27@'.B,#5" &D" 5&)($,05" ,08" *)(#.8" 2&#0J"
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,#$" 2@$B$#@)" 8$5./0$8" '&" /,.0" -,#S$'" %&I$#W" #$5'#.2'"
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greenhouse, or “protected culture,” industry – the fastest growing sector of the vegetable seed market, according to Monsanto.:I Combined, Seminis and De
Ruiter give Monsanto more than a quarter share of the
global vegetable industry.:H Ninety percent of De Ruiter’s seed sales in 2008 were for protected cultures, while
approximately 90 percent of Seminis’s seed sales were
.'"% '1/&% !/+0% 1"'0,)*4'&350 Monsanto has therefore
effectively captured much of the protected culture and
'1/&%!/+0%5/=/*6E+/%$//0%#6"A/*$3%
M7/,#"
Monsanto is also moving quickly to command biotechnology in the sugar industry. In 2009, an estimated 95
percent of U.S. sugar beets planted had the Roundup
Ready trait (only the second year of GE beet production).51 Even growers who quickly adopted Roundup
Ready sugar beets expressed concern that traditional
varieties would not be an option in a few years.52 But
given a recent court ruling that overturned USDA’s approval of Roundup Ready sugar beets, citing the agency’s failure to conduct an Environmental Impact Statement, Roundup Ready sugar beets might be removed
from the marketplace.@B
As for sugar cane, last year Monsanto purchased the largest sugar cane breeding company in the
world, Brazil-based Aly Participações Ltda., which operates CanaVialis S.A. and Alellyx S.A.@: In addition
to raw sugar production, Monsanto says it will expand
sugar ethanol research and development.55
_*$,'
In July 2009, Monsanto purchased WestBred, LLC,
Montana’s prominent wheat breeding company. The
companies report that WestBred’s genetics will be used
to develop genetically engineered traits in wheat.
Monsanto attempted to commercialize genetically engineered wheat but abandoned these efforts due
*'%#6"A/*%"/C/)*4'&%6E"'60%4&%O<<:356 Farmers – both
those who support and reject crops derived from biotechnology – recognize the economic risk in introducing a crop that customers do not want, particularly those
in Asia where much of the U.S.’s wheat is shipped.
%
T//4&=%*-4$%"4$A?%*-/%O<<B%R'&*6&6% T*6*/%P/=islature overwhelmingly passed then-State Senator Jon
Tester’s Joint Resolution that stated, “the introduction
of genetically engineered wheat and barley for commercial production must be carefully timed so that it
occurs only when there is acceptance of these crops by
Montana’s major customers.”57 The Canadian Wheat
Board, a major world wheat marketer, also maintains
that it will not support genetically engineered wheat until world markets, like Europe and Japan, accept it.58
Dr. Robert Wisner, a leading grain market
economist at Iowa State University, warned that commercializing genetically engineered wheat could result
in the U.S. losing up to half of its wheat exports.59
Where will that unwanted wheat go? It will likely end
up in U.S. livestock feed or industrial channels, such
as ethanol plants. This should concern corn producers, says Dan McGuire with the American Corn Growers Farmer Choice – Customer First program. Farmers
who raise corn would face reduced demand and prices
should wheat displace corn in these markets.60
Even if export markets decide one day to accept genetically engineered wheat, the fear that Monsanto will reduce seed options that farmers currently
rely on is very real.
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
Licensing Seed Traits
19
;
Section
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Section 2:
Price, Choice, and Availability in Corn and Soybeans
20
.S. farmers adopted crops with GE traits faster than
any other technology in agricultural history. Introduced in 1996, soybeans genetically engineered to tolerate
Monsanto’s Roundup herbicide covered more than half
of U.S. soybean acreage by 2000 and 91 percent in 2009.
Farmers in the South adopted herbicide-tolerant and insect-resistant (Bt) cotton as quickly, growing from 61 percent of U.S. acreage in 2000 to nearly 90 percent in 2009.
While GE corn had a slower start, genetically engineered
varieties now cover 85 percent of U.S. corn acreage.61 As
$//&%4&%D4=,"/%:?%R'&$6&*'W$%0'#4&6&)/%4&%*-/%*"64*%4&0,$try is unrivaled.
9./7#$"NJ"C&',@"XJMJ"!2#$,/$"G@,0'$8"'&"
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$#5J758,J/&Bb8,',b(.&'$2*2#&%5bs"R&05,0'&U5"M7%%@$-$0',@"C&&@S.'"D&#"O0B$5'&#5"F!%#.@";<<=H",'"
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Seed companies and dealers responded accordingly, growing and stocking more Roundup Ready and
Bt varieties of major crops. Though conventional varieties matched and sometimes out-yielded crops with
GE traits, the new technology was “like a drug,” says
one farmer, and each year farmers came back for the
higher priced seed that allowed for unprecedented conveniences in farming.
The rapid adoption of GE traits in U.S. agriculture has led to three major trends in the seed marketplace that impact farmers:
1) Historic price increases in seed driven by royalty fees
for biotech traits;
O;%J4'*/)-&'+'=2%!"#$W%1,$-%.'"%="/6*/"%#6"A/*%1/&etration of stacked traits in corn; and
B;% P6)A% '. % )'&5/&*4'&6+% )'"&% 6&0% $'2E/6&% $//0% '1tions.
An examination of these trends shows they are
a function of a single underlying force: increased marA/*%1'(/"%'. %*-/%+6"=/$*%E4'*/)-&'+'=2%!"#3%
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have implemented a novel pricing
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trend. The most substantial price increases have occurred since 1999, parallel to the increases in genetically engineered crop plantings. Prices farmers
162% .'"% $//0% -65/% 4&)"/6$/0% G:X% 1/")/&*%$4&)/%GHHH?%6&0%X:%1/")/&*%'. %*-6*%
increase occurred in just the last three
years.62 Prices of hybrid corn seed
(/"/%#'"/%*-6&%B<%1/")/&*%-4=-/"?%6&0%
soybean seed about 25 percent higher,
over 2008 prices.XB
According to USDA’s Agricul*,"6+%Y"4)/%>&0/]?%.6"#/"$%1640%c:H3X<%
per bushel of biotech soybeans, rough+2% c:G3<<% 1/"% ,&4*3% F-/2% 1640% cOI3<<%
per unit for non-GE seed.X: (A unit of
$'2E/6&$% 4$% 611"']4#6*/+2% IB% 1/")/&*%
of a bushel: 50 lb. units versus 60 lb.
bushels.) As explained later, farmers
can expect even greater price increases
in 2010.
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
9./7#$"YJ"G#.2$5"G,.8"D&#"+&#0",08"M&)($,0"M$$8
21
Price, Choice, and Availability in Corn and Soybeans
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less transparency because farmers do not always know
what a GE trait is costing them. In fact, seed companies
that license these traits are ordered not to share this information. Increases in technology fees are therefore
-6"0%*'%40/&*4.2%E/)6,$/%*-/2%6"/%&'(%16"*%'. %)'&!0/&tial licensing agreements. Figure 6 shows the general
trend in the cost of the Roundup Ready soybean trait
by piecing together various reports over the years.
Furthermore, seed companies say the licensing contracts they must sign to access Monsanto’s traits
have become increasingly onerous. “I feel like a puppet
on a string,” explained one seed company owner.66 Another seed company representative noted that Monsanto audits its licensees every year and “knows what you
='*%4&%*-/%E6&A%6&0%(-6*W$%4&%2',"%!/+0$%N%/5/"2*-4&=%
we know, they know.” He adds that the salary of one of
their secretaries goes almost entirely “to keeping Monsanto happy” by managing the licensing and reporting
paperwork.67 These licensing contracts are protected
E2% )'&!0/&*46+4*2% )+6,$/$% 6&0% *-/"/.'"/% /$)61/% 1,E+4)%
scrutiny. Nevertheless, they have been the focus of antitrust investigations and lawsuits, as explained in on
16=/%OB3%
As acreage planted to patented traits increases,
so do the prices farmers pay for the technology. And as
we will see, few farmers are immune to the far-reaching
effects.
9./7#$"ZJ"A&7087%"A$,8)"M&)($,0"C$2*0&@&/)"9$$
:&@@,#5bX0.'
Section 2:
Biotechnology traits and technology fees are
the driving force behind increased seed costs. These
fees vary by crop type, but all have increased substantially over the years. For example, the Roundup Ready
trait in soybeans added $6.50 per bag in 2000. It has
nearly tripled since then, now costing $17.50 per bag
for the same trait – sometimes attributing to nearly half
the price of a bag of Roundup Ready soybean seed.65
This means a farmer who plants one bag of Roundup Ready soybeans per acre on 1,000 acres has seen
-4$%1"'0,)*4'&%)'$*$%4&)"/6$/%E2%cGG?<<<%4&%!5/%2/6"$%
due to the trait price increase alone. It also means that
smaller seed companies that license the trait for varieties they have developed independently recoup only a
fraction of their research costs, since much of the price
goes back to Monsanto in the form of a royalty.
Farmers have long criticized Monsanto for its
technology fees. The company responded to mounting
disapproval by changing its trait pricing structure. In
2002, the company stopped requiring farmers to pay
a separate technology fee and implemented a seamless pricing requirement, shifting the royalty payment
obligation from the farmer to seed manufacturer. Seed
companies are now required to set a streamlined price
"/b/)*4&=%*-/%)'$*%'. %*-/%*"64*$%6&0%E6$4)%=/&/*4)$%70/veloped independently from Monsanto) and send royalty payments for the traits to Monsanto accordingly.
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Litigation in the Seed Industry
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
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23
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Section 2:
Price, Choice, and Availability in Corn and Soybeans
24
C*$#$".5"$B.8$02$"'*,'"'*$5$"'#,.'"@.2$05.0/",/#$$-$0'5"B,#)",-&0/".08$%$08$0'"5$$8"
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C*&7/*"R&05,0'&".5"'*$"D&275"&D"-,0)"&0/&.0/",0'.'#75'".0B$5'./,'.&05W"&'*$#"5$$8"
D.#-5",#$",@5&",2275$8"&D",0'.2&-%$'.'.B$"2&0872'J"O0 Schoenbaum v. Dupont and
MonsantoW"%@,.0'.DD5",@@$/$"'*,'"R&05,0'&",08":7%&0'"$0'$#$8".0'&"70@,ID7@",/#$$[
-$0'5"'&"#$5'#,.0"'#,8$",08"D.E"%#.2$5"&D"13"2&#0",08"5&)($,0"5$$85JVY""C*$)",#/7$"
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rumblings of seed corn price hikes traveled
across the Midwest in 2008, and agricultural
#/046%)'&!"#/0%*-/%E,^^3%R'&$6&*'W$%[/+4*/%-2E"40$\%
(',+0%E/%+4$*/0%.'"%6E',*%cB@<%1/"%E6=%N%"',=-+2%6%cG<<%
increase – in some parts of the U.S.76 Three hundred
dollar seed corn was unheard of just one year before.
Indeed, seed corn prices have increased rapidly,
with GE prices rising faster than conventional. Conventional seed has consistently sold for $50 to $100 less
than varieties with GE traits and yet, even in light of
#'"/%0/#6&0?%.6"#/"$%!&0%*-6*%-4=-KQ,6+4*2?%&'&KUV%
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Though costly seed corn is partially attributed to companies cashing in on higher commodity returns – farmers received a record $6.00 per bushel in
2008 driven largely by the ethanol boom – seed prices
have continued to increase even as prices farmers received decreased.77 Monsanto’s strategy to combine, or
“stack,” as many traits as possible into seed sold appears to be the major contributor to increased prices in
corn seed.
Monsanto’s dominance in the seed corn industry was built through careful strategy, including dozens
of acquisitions, as explained in Section 1. Last year the
company executed an “expanded trait penetration” plan
to increase sales of seed stacked with as many traits as
possible. Its triple stack varieties include three traits in
a single variety: two Bt traits coupled with the Roundup
9/602%*"64*3%F-/%*6)*4)%4$%6=="/$$45/%6&0%/../)*45/_%!"$*%
capture ample market share through attractive pricing
structures when technologies are young and then ramp
up prices once “penetration goals” are met.78
In August 2008, the company announced it
would increase acreage of its triple stack corn from 28
#4++4'&%6)"/$%4&%O<<I%*'%B@%#4++4'&%4&%O<<H?%#'"/%*-6&%
:<%1/")/&*%'. %*'*6+%S3T3%)'"&%6)"/6=/3b Triple stack corn
b
%F-4$%!=,"/%(6$%E6$/0%'&%O<<H%/$*4#6*/$%*-6*%R'&$6&*'W$%*"41+/%$*6)A%56"4/*4/$%
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acres. (Monsanto Company. 2008. “Monsanto Is Extending Its Industry Leadership Through 2012, Executives Tell Investors at Annual Field Event,” August 12;
STLMfgMTT3%O<<H3%[g6*4'&6+%$*6*4$*4)$_%D4/+0%)'"&?\%9/*"4/5/0%'&%R62%GB?%O<<H3;
56"4/*4/$%(',+0%6+$'%$/++%.'"%B<%1/")/&*%#'"/%4&%O<<H379
By March 2009, Monsanto had met its goal.
Even with commodity prices sliding, the company reported that more than 70 percent of its seed corn sales
were triple stack varieties – the most expensive seed
corn options on the market.80
Monsanto’s radical price increases are unmatched.81%%>. %4&)"/6$4&=%$//0%)'"&%1"4)/$%E2%B<%1/")/&*%
in one year is not evidence enough of exercising market power, then Monsanto’s pricing structure should
be. The company recently implemented a “value-based
pricing model” to “convert as many farmers as possible
to triple stacks.”IO?IB
Mirroring Microsoft
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7$[(,5$8"-&8$@".0"*.5"B$#8.2'W"D.08.0/"'*$"2&-%,0)"
/7.@')"&D"(#$,S.0/"XJMJ",0'.'#75'"@,IJ"R&05,0'&U5"5'#,'[
$/)" '&" 7%/#,8$" D,#-$#5" '&" '#.%@$" 5',2S" 2&#0" B,#.$'[
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“First it was just the East and West,” says one
seed company representative, “now there are seven
zones Monsanto uses to price its seed.”85 He explains
that the Roundup Ready trait in corn carried a tech&'+'=2% .//% '. % cBB% 1/"% E6=% (-/"/% 4*% -6$% E//&% (40/+2%
60'1*/0%6&0%cOB%1/"%E6=%(-/"/%*-/%*"64*%-6$%&'*%E//&%
well accepted, such as North Dakota.
The differences in zones depends, then, on
where Monsanto seeks to expand market share and
make triple stack corn more attractive – charge more
where demand is higher (where pest pressure is worse)
and less where farmers do not necessarily need the trait
package. That is, the pricing model helps “convert”
farmers who would not otherwise choose Monsanto’s
triple stack varieties.
Monsanto also boosts triple stack seed sales
by effectively eliminating other options in the marketplace. Some farmers have bought triple stack seed sim-
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
The Story of Seed Corn:
25
David Shupe
Farmer, Researcher
Toledo, Illinois
Section 2:
Price, Choice, and Availability in Corn and Soybeans
I
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
*)(#.85W"(7'".D")&7"2,00&'"/$'"'*,'"/$0$'.2"%,2S,/$"0&0['#,.'$8"'*$0"*&I"8&")&7"S0&I`""
There isn’t enough competition in the market to work and set prices that
are in line with the fluctuating agricultural economy.
27
­ :,B.8"M*7%$
ply because varieties they once relied on are no longer
available. Instead of producing an “inordinate number
of products to serve all these regional markets,” reads
an investment report, “Monsanto would like to move
as many customers to triple stacks as possible.”86
In many cases trait penetration has meant forcing traits on farmers. Farmers suspect that some companies increasingly only offer the best varieties of seed
with traits.
O08$%$08$0'"M$$8"+&-%,0.$5":).0/"d7'
Section 2:
Price, Choice, and Availability in Corn and Soybeans
28
Independent seed companies are a critical component
of U.S. agriculture. These family-owned businesses
have served the regional needs of farmers for decades
by breeding varieties with agronomic traits adapted to
5/"2%$1/)4!)%"/=4'&$3%F-/2%-65/%6+$'%E/)'#/%/$$/&*46+%
distribution channels for GE traits developed by larger
!"#$?%6$%/540/&)/0%E2%+4)/&$4&=%6="//#/&*$3%M$%*-/%4&dustry consolidates, however, and product options narrow, farmers lose access to important varieties tailored
to their area.
The Independent Professional Seed Association (IPSA) estimates that approximately 100 indepen-
company’s products – genetics, weed and insect control, etc. – even though they might not be as good for a
producer’s operation.”88 Latham believes that independent companies work for the best interest of farmers.
Many farmers agree. “When we had many regional breeding programs sharing genetic material
$'#/'&/% (',+0% !&0% *-/$/% &4)-/% 56"4/*6+% )"'$$/$% 6&0%
1"'0,)/% *-/#% .'"% Q,4*/% $1/)4!)% 6"/6$?\% $62$% >++4&'4$%
farmer David Shupe. “This is gone today because the
only varieties that large companies are interested in
are ones that can be sold over a very large geographic
area.”89
Selling fewer products over a larger market
$-6"/% 6..'"0$% R'&$6&*'% /.!)4/&)2% 6&0% )'&*"'+% 4&% *-/%
marketplace, and lays the groundwork for crops in the
pipeline. In particular, investment reports note that the
company’s market share creates a “captive customer
base” for octo-stack “SmartStax” corn seed – which
includes six Bt insect-resistant traits and two herbicidetolerant traits – to be released in 2010.90 Because of
its foothold in the market, Monsanto expects adoption
to reach 65 million acres, or nearly 75 percent of corn
acreage in the U.S., by 2012.c
It is easy to understand why farmers have mixed
feelings about this precedent-setting hybrid. With such
If everyone raises seed prices, the only option is to not plant corn. So
you pay and plant, or stop producing corn.
["^&("?.$@5&0W"$E'$05.&0"2&#0"5%$2.,@.5'
0/&*% $//0% )'#16&4/$% "/#64&?% 0'(&% ."'#% B<<% 7(-4)-%
includes independent and consolidated companies)
C,$*%GB%2/6"$%6='3%>YTM%+6,&)-/0%6%#6"A/*4&=%)6#164=&%
to raise visibility of independent seed companies. But
since the campaign was launched just one year ago,
about 25 seed companies have been acquired or gone
out of business.87
As John Latham, owner of Latham Hi-Tech
Seeds, explains, once a company is purchased by a larg/"%!"#?%[*-6*%16"*4),+6"%0/6+/"%(4++%'&+2%1,$-%*-/%16"/&*%
an extraordinary trait package, farmers wonder what
Monsanto will charge for so many traits and question
whether the company will continue to market single,
double – or even triple – trait varieties, especially when
many farmers neither want nor need all those traits.
Farmers may not have much of a choice, says
Bob Nielsen, extension corn specialist at Purdue University. He explains that if seed prices increase even
more in the future, “producers don’t really have any
options.” He adds, “If everyone raises seed prices, the
c
Based on corn acreage in 2008 at http://www.nass.usda.gov/QuickStats/index2.jsp and Monsanto’s Supplemental Toolkit for Investors, April 2009
into single varieties. Because each trait fetches a separate royalty for the patent holder, as seed traits were
stacked, prices grew. And so have company returns.
The only shrinking part of the equation is competition
and choice. The question is whether the company has
acquired this market power ethically and legally, as dis),$$/0%4&%'&%16=/$%OB%6&0%O:3%
:$-,08"&#"],2S"&D"+*&.2$`
Reduced competition does not only take away
from a farmer’s bottom line through higher seed prices.
It takes away choice.
Iowa State University agricultural economist
Mike Duffy said a producer called him in May 2009
/]1+64&4&=%*-6*%-/%)',+0%&'*%!&0%)'"&%$//0%4&%>'(6%*-6*%
was not genetically engineered. He said corn seed that
)'$*%c@<%*'%cG<<%6%E6=%G<%2/6"$%6='%&'(%*'1$%cB@<%.'"%
hybrids stacked with traits.99 Duffy believes consolidation has hurt farmers because they are paying more
than they should for seed due to less competition and
)-'4)/$3%T4#1+2%1,*_%[d-/&%2',%-65/%6%./(%!"#$?%*-/%
ability to set prices is greater,” Duffy explains.100
Illinois farmer David Shupe agrees. “You cannot even purchase the latest corn hybrids today without
them being loaded with traits,” he says. “You either sign
a seed and trait suppliers contract which forces you into
conditions that take away many of your rights or you
cannot competitively produce a crop.”101
Stacked trait varieties now dominate the seed
corn marketplace. These traits are often owned by
*-/% $6#/% )'#16&2?% *-',=-% 04../"/&*% !"#$% 6+$'% /&*/"%
into agreements to share and stack traits. For example,
SmartStax corn is the result of a partnership between
Monsanto and Dow AgroSciences. Dow AgroSciences
also has an agreement with Syngenta to cross license
their respective corn traits – Herculex and Agrisure –
under their branded seed businesses.102
%
F"64*%+4)/&$4&=%6="//#/&*$%E/*(//&%+6"=/%!"#$%
-65/% &'*% ='&/% (4*-',*% )'&*"'5/"$23% R'&$6&*'% !+/0% 6%
lawsuit in May 2009 against Dupont/Pioneer Hi-Bred
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
only option is to not plant corn. So you pay and plant,
or stop producing corn.”91
Dan Davidson, an economist at DTN in Omaha, Nebraska, asks about SmartStax technology, “Will
Monsanto price [SmartStax] relative to market, or will
they double the price for all those extra traits? The
question is, will there be enough value to justify the
cost?”92
It seems Monsanto has enough market power
to evade market economics. “While Monsanto would
+4A/%4*$%1"'0,)*$%*'%#'"/%)+'$/+2%"/b/)*%),""/&*%#6"A/*%
prices,” reads an investment report, “the company does
not want to establish such a direct linkage, for once
cyclical grain markets reverse it does not want the pressure of providing price concessions.”HB
With high commodity prices, it might only take
a few bushels to make up for expensive seed costs, like
the $6 corn farmers enjoyed in 2008. But with 2009
1"4)/$%-'5/"4&=%6"',&0%cB3@<?%.6"#/"$%6"/%b4"*4&=%(4*-%
the break-even point and questioning the value of expensive triple stack seed. “I’ve had two guys cancel their
DeKalb seed orders, triple stack, because they wanted
*'% !&0% )-/61/"% )'"&?\% "/1'"*/0% '&/% $//0% )'#16&2%
salesman in early 2009. “I think [Monsanto’s] pricing
themselves out of the market.”H:
But Monsanto controls the market, and in a
highly concentrated industry, competition does not
regulate price. In fact, when asked about its precedent$/**4&=% cB<<% $//0% )'"&?% R'&$6&*'% $640% 4*% )',+0% [=/*%
*-/%1"4)4&=%"4=-*%*'%$-'(%.6"#/"$%*-/%E/&/!*$?\%6004&=?%
“We can pass the red-faced test from the Panhandle of
Texas to McLean County, Ill.”95 If embarrassment has
replaced market competition as the restraint to price
gouging, then Department of Justice take note: an article in Farm Industry News notes that $500 seed corn and
varieties stacked with 20 traits may not be far off.96,97
Indeed, according to one source, the retail price
.'"%T#6"*T*6]%)'"&%4$%",&&4&=%#'"/%*-6&%c:<<%1/"%E6=?%
6E',*%cOB%#'"/%1/"%6)"/%*-6&%*"41+/%$*6)A%56"4/*4/$398
%
8+/6"+2?% 0'#4&6&*% E4'*/)-&'+'=2% !"#$% +4A/%
Monsanto have leveraged their success in gaining huge
market share for GE seed by stacking different traits
29
Price, Choice, and Availability in Corn and Soybeans
Triple stack varieties, however, show tremendous growth. Within three years, acreage of triple stack
)'"&%(/&*%."'#%^/"'%*'%B@%1/")/&*%'. %S3T3%)'"&%6)"/age.107 Double trait acreage is now falling, covering 16
percent in 2008, after hitting its peak last year of nearly
B<%1/")/&*%7$//%D4=,"/%a;3
To drive farmers toward triple stack varieties,
Monsanto implemented more dramatic price increases for single and double stack varieties while reducing
single and conventional options in its own brands and
subsidiary companies.108 Little attention has been given
to this emerging trend, where demand may not be at
play nearly as much as a lack of choice.
The lack of conventional corn seed options
has led many farmers to believe that high yields can
only be achieved by purchasing GE varieties. Some
companies have eliminated non-GE versions of particular hybrids, so when a new high-yielding variety is
introduced, it is only available with stacked GE traits.
Therefore some farmers believe that to increase yields
and take advantage of the newest genetics, they need to
purchase stacked trait hybrids. Yet a 2008 Ohio Corn
Performance Test revealed that average plot yields of
non-GE and GE corn were comparable with nonGE corn out-yielding some GE varieties. One of the
9./7#$"VJ"C#$085".0"R&05,0'&U5"+&#0"C#,.'"!2#$,/$"FQ==Z[;<<PH
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C&',@L"VN"R.@@.&0"!2#$5
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!2#$5"FR.@@.&0H
Section 2:
accusing Dupont of “unauthorized use” of its Roundup Ready trait.G<B Monsanto contends that Pioneer is
illegally stacking its new Optimum GAT trait (which
also confers glyphosate-tolerance) with Monsanto’s
Roundup Ready trait. A month later, Dupont countersued Monsanto alleging patent abuse and seeking
to invalidate underlying patents.G<: The same month,
DuPont and Germany-based BASF sued each other on
claims of patent infringement also regarding DuPont’s
Optimum GAT.105
Not only has choice in conventional varieties
diminished, single and double trait corn varieties are
6+$'%#'"/%04.!),+*%*'%+')6*/3%F-4$%#/6&$%.6"#/"$%(-'%
prefer these varieties can only access the newest genetics by paying for unnecessary traits. Farmers report,
.'"%/]6#1+/?%*-6*%4*%4$%4&)"/6$4&=+2%-6"0%*'%!&0%J*%)'"&%
without the Roundup Ready trait.
%
R'&$6&*'W$% 06*6% )'&!"#$% *-4$% *"/&03% T4&=+/%
trait acreage – especially Bt corn varieties – is rapidly
decreasing. Acreage of single trait Bt corn borer varieties decreased by two-thirds between 2006 and 2008
and Monsanto reported zero acreage for single trait Bt
rootworm varieties in 2008.106 Monsanto’s single trait
acreage for Roundup Ready corn peaked in 2007 before falling slightly in 2008.
Z<
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
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31
As fewer independent seed companies are left on the agricul­
tural landscape, conventional seed options are increasingly in
danger of disappearing.
agronomists who looked at the data reported, “I’m unaware of any research indicating stacking traits per se
increases yield.”109
Though couched as expanding choice, new
varieties therefore often replace less expensive varieties with expensive counterparts stacked with traits that
some farmers do not need. Not every farmer needs
three (or, next year, eight) GE traits. Some do not need
these traits at all. But all should have choice.
R$$'.0/"9,#-$#5U"?$$85
Section 2:
Price, Choice, and Availability in Corn and Soybeans
32
To be sure, there is great demand for GE corn. Yet demand for conventional corn is growing at a time when
these varieties are slipping away in the face of a consolidated industry determined to expand market share and
4&)"/6$/%$-6"/-'+0/"%1"'!*%E2%1,$-4&=%/]1/&$45/%*"64*$3
Farmers seek out conventional corn for a variety of reasons, including the appeal of earning a premium and reducing seed costs associated with GE varieties. Many farmers successfully manage pests and weeds
that GE corn targets and therefore question the need
for expensive traits. But they fear that locating non-GE
-2E"40$%(4++%E/)'#/%4&)"/6$4&=+2%04.!),+*%*'%+')6*/3
“I don’t know if there are that many premium
opportunities with corn,” says Bruce Vester of Beck’s
e2E"40$?%[E,*%*-/"/W$%0/!&4*/+2%="'(/"$%+''A4&=%*'%1+6&*%
more acreage to conventional corn.”110
Even though conventional corn premiums may
not be as attractive as those for conventional soybeans,
other independent seed companies also report that demand for non-GE varieties of corn are growing.
Monsanto reports that half of its research and
development investments in seed goes to breeding, the
other half biotechnology. “At any point, once we identify the germplasm, we can choose to put that trait in it
or to keep it out,” says Jeremy Frie, a Monsanto representative.111 But since the money is in the traits, companies like Monsanto have little economic incentive to
sell good, high-yielding seed without including expensive, GE traits. As fewer independent seed companies
are left on the agricultural landscape, conventional seed
options are increasingly in danger of disappearing.
Independent seed companies stand out as the
most reliable source for high yielding varieties of conventional seed. They maintain these options in the marketplace to meet demand for non-GE seed but also because royalty fees for licensing GE traits are increasing
and taking a larger share of seed prices.
“We make more money selling conventional
than we do traited corn,” says one independent seed
company representative, who is also licensed to sell
R'&$6&*'W$%*"64*$?%E/)6,$/%6%$4=&4!)6&*%1/")/&*6=/%'. %
seed costs go to Monsanto as a trait royalty. That means
they recoup less of their investment in developing their
branded seed.
Not only are royalties high and increasing, trait
licensing agreements may also be putting independent
seed companies at a disadvantage by limiting their ability to sell non-Monsanto seed due to onerous requirements that limit competition of other products (see
16=/%OB;3
The trend toward fewer single trait and conven*4'&6+%1+6&*4&=$%$//#$%*'%E/%4&b,/&)/0%6$%#,)-%E2%6%
narrowing of availability driven by industry interests to
sell stacked varieties as it is demand. Seed catalogs con!"#%*-6*%*"41+/%$*6)A%56"4/*4/$%",+/%*-/%#6"A/*1+6)/%6&0%
that fewer conventional, single trait and double trait options exist. This is especially true for Monsanto’s sub-
9./7#$" PJ" C&',@" XJMJ" +&#0" !2#$,/$"
+&0',.0.0/"A&7087%"A$,8)"FAAH"C#,.'
15%
5%
Roundup Ready
80%
G$#2$0'"!2#$,/$"+&0',.0.0/"R&05,0'&U5"AA"C#,.'"
G$#2$0'"!2#$,/$"+&0',.0.0/"R&05,0'&U5"^'"C#,.'
FI.'*&7'"AA"'#,.'H"
d'*$#
M&7#2$L"R&05,0'&U5"M7%%@$-$0',@"C&&@S.'"D&#"O0B$5'&#5"F!%#.@";<<=H",'"*''%LbbIIIJ-&05,0'&J
2&-b.0B$5'&#5b%#$5$0','.&05J,5%
triple stack variety.112
Heritage Seeds based in Reynolds, Indiana, was
also part of Monsanto’s 2006 seed company purchasing spree. Heritage’s selection is in line with other sub$4046"4/$?% 6&0% "/b/)*$%R'&$6&*'W$% *"41+/% $*6)A% 1/&/*"6tion plan. Triple stack varieties comprise 68 percent of
its corn platform and the company is not offering conventional and non-Roundup Ready varieties this year.GGB
The reason Monsanto continues to stack the
Roundup Ready trait in virtually every variety it offers
is simple. The trait is used in conjunction with Round,1% -/"E4)40/?% (-4)-% /&$,"/$% R'&$6&*'% E/&/!*$% ."'#%
these seed sales twice. Figure 8 shows that 80 percent
of U.S. corn acreage is planted to the Roundup Ready
trait. As explained below, the combination is even
more lucrative now that glyphosate prices have also
increased. Monsanto also provides a disincentive for
using generic (non-Roundup) brands of glyhposate by
disqualifying farmers from warranties on seed products
who do not purchase the company’s higher priced expensive trademark brand. Only, some farmers buy seed
with the Roundup Ready trait not because they plan to
611+2%9',&0,1?%E,*%E/)6,$/%4*%4$%04.!),+*%*'%!&0%&'&K
Roundup Ready varieties.
This reality has led to a general fear among
farmers that the best and newest genetics will only be
accessible by purchasing expensive trait varieties that
#62%&'*%!*%*-/4"%.6"#4&=%$2$*/#3%Z&/%.6"#/"%"/)',&*$%
-4$%/]1/"4/&)/%6*%6%!/+0%062%4&%O<<a%(-/"/%6&%6="'&omist pointed to a new corn variety and told him to
“get your order in early,” explaining that this corn performed best in last year’s trials as a conventional. When
this farmer said he wanted to buy the variety as a conventional, the agronomist said this was not possible – it
would only be available as a triple stack.GG:
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
sidiary companies.
For example, Trisler Seeds, Inc. based in Fairmont, Illinois, is a well-established seed company with
a 70-year history in seed corn. In 2006, Trisler was
bought by Monsanto’s holding company, American
Seed Incorporated (ASI), after which the diversity in
$//0%'1*4'&$%0/)"/6$/0%0"6#6*4)6++23%>&%O<<:?%F"4$+/"%'../"/0%BB%)'&5/&*4'&6+%)'"&%56"4/*4/$?%6E',*%:<%1/")/&*%
of its seed corn platform. This number remained relatively steady until the years following its acquisition by
Monsanto. Trisler offered three conventional varieties
*-4$%2/6"?%6%HG%1/")/&*%"/0,)*4'&%."'#%!5/%2/6"$%1"4'"?%
even in light of renewed interest in conventional corn
varieties and increasing trait prices. Furthermore, the
company only offers three non-Roundup Ready traited
varieties, and more than half of the seed offered is a
33
Greg Hamner
Clemmons & Hamner Seed, Inc.
Killen, Alabama
Section 2:
G
#$/"6,-0$#"*,5"&%$#,'$8"+@$--&05"\"6,-0$#"M$$8W"O02J".0"4.@@$0W"!@,(,-,W"5.02$"'*$"$,#@)"Q=P<5J"
6$"#$%&#'5","#,%.8"g5I.0/"(,2Sh"'&"2&0B$0'.&0,@"5&)($,05".0"*.5",#$,"($2,75$"'*$)",#$"@$55"$E%$05.B$"
'&"/#&I",08"/@)5&%*,'$[#$5.5',0'"I$$85",#$".02#$,5.0/@)","%#&(@$-J
Price, Choice, and Availability in Corn and Soybeans
"
^)" 9$(#7,#)" ;<<=W"6,-0$#" I,5" 5&@8" &7'" &D" *.5" 'I&" -&5'" %&%7@,#" 2&0B$0'.&0,@" 5&)($,0" B,#.$'.$5J" O0"
;<<PW"2&0B$0'.&0,@"5&)($,05"-,8$"7%"*,@D"&D"*.5"5&)($,0"5,@$5J"gC*.5")$,#".'"I.@@"($"2@&5$#"'&"P<"'&"=<"%$#2$0'"
2&0B$0'.&0,@Wh"*$"5,)5J
"
6,-0$#"5,)5"*.5"2&-%,0)"2&0'.07$8"'&"5$@@"2&0B$0'.&0,@"5&)($,05"&B$#"'*$")$,#5"($2,75$"-,0)"D,#-[
$#5".0"*.5"#$/.&0"/#&I"@$55"$E%$05.B$"B,#.$'.$5"&D"5&)($,05".0"D&&8"%@&'5"D&#"8$$#",08"&'*$#"I.@[email protected]$J"^7'"8$-,08"
D&#"'*$5$"2&0B$0'.&0,@"B,#.$'.$5"*,5"57#/$8"#$2$0'@)"D&#",/#&0&-.2",08"D.0,02.,@"#$,5&05J
"
gO0"'*$"M&7'*W"#$5.5',02$".5"m75'"572*","*7/$"%#&(@$-Wh"6,-0$#"$E%@,.05J"gG,@-$#",-,#,0'*W"&#"G./I$$8W"
.5"5&"#$5.5',0'"'&"A&7087%J"M&".D"/#&I$#5",#$"/&.0/"'&"*,B$"'&"-.E"2&0B$0'.&0,@"*$#(.2.8$5W"I*)"I&7@8"'*$)"
I,0'"'&"%,)","'$2*"D$$"&0"'&%"&D"'*,'`h
"
!0&'*$#"#$,5&0"-&#$"D,#-$#5",#$"@&&S.0/",'"2&0B$0'.&0,@"B,#.$'.$5".5"($2,75$"!:R"&DD$#$8","%#$-.7-"
D&#".8$0'.')[%#$5$#B$8"5&)($,05".0";<<P"'*,'"$E2$$8$8"aQJ<<"%$#"(75*$@J
"
+&0B$0'.&0,@"B,#.$'.$5",#$",@5&"&DD$#.0/"2&-%$'.'.B$").$@85W"*$"5,)5W",5"$B.8$02$8"()"D.$@8"'#.,@5"2&0[
872'$8".0"],I#$02$"+&70')W"C$00$55$$J"],I#$02$"9,#-$#5"+&&%$#,'.B$"2&-%,#$8"2&0B$0'.&0,@",08"A&7087%"
A$,8)"B,#.$'.$5",D'$#"275'&-$#5"5',#'$8"8$-,08.0/"-&#$"2&0B$0'.&0,@"5&)($,05",08",5S.0/W"g+,0"O"/#&I"'*$-"
2*$,%$#`h
"
C*$"'&%"'*#$$")[email protected]/"B,#.$'.$5"I$#$"2&0B$0'.&0,@W"6,-0$#"#$%&#'5W",08",D'$#"2&-%,#.0/"'*$"#$',.@"%#.2$5"
&D"*$#(.2.8$5".0"2&0B$0'.&0,@",08"A&7087%"A$,8)"5)5'$-5W"2&0B$0'.&0,@"B,#.$'.$5"'7#0$8"&7'"'&"($"2*$,%$#"'&"
/#&IJ
"
34
C*$"2&0B$0'.&0,@"B,#.$'.$5".0"'*$"5'78)"I$#$";<"'&"T<")$,#5"&@8W",08"-,)"@,2S"#$5.5',02$"'&"-&#$"#$2$0'"
,/#&0&-.2"%#&(@$-5J"^7'"'*$)").$@8$8",5"I$@@"&#"($''$#"'*,0"-&8$#0"A&7087%"A$,8)"B,#.$'.$5W"%,#'.27@,#@)".0"
#&','$8"D.$@85J
"
gA&7087%"A$,8)"'$2*0&@&/)"I,5"5&"5.-%@$"I*$0"'*$"&0@)"'*.0/".0")&7#"',0S"I,5"A&7087%Wh"*$"5,)5J
R&#$"9,#-$#5"M$,#2*.0/"D&#
+&0B$0'.&0,@"M$$8
C
'"&%4$%&'*%*-/%'&+2%!/+0%)"'1%=454&=%.6"#/"$%16,$/3%
In one year, some farmers saw Roundup Ready
soybean seed prices double, jumping from $25 per unit
to $50 in 2009. While the technology royalties explained
earlier have increased over the years, higher commod4*2% 1"4)/$% -65/% 6+$'% +/0% *'% 6% C,$*4!)6*4'&% 6#'&=% $//0%
companies to “take any extra margin,” according to one
farmer.115 As commodity prices make a dip, however,
higher Roundup Ready seed prices have farmers looking for alternatives. Their hunt uncovers startling truths
about the state of the U.S. non-GE soybean supply.
Historic Roundup Ready seed prices, coupled
with other factors explained below, have sparked renewed interest in conventional soybeans. Seed companies and university extension agents started to re)/45/%#'"/%4&Q,4"4/$%6E',*%*-/%$,11+2%6&0%E/&/!*$%'. %
conventional soybeans in 2007. The interest has only
grown since then, and agricultural media reported an
'.!)46+% [)'#/E6)A\% '. % )'&5/&*4'&6+% $'2E/6&$% 4&% *-/%
face of skyrocketing Roundup prices and seed costs the
following year.116 By 2009, some university extension
agents reported that conventional soybean sales had
doubled and could not meet demand.117, 118, 119
%
>&%.6)*?%O<<H%#6"A/0%*-/%!"$*%"/0,)*4'&%4&%UV%
soybean acres since their introduction in 1996.120 Experts agree that the percent of conventional soybean
acreage would be higher if the conventional seed supply could meet demand.121, 122
In 2009, conventional soybean shortages
were reported in Arkansas, Mississippi, Missouri, and
Ohio.GOB?% GO:?% GO@?% GOX University extension estimated that if
Mississippi soybean growers planted all the public and
private conventional seed available, the amount would
600%,1%*'%&'%#'"/%*-6&%B%1/")/&*%'. %*-/%$*6*/W$%$'2E/6&%
acreage (and just 0.5 percent if only the public varieties
available were planted).127
“Out of 10 to 15 excellent varieties of Roundup Ready soybeans there’s only one excellent conventional,” reports one Iowa farmer. “Then there’s the
problem of availability and quantities, and it becomes
#'"/%04.!),+*%*'%=/*%(-6*%2',%&//03\128
There is less breeding of non-GE soybean varieties in general, and much of the work is conducted
at state universities. However, fewer private companies
that focus on breeding and selling conventional varieties remain independent businesses, meaning distribution channels for these varieties have also decreased.129
“We used to have more public varieties,” says
J.B. Ladd, an Indiana farmer. “They’ll say they’re available but fewer are supplied by local dealers.”GB<
The renewed demand for conventional soybeans is spurred by the following factors. Taken together they lead to cheaper production costs, access to
#'"/%1"'!*6E+/%#6"A/*$?%6&0%*-/%6E4+4*2%*'%$65/%$//03%
6./*"M$$8"+&5'5
As explained, Roundup Ready soybean seed has dramatically increased in price over the years and now cost
about twice as much as conventional varieties. Farmers
say the price hikes in Roundup Ready seed are unjus*4!/0% E/)6,$/% *-/2% 6"/% 1624&=% .'"% *-/% $6#/% *"64*% /6)-%
year without yield advantages to substantiate the higher
cost. With other input costs at an all-time high, farmers
see conventional soybeans as a clear-cut way to keep
more money on their farm because of lower seed costs
and comparable yields.
In fact, Roundup Ready soybeans do not always yield as well as conventional varieties, and demon$*"6*/0%6%24/+0%0"6=%(-/&%*-/2%(/"/%!"$*%4&*"'0,)/03GBG
Though RR is not a “yield trait,” advertisements pur1'"*%*-/%*"64*%*'%1"'540/%04"/)*%24/+0%E/&/!*$3%M%"/)/&*%
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
Soybean Sticker Shock:
35
Out of 10 to 15 excellent varieties of Roundup Ready soybeans there’s only one excellent conventional.
["O&I,"D,#-$#
Section 2:
Price, Choice, and Availability in Corn and Soybeans
36
study, however, explains that biotechnology traits are
not responsible for improvements in intrinsic yield but
rather traits are often bred into varieties that yield well
as a result of traditional breeding.GBO Good genetics and
agricultural practices remain the most important factor
.'"%24/+0?%2/*%E4'*/)-&'+'=2%!"#$%)'&*4&,/%*'%*',*%*-/%
yield advantage provided by single herbicide-tolerant
and insect-resistant traits.
Still, Monsanto introduced second generation
“Roundup Ready 2 Yield” (RR2Y) soybeans in 2009
*',*4&=% 4#1"'5/0% 24/+0$% '. % a% *'% GG% 1/")/&*% '5/"% !"$*%
generation varieties. Critics say RR2Y is Monsanto’s
4#1+4)4*% 60#4$$4'&% *-6*% 4*$% !"$*% =/&/"6*4'&% 9',&0,1%
Ready soybeans did not yield as well as farmers expected.GBB Regardless, RR2Y varieties are creating even
more sticker shock for farmers and seed companies licensing the new trait.
Will the yield advantage the product’s name implies be realized and justify a much higher price? Maybe
not. One independent seed company representative,
who spoke on condition of anonymity, turned down
RR2Y varieties in 2009 because “the yield data showed
that farmers wouldn’t make money.”GB:
“When they asked us to market that product,”
he says, “we looked at the yield data and what they
wanted us to charge our customers. We didn’t think
they were better agronomically for our market.” A representative of a different company, also wishing to remain anonymous, adds, “The yield is not there…It just
hasn’t been proven.”GB@
%
9/1'"*$% .'++'(4&=% *-/% O<<H% -6"5/$*% )'&!"#%
preliminary data. Approximately 20 farm managers and
$//0%04$*"4E,*'"$%4&%!5/%$*6*/$%"/1'"*/0%4&%6&%Z)*'E/"%
2009 survey that “yields from the new soybean seeds
didn’t meet their expectations.”GBX Beck’s Hybrids, a
prominent Midwestern seed company, said 188 of its
farmers conducted side by side test plots and found
that RR2Y yielded about two bushels per acre less than
!"$*%=/&/"6*4'&%99%$'2E/6&%56"4/*4/$3GBa
The royalty on a bag of RR2Y soybeans is approximately $22.GBI By comparison, this royalty alone is
more than the total cost (trait plus genetics) of a bag
of Roundup Ready soybeans when the technology was
!"$*%4&*"'0,)/03%M&0%)'#16"/%*-4$?%*''?%*'%*-/%'"4=4&6+%
*/)-&'+'=2% .//% .'"% *-/% 9',&0,1% 9/602% *"64*% 6*% c:3@<%
per bag.
Seed companies report that higher prices and
less choice are on the horizon. In August 2009, Mon$6&*'%6&&',&)/0%6%:O%1/")/&*%4&)"/6$/%'&%$/)'&0K=/&/"6*4'&%99Oh%$'2E/6&$%4&%O<G<?%'"%ca:%1/"%6)"/3%D4"$*%
generation Roundup Ready soybeans would increase to
$52 per acre.GBH
The second-generation trait alone is expected
*'% )'$*% #'"/% *-6&% cB<% 1/"% E6=?% 6&0% )'#16&4/$% -65/%
E//&%*'+0%*-6*%+/$$%/]1/&$45/%!"$*%=/&/"6*4'&%9',&0,1%
Ready soybean options will be phased out by 2012.G:<
This means farmers who want the Roundup Ready trait
in soybeans will have no choice but to purchase the
more expensive second-generation varieties. Farmers
(4++%E/%1624&=%$4]%*4#/$%(-6*%*-/2%1640%.'"%*-/%!"$*%=/&eration trait when it debuted in 1996.
With conventional soybean seed in short supply, farmers paid a $17.50 royalty in 2009 for GE varieties they would otherwise not choose and may not
aZ<
G#.2$b1,@@&0
aY<
$43
aN<
aT<
$29
a;<
Q==T""""Q==Y""""Q==V""""Q==="""";<<Q"""";<<T"""";<<Y"""";<<V"""";<<=
M&7#2$L"XM:!b?!MMJ"!/#.27@'7#,@"G#.2$5"F!%#.@"D./7#$5H",'"*''%Lbb758,J-,00@.(J2&#0$@@J$87bR,00X58,bB.$I:&27-$0'O0D&J8&`8&27-$0'O:tQ<<;J
E/% E/&/!*4&=% ."'#3% >. % *-/% )'&5/&*4'&6+% $//0% $,11+2%
0'/$% &'*% 4#1"'5/% 6$% !"$*% =/&/"6*4'&% 9',&0,1% 9/602%
varieties are phased out, choice will be reduced further
as seed costs increase. Frustration among farmers will
only grow if the higher yields promised by new Roundup Ready varieties are not realized to soften the blow to
their bottom line.
1@)%*&5,'$"+&5'5"M*&&'"X%
In addition to higher seed prices, farmers are facing a
-'$*%'. %'*-/"%4&b6*/0%4&1,*$%)'$*$?%4&)+,04&=%*-/%#'$*%
widely used herbicide, glyphosate. Figure 9 shows that
for years, glyphosate prices dropped after Monsanto’s
patent on the chemical formulation ran out in 2000.
But in recent years generic forms of the popular weed
control have doubled and even tripled in price. For example, in some parts of the country, glyphosate prices
4&)"/6$/0%."'#%cO:%1/"%=6++'&%4&%O<<a%*'%6E',*%cX<%4&%
2008.G:G Seed and chemical dealers told farmers the
price hikes were a result of several factors, including increased global demand (more Roundup Ready acreage);
waning production in China (which supplies much of
the generic glyphosate supply); and shortages of phosphorous (a key glyphosate ingredient).
a
a
a
%
D'"%*-/%!"$*%*4#/?%*-/%1"4)/%'. %=/&/"4)%=+21-'sate was on par with Monsanto’s trademark brand,
9',&0,13%R'&$6&*'%"/$1'&0/0%(4*-%6%B<%1/")/&*%4&crease in Roundup prices in order to “ration supply.”G:O
According to Jim Zimmer, a Monsanto representative,
“Monsanto was forced to raise prices to slow down offtake because it didn’t want to be in a position where it
couldn’t supply Roundup to a farmer with a Roundup
Ready crop.”G:B
%
J,*%*-/%C,$*4!)6*4'&%.'"%6%1"4)/%4&)"/6$/%4$%'.*/&%
unrelated to the reasons given for public relations purposes, says Neil Harl, emeritus professor of economics
at Iowa State University. “In this instance, it is likely
more related to exercise of market share power to in)"/6$/%1"'!*$?\%e6"+%/]1+64&$3%[F-4$%6"/6%'. %*-/%/)'&omy is a long way from perfect competition. That has
been my main concern for several years about Monsanto.”G::
In 2008, Monsanto explained its rationale for
increasing Roundup prices in a “Dear Valued Customer” letter sent to chemical dealers and producers, and
warned of further price increases in 2009. The letter
said, “At this time we are unsure to what degree glyphosate prices will increase, however we do anticipate a
price increase on all Roundup brands for the 2009 season.”
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
9./7#$"=J"C#$085".0"1@)%*&5,'$"G#.2$5"FQ==T[;<<=H
37
9./7#$"Q<J"G&7085"&D"1@)%*&5,'$"!%%@.$8".0"C&%"M&)($,0"M','$5
QN
Q==Z
G&7085"!%%@.$8"F-.@@.&05H
Q;
;<<Z
Q<
P
12.1 million
11.9 million
9.3 million
7.9 million
6.7 million
Z
N
1.7 million
;
<
1.7 million
0.9 million
0.2 million
0.2 million
?$(#,5S,
O08.,0,
R.00$5&',
O@@.0&.5
O&I,
M&7#2$5L"XM:!b?!MMW"!/#.27@'7#,@"+*$-.2,@"X5,/$";<<Z"9.$@8"+#&%5"M7--,#)W"R,)";<<V",'"*''%Lbb758,J-,00@.(J2&#0$@@J$87b758,b0,55b!/#.+*$-X592bb;<<<5b;<<Vb!/#.+*$-X5[
92[<Y[QZ[;<<Vw#$B.5.&0J'E's"!/#.27@'7#,@"+*$-.2,@"X5,/$"Q==Z"9.$@8"+#&%5"M7--,#)W"M$%'$-($#"Q==V",'"*''%Lbb758,J-,00@.(J2&#0$@@J$87b758,b0,55b!/#.+*$-X592bbQ==<5bQ==Vb!/#.+*$[
-X592[<=[<T[Q==VJ'E'J
Section 2:
Price, Choice, and Availability in Corn and Soybeans
38
Indeed, Roundup was $71 per gallon in 2009,
according to Missouri dealer Bob Niemeyer. “And
that’s wholesale,” Niemeyer says. Generic glyphosate,
on the other hand, went down $10, he adds, explaining
he brought the cost down to $21.50 per gallon for his
customers this year.G:@
As mentioned earlier, Monsanto’s patent on
glyphosate expired in 2000, yet the company’s trademark brand continues to demand a large market share
(estimated at 60 to 80 percent) even as generic glyphosate sales expanded.G:X This dominance in the glyphosate industry is curious, and has been the focus of antitrust lawsuits.d
As the most widely used herbicide, glyphosate
is certainly a money maker. Its use has expanded significantly due to Roundup Ready crops. In Iowa, the U.S.’s
leading soybean state, 952,000 pounds of glyphosate
was applied on 15 percent of the state’s soybean acre6=/% *-/% !"$*% 2/6"% 9',&0,1% 9/602% $'2E/6&$% (/"/% '.fered. Ten years later, glyphosate use had grown eightfold (see Figure 10). More than 90 percent of Iowa’s
soybean acreage was applied with 12 million pounds of
glyphosate.G:a
d
See Texas Grain Storage v. Monsanto Co3?%O<<I%dP%O@a<@B<%7d3L3%F/]3%O<<I;%
Agronomists warn against lowering recommended application rates in response to higher glyphosate prices, which speeds up weed selection pressure
(i.e., susceptible plants die and resistant plants survive
and reproduce without competition) and facilitates the
development of glyphosate-resistant weeds. As will be
explained next, glyphosate-resistant weeds are now the
bane of many farming operations and another reason
farmers are returning to conventional systems.
1@)%*&5,'$[A$5.5',0'"_$$85
If you are a corn, cotton, or soybean producer in the
T',*-/6$*%'"%R40KT',*-?%/../)*$%'. %=+21-'$6*/W$%1"'+4!)%
,$/%4$%$//&%4&%!/+0$%6&0%./+*%4&%1')A/*E''A$3%U+21-'sate-resistant weeds are now established in 19 states
and deemed a serious economic problem, at times adding more than $20 per acre.G:I?%G:H Weed specialists refer
to resistant weeds as a “train wreck” making their way
across the country.150
The International Survey of Herbicide Resistant Weeds lists nine weeds resistant to glyphosate in
Leake. “When a farmer looks down the weed guide
list and sees ‘poor control’ for glyphosate on so many
problem weeds, he has to wonder if the Roundup
Ready system is worth his time and money.”G@B
Therefore, resistant weeds have effectively
wiped out the one advantage Roundup Ready seed once
offered and farmers can no longer justify paying for the
expensive trait. Indeed, for farmers with Roundup-resistant weeds, conventional soybeans are now cheaper
to produce and easier to manage.
Although not yet a big problem in northern
states, farmers are taking precautions against weed resistance, according to Judge Barth, executive director
of Dakota Pride Cooperative. “I think [farmers] are
more willing to put conventional soybeans in a farming
rotation because some are worried about resistance to
Roundup,” Barth explains. “Conventional became an
6+*/"&6*45/%.'"%*-/#%(-/&%*-/2%)',+0%$62?%i#2%!/+0$%6"/%
clean already, and maybe I can get a premium on top of
rotating herbicides.’”
With premium programs for non-GE soybeans
/]16&04&=?% .6"#/"$% 6"/% !&04&=% 4*% #'"/% 611/6+4&=% *'%
walk away from the Roundup Ready system.
G#$-.7-5"D&#"+&0B$0'.&0,@"M&)($,05
There are a number of national and international mar-
9./7#$"QQJ"13",08"?&0[13"M&)($,0"G#.2$"+&-%,#.5&0
Soybean Price
Comparisons (per bu)
Saved Seed
d%%&#'70.')"+&5'f
aPJP;
+@$,0.0/"+&5'
aQJ<<
^,//.0/"+&5'
aQJY<
Total Cost
New Non­GE
New GE
$11.32
$40.60
$59.76
($9.40/unit)
($33.70/unit)
($49.60/unit)
M&7#2$L"?$I"5$$8"2&5'5"8$#.B$8"D#&-"XM:!b?!MM"!%#.@";<<="!/#.27@'7#,@"G#.2$5"O08$Es"+@$,0.0/",08"(,//.0/"2&5'5"%#&B.8$8"()".08$%$08$0'"5$$8"2@$,0$#5J
fM&)($,0"(.8",5"&D"R,)"VW";<<="D&#"0$I"2#&%J
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
the U.S., including: common ragweed, common water-/#1?% =46&*% "6=(//0?% -64"2% b/6E6&/?% -'"$/(//0?% >*6+ian ryegrass, johnsongrass, palmer amaranth, and rigid
ryegrass.
Some of the worst resistance is found in pigweed (Palmer amaranth). Resistant pigweed now infests
hundreds of thousands of acres in the Southeast. For
example, 70 to 80 percent of Macon County, Georgia, dubbed the “epicenter” of glyphosate-resistant
Pigweed, is infested with the weed, and farmers were
forced to abandon 10,000 acres in 2007.151
Purdue University weed scientist Bill Johnson explains that, “Farmers do not think resistance is
a problem until they actually have it.” Johnson points
out that new innovation and choice in herbicides has
diminished over the years, so farmers have fewer
chemical options. He says farmers “think the chemical
companies can turn on the spigots and produce a new
herbicide whenever they want.”152 But with Roundup’s
success, money has not been invested in new herbicide
research.
Weed resistance clearly diminishes the value of
glyphosate and Roundup Ready systems, evidenced by
the fact that farmers with resistance problems routinely
mix glyphosate with other conventional herbicides.
“Spreading weed resistance is rapidly relegating the Roundup Ready system to the list of yesterday’s
herbicide systems,” says North Dakota farmer, Todd
39
Section 2:
Price, Choice, and Availability in Corn and Soybeans
40
kets sourcing non-GE soybeans, and the premiums are
catching farmers’ attention. Mark Albertson of the Illinois Soybean Association reports that some of the major purchasers had booked all of their non-GE acres
for the year by March 2009. “I never would have heard
that a year ago,” he says.G@:
Still, as of May 2009, SoybeanPremiums.org
+4$*/0%#'"/%*-6&%:<%&'&KUV%1"/#4,#%1"'="6#$%$16&&4&=% BO% $*6*/$3% Y"/#4,#$% *214)6++2% "6&=/% E/*(//&% cG%
and $2 per bushel, though some farmers report receiving even more. One Iowa farmer says he will receive
cB3:<%1/"%E,$-/+%*-4$%2/6"%6$%6%1"/#4,#%.'"%-4$%&'&KUV%
soybeans.155
“There is no doubt that non-GE premiums
have increased from last year,” Albertson says. “In ad04*4'&?%*-/%b6*%1"4)/%'. %$'2E/6&$%-6$%0/)"/6$/0?%#6Aing the premium a larger piece of the pie. With the
cost of growing GE beans being higher than usual, the
perceived risk and reward ratio of non-GE is looking
more favorable to many farmers.”156
And while demand for non-GE soybeans continues to increase, especially abroad, U.S. production is
not keeping up. The biggest reason, says Corey Nikkel
of Schillinger Seed, Inc., which recently introduced a
new platform of exclusively non-GE crops, is the limited supply of conventional soybean seed. “The U.S.
was short last year,” he explains, “but I hope we’ll only
grow in terms of supply for non-GE from here.”157
While non-GE premiums provide a nice incentive to farmers, it is a drop in the bucket compared to
another advantage of growing conventional varieties:
the ability to save seed.
9,#-$#5"A$2@,.-.0/"+&0'#&@
Agricultural biotechnology dramatically changed agriculture beyond conveniences in weed and pest control.
Because patents protect GE traits, patent holders exercise unprecedented ownership and control over their
intellectual property even after the seed is bought and
sown. Patent law allows seed and seed trait develop-
ers to enforce licensing contracts for their technologies that, among other restrictions, terminate a farmer’s
time-honored right to save seed.
Prior to the advent of patented seed traits, most
farmers traditionally saved a portion of their soybean
harvest to plant the following year or sell to neighbors.
Eliminating a farmer’s right to save seed effectively removes an important form of competition in the seed
industry, as farmers who plant GE varieties – at times
with few other options – must buy new seeds each year.
Sometimes farmers are forced to destroy seed they cannot sell, but would otherwise plant, if not for seed saving restrictions imposed by patent holders.
More than a decade has passed since patented
seed entered the marketplace and yet many farmers still
lament seed saving restrictions. With all the challenges
explained above, farmers see an opportunity to reclaim
control over their seed by returning to non-patented
conventional varieties. The savings are huge. Farmers
can pay seed cleaning fees – costing them approximately $1 per bushel – instead of buying new and ever more
expensive seed every year.
Farmers’ reasons for wanting to save seed,
-'(/5/"?% 6"/% &'*% +4#4*/0% *'% /)'&'#4)% C,$*4!)6*4'&$3%
Many farmers still prefer to selectively harvest seed for
traits and performance. “The reason for producing our
own seed was and always has been quality,” says David
Shupe. “I will pick out only the very best beans from
#2%!/+0%.'"%$//03%>%)6&%*-/&%)6"/.,++2%$*'"/%6&0%)'&04tion that seed and am assured that it is treated correctly.
I cannot be sure of this kind of quality care anywhere
else.”158
Shupe bemoans the loss of regionally adapted
varieties made available through more numerous and
diverse breeding programs of the past. He worries, like
many farmers, that the lack of genetic diversity span&4&=%*-/%#6C'"4*2%'. %',"%$'2E/6&%6&0%)'"&%!/+0$%*'062%
leaves us vulnerable to future problems. “If for some
reason we had to abandon that system of production
we would lose most of our ag production capacity
overnight and we do not have anything to replace it
with on a timely basis,” he says.159
Leland “Judge” Barth
J
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
Dakota Pride Cooperative
Jamestown, North Dakota
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41
T
Section
C*$"A&@$"&D"G,'$0'5".0
M$$8"O0875'#)"+&02$0'#,'.&0
P
Section 3:
The Role of Patents in Seed Industry Concentration
42
6*/&*$%-65/%4#16)*/0%S3T3%6="4),+*,"/%4&%$4=&4!)6&*%
ways by allowing unprecedented ownership and
control over our nation’s plant genetic heritage. Utility patents on plants have reduced breeders’ access to
essential genetics and therefore slowed crop improvements needed to meet farmers’ needs. And, as is the
focus of this report, patents have facilitated concentration in the seed industry by placing farmers and smaller
$//0% !"#$% 6*% 6% 04$6056&*6=/% 4&% *-/% #6"A/*1+6)/3% D,"thermore, the enforcement of seed intellectual property rights has led to a culture of fear in rural communities as enforcing patent rights often comes at the
expense of farmers’ privacy and property rights.
The changes in the seed industry described in
this report are largely a result of the U.S. Patent and
F"60/#6"A%Z.!)/W$%7YFZ;%GHI<%0/)4$4'&%*'%6(6"0%*-/%
!"$*%,*4+4*2%16*/&*%'&%+4./?%6%E6)*/"4,#%)616E+/%'. %E"/6Aing down crude oil, which was upheld in the Supreme
Court case of Diamond v. Chakrabarty. The PTO’s decision was later upheld again in the landmark 2001 Supreme Court ruling in J.E.M Ag Supply, Inc. v. Pioneer HiBred International, Inc., where Pioneer Hi-Bred had sued
J.E.M. Ag Supply for illegally saving patented seed.160
Before the ruling, Congress had long argued
that sexually reproducing plants should not be awarded
utility patents – the same patents awarded to toasters,
for example – for fear of curtailing innovation, threatening the free exchange of genetic resources, and in-
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
creasing market concentration. As this report shows,
landmark case of Diamond v. Chakrabarty. In this case,
Congress was right. These consequences are now being
*-/%T,1"/#/%8',"*%",+/0%@%N%:%*-6*%6%+454&=%E6)*/"4,#%
realized.
was patentable subject matter. The U.S. PTO decided
%
8'&="/$$%16$$/0%*-/%Y+6&*%Y6*/&*%M)*%4&%GHB<?%
!5/%2/6"$%+6*/"%4&%*-/%)6$/%Ex parte Hibberd that sexually
which explicitly rejected making sexually reproducing
reproducing plants should be awarded patents (largely
plants patentable subject matter. Patents, the law said,
pointing to the Chakrabarty case) and began accepting
could only be applied to asexual reproduction, such as
patent applications for these plants.
grafting, budding, cuttings, layering, and division.
The Supreme Court decision in the 2001 J.E.M.
%
R'"/%*-6&%B@%2/6"$%+6*/"?%4&%GHXa?%8'&="/$$%"/Ag Supply, Inc., v. Pioneer Hi-Bred International, Inc., where
turned to the idea of patents on sexually reproducing
plaintiffs argued that Congress had never intended for
plants when it defeated an amendment to include these
PTO to grant utility patents for sexually reproducing
1+6&*$% 4&% *-/% Y6*/&*% 9/.'"#% M)*3% T4=&4!)6&*+2?% STLM%
plants, concluded that Congress did not explicitly exalso opposed the amendment because of the threats it
clude plants in section 101 of the Utility Patent Act.
posed to future research and development.
Justice Clarence Thomas, a former attorney of MonAt the same time,
santo, wrote the majority
The enforcement of seed intellectual opinion.
Congress saw that some
form of protection for
Opponents of utility
property rights has led to a culture
sexually
reproducing
patents on sexually reproof
fear
in
rural
communities,
as
en­
plants was reasonable. It
ducing plants continue to
created the 1970 Plant
forcing patent rights often comes at argue that Congress should
Variety Protection Act
amend the PVPA to be the
the
expense
of
a
farmer’s
privacy
and
(PVPA) to provide plant
exclusive means of prodevelopers similar rights
tection for such crops.
property rights.
as patent holders, includRemoving these patents
ing exclusive rights to propagate and market a protected
would help plant breeders and farmers return to tradivariety for 20 years. USDA administers the PVPA and is
*4'&6+%1"6)*4)/$%6&0%"4=-*$%*-6*%6"/%E/&/!)46+%*'%.6"#/"$%
"/$1'&$4E+/%.'"%6(6"04&=%6%8/"*4!)6*/%'. %Y"'*/)*4'&%*'%
and society as a whole.
plant developers who prove their new variety is novel
from existing varieties, genetically uniform, and stable
G,'$0'5"67#'"G7(@.2",08"G#.B,'$"^#$$8.0/
through successive generations.
Congress implemented important exempOwners of utility patents on plants have far-reaching
tions consistent with public policy and USDA’s unease
control over access and use of their protected prodaround utility patents on sexually reproducing plants.
ucts. They can claim an entire plant – as is the case with
First, the PVPA provides a research exemption so other
patents for asexually reproducing plants and PVPA cerplant breeders can use protected varieties for research
*4!)6*/$% N% 4&% 6004*4'&% *'% 1+6&*% 16"*$?% $,)-% 6$% 6% LgM%
and development purposes. Second, farmers can save
sequence, gene, seed, or tissue culture. They can also
seed from protected varieties to replant on their own
claim the methods used to produce the variety and any
land. Neither the Plant Patent Act described above nor
hybrid varieties that result from patented plant parts.
utility patents offer these exemptions.
As a result, these patents have effectively reTen years later, a landmark case started to unmoved valuable genetic material from the pool of reravel the progress Congress had made in plant protecsources that breeders rely on for improving agricultural
*4'&$3%F-/%!"$*%16*/&*%'&%+4./%(6$%6(6"0/0%4&%GHI<%4&%*-/%
43
Section 3:
The Role of Patents in Seed Industry Concentration
44
crops. Access to patented material hinges on restrictive licensing agreements that create a mess of legal
arrangements where important genetics essentially get
stuck and underutilized.
Furthermore, patent owners can deny licensing
agreements for strategic purposes, in particular, to prevent competition. Some researchers might need several
licenses for one variety, and their ability to use genetic
resources for improving plant varieties is slowed or
stopped if they are denied a license for even one patent.
This in turn denies breeders from improving and expanding the genetic base on which agriculture depends.
Denying licensing agreements also restricts
public analysis of new varieties already in or entering the marketplace. Many public plant breeders rely
on industry funding for their work, which means large
1"456*/% !"#$% $'#/*4#/$% 04)*6*/% "/$/6")-% 6&0% )"/6*/%
barriers to answering important questions about their
products.
According to 26 university scientists who submitted a joint complaint to EPA on this point, “No
truly independent research can be legally conducted on
many critical questions.”161 These scientists, most of
whom remain anonymous, point to situations where
biotechnology companies are keeping universities from
fully researching the effectiveness and environmental
impact of the industry’s genetically engineered crops.162
In 1999, Nature Biotechnology reported that
“Nearly 50 percent of public plant breeders have had
04.!),+*4/$%'E*64&4&=%=/&/*4)%$*')A$%."'#%)'#16&4/$3\GXB
g'*%'&+2%0'%!"#$%0/&2%6))/$$%*'%56"4/*4/$?%*-/2%'.*/&%
4&$4$*% '&% "/54/(4&=% $)4/&*4!)% !&04&=$% E/.'"/% *-/2% 6"/%
published. The editors of !"#$%&#'"( )*$+#",% recently
asked, “Do Seed Companies Control GM Crop Research?” The article noted the scientists’ letter to EPA
mentioned above, and said that claims touted by biotechnology companies have little independent research
backing them up. “Unfortunately, it is impossible to
5/"4.2% *-6*% =/&/*4)6++2% #'04!/0% )"'1$% 1/".'"#% 6$% 60vertised,” the article reads. “That is because agritech
companies have given themselves veto power over the
work of independent researchers.”GX: The article goes
on to say:
Under the threat of litigation, scientists cannot
test a seed to explore the different conditions
under which it thrives or fails. They cannot
compare seeds from one company against those
from another company. And perhaps most important, they cannot examine whether the ge%$&#",--.(*/0#'$0("+/12(-$,0(&/(3%#%&$%0$0($%vironmental side effects… It would be chilling
enough if any other type of company were able
to prevent independent researchers from testing
#&2(4,+$2(,%0(+$1/+&#%5(46,&(&6$.('%07#*,5ine car companies trying to quash head-to-head
model comparisons done by Consumer Reports,
for example.165
Private research has also been affected. There
4$% 6% !&6&)46+% 04$4&)/&*45/% *'% $//A% 6))/$$% *'% 16*/&*/0%
material to expand research because of costly royalties
and onerous licensing agreements with patent owners,
some of which have led to lawsuits. This reality serves
as a major barrier to new companies entering the plant
breeding industry.
Crop research in general has narrowed, priori*4^4&=%)'##'04*4/$%(-/"/%*-/%#'$*%1"'!*%)6&%E/%#60/%
over breeding programs focused on the range of needs
of farmers. Uniform seed options have replaced culti56"$% *64+'"/0% *'% $1/)4!)%"/=4'&$?% 6&0% $#6++/"% 4&0/1/&dent seed companies with a history of meeting these
regional needs are disappearing.
G,'$0'5" 67#'" O08$%$08$0'" M$$8" +&-%,[
0.$5",08"A$872$"+&-%$'.'.&0
Utility patents have not spurred innovation in plants. In
fact, the opposite seems true, as evidenced by USDA
reports that document a downward trend: “Calculations for corn, soybeans, and cotton indicate that as
the seed industry became more concentrated during
the late 1990s, private research intensity dropped or
slowed.”166 As opposed to driving innovation, utility
patents on plants have provided an incentive to expand
control over genetic resources, limit access to them,
and make access expensive.
The number of independent seed companies,
especially small, family-operated businesses and re$/6")-%!"#$?%-6$%0"6#6*4)6++2%0/)+4&/0%'5/"%*-/%+6$*%./(%
decades. As mentioned earlier, the Independent Professional Seed Association says there are only about 100
independent seed companies left, compared to more
*-6&%B<<%*'*6+%74&0/1/&0/&*%6&0%)'&$'+406*/0;%*-4"*//&%
years ago.167
Utility patents on plants have facilitated this
*"/&0%E/)6,$/%'. %4&)"/6$/0%)'&)/&*"6*4'&%'. %!&6&)46+%
and genetic resources, which have led to numerous buy',*$%6&0%6&%4&)"/6$/0%E6""4/"%*'%/&*"23%P6"=/"%!"#$%E,2%
out smaller companies to increase their market share
and lock up greater amounts of genetic resources obtained through the acquisitions. They also apply for the
most patents on plants to control what is researched
and sold.168
It is important to remember that patent owners do not start from scratch. Farmers and other plant
breeders have played crucial roles in building our nation’s germplasm base for modern agriculture to thrive,
expand, and meet new agricultural challenges. Saving
seed and the free exchange of germplasm is central to
this history of innovation and genetic diversity.
Companies take advantage of the plant breeder exemption under the PVPA by making once pub-
lic germplasm inaccessible to other plant breeders in
addition to charging expensive fees for using these resources. Often times, the licensing agreements are for a
limited use and disallow further research and development.
Utility patents on plants remove an important
form of competition in the seed industry: a farmer’s
right to save seed. This has added to the problem of
seed prices, where in most major crops a handful of
!"#$%-65/%*-/%+6"=/$*%#6"A/*%$-6"/3%>&%*,"&?%1"4)/$%6"/%
not regulated by the market but by the largest players.
In a concentrated seed industry where patents provide
a legal monopoly on plants and plant parts, price is
not driven down by competition from varieties derived
from already patented material or by seed saving, since
patents allow enforcement of technology agreements
that restrict this traditional practice. Seed saving provides a check on seed price increases. Farmers would
likely save more seed on the farm in response to escalating seed costs, for example.
Congress understood the importance of farmers’ right to save seed when it created this exemption
4&%*-/%YjYM?%6&0%)/"*64&+2%040%&'*%4&*/&0%.'"%!"#$%*'%
take advantage of the plant breeder exemption by making once public germplasm inaccessible to other plant
breeders.
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
!"50,%5*&'"&D"R&05,0'&U5"5$$8"'#,.'"%,'$0'5",5"@.5'$8".0"'*$.#";<<P"'$2*0&@&/)",/#$$-$0'
45
G@,0'" G,'$0'" 30D&#2$-$0'" C*#$,'$05" G#.[
B,2)",08"G#&%$#')"A./*'5
Section 3:
The Role of Patents in Seed Industry Concentration
46
Farmers who use seeds containing genetically
engineered traits are required to enter into onerous
agreements that, among other things, remove their traditional right to save seed on their farm (a right, remember, provided under the PVPA).169
The pursuit of farmers for patent infringement
(i.e., illegally saving patented seed) has affected rural
communities beyond the drain of expensive attorney
fees and judgments. These investigations, lawsuits, and
most often, out of court settlements, have created a
culture of fear in communities where farmers are targeted, as Monsanto’s private investigators are known to
harass and intimidate families and businesses under investigation.
No other company is enforcing its plant patents as aggressively as Monsanto. The company hosts
an anonymous toll-free hotline that farmers can call to
snitch on neighbors suspected of saving patented seed.
This has bred distrust, suspicion, and less information
sharing among farmers. Not to mention false leads.
In the 2008 Vanity Fair article, “Monsanto’s
Harvest of Fear,” Donald L. Bartlett and James B.
Steele write, “Some compare Monsanto’s hard-line approach to Microsoft’s zealous efforts to protect its software from pirates. At least with Microsoft the buyer of
reached the correct court venue, the crop had gone
bad, costing the farmer lost revenue on top of attorney
fees.
%
R'"/% *-6&% G<<% +6($,4*$% -65/% E//&% !+/0% 4&% Oa%
states against farmers for patent infringement.170 While
many of these farmers admit they illegally saved seed,
others say they followed the rules but were told of accusations long after the opportunity to collect independent samples had passed. Most farmers do not have
*-/%"/$',")/$%*'%!=-*%6%#,+*4KE4++4'&%0'++6"%)'"1'"6*4'&%
in court. And Monsanto’s investigators are known to
threaten farmers with lawsuits and bankruptcy if they
contest allegations and resist settling out of court. As
such, the majority of farmers sign settlements. Because
these farmers receive gag orders, many of their stories
remain untold, and it is unknown how many farmers
believe they were wrongly targeted.
Hundreds of farmers are investigated each year.
M$%'. %O<<X?%R'&$6&*'%-60%4&4*46*/0%,1%*'%:?<<<%[$//0%
piracy matters” against farmers in 19 states.171 Farmers
-65/%1640%6&%/$*4#6*/0%cI@?X@B?X<G%*'%cGX<?@H:?OB<%4&%
$/**+/#/&*$%6&0%*-/%&,#E/"%'. %$/**+/#/&*$%4$%O<%*'%:<%
times the number of lawsuits in public court records.172
In response, several states have passed Farmer
Y"'*/)*4'&%M)*$%*'%+/5/+%*-/%1+624&=%!/+0%4&%16*/&*%4&5/$tigations, including North Dakota (2001), South Dako*6%7O<<O;?%>&046&6%7O<<B;?%R64&/%7O<<I;?%6&0%86+4.'"&46%
(2008). These laws typically establish mandatory crop
More than 100 lawsuits have been filed in 27 states against farmers for patent infringements.
a program can use it over and over again. But farmers
who buy Monsanto’s seeds can’t even do that.”
In one lawsuit, a U.S. District Court for the
Southern District of Illinois referred to Monsanto’s investigative practices as “scorched-earth policies,” citing
the company’s “hardball tactics.” In this particular case,
the farmer was sued in the wrong court venue based
on a forged technology use agreement (his name was
even misspelled), and Monsanto obtained an injunction
*'% +')A% *-/% .6"#/"W$% ="64&% E4&$3% d-/&% *-/% )6$/% !&6++2%
sampling procedures for patent holders to follow when
)'++/)*4&=%$6#1+/$%."'#%6%.6"#/"W$%!/+03%F-4$%1"'540/$%
transparency and ensures that farmers and a third party
have an opportunity to collect duplicate samples. Some
of these laws also recommend that the venue for disputes be the state court where the alleged infringement
occurred. Still, even with some protections in place, in&')/&*%.6"#/"$%-65/%/&0,"/0%,&0,/%!&6&)46+%6&0%/#'tional stress in their effort to avoid costly lawsuits.
David Runyon
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
Soybean Farmer
Adams County, Indiana
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47
+&02@75.&0
Policy Recommendations for Restoring Choice
and Fair Prices in the Seed Industry
T
he consequences of seed industry consolidation cannot be ignored. As this report explores, farmers are experiencing less choice in the seed marketplace as prices increase at historic rates. Reversing these trends will
*6A/%6%$/"4',$%/]6#4&6*4'&%'. %),""/&*%)'&0,)*%E2%0'#4&6&*%!"#$%6&0%*-/%"'+/%16*/&*$%-65/%1+62/0%4&%$//0%4&0,$*"2%
consolidation. Furthermore, rebuilding public plant breeding programs is central to expanding choice and meeting
the diverse needs of farmers.
9/56#14&=%16*/&*%+6(%'&%$//0%(',+0%"/$*'"/%$'#/%'. %.6"#/"$W%E6$4)%"4=-*$3%F-/%+/5/+%'. %)'&*"'+%E4'*/)-%!"#$%(4/+0%
'5/"%.6"#/"$%4$%6%.,&)*4'&%'. %6&%4&*/++/)*,6+%1"'1/"*2%$2$*/#%*-6*%1,*$%4&0,$*"2%1"'!*$%E/.'"/%*-/%4&*/"/$*$%'. %.6"#ers. A system that works for seed developers and farmers alike will return choice, fair prices, and transparency to the
U.S. seed industry.
>&%16"*4),+6"?%"/#'54&=%1+6&*%,*4+4*2%16*/&*$%(',+0%+/5/+%*-/%1+624&=%!/+0%.'"%.6"#/"$%E2%"/K/$*6E+4$-4&=%*-/%*4#/K
honored right to save seed and eliminating patent infringement investigations that lead to out of court settlements,
lawsuits, and intrusions of property and privacy rights. Federal legislation is needed in the short term that provides
farmers who face patent infringement allegations a fair advantage in these investigations.
Challenging plant utility patents is a direct confrontation to concentration. As this report has shown, patents have
facilitated consolidation in the seed industry and an unfair marketplace (higher prices and less choice).
Conclusion
48
Because the existing landscape involves biotechnology failures (e.g., the Roundup Ready system is breaking down)
6&0%.6"#/"$%+''A4&=%.'"%6+*/"&6*45/$?%4*W$%)",)46+%*'%"/E,4+0%*-/%4&."6$*",)*,"/%.'"%*-/$/%6+*/"&6*45/$?%$1/)4!)6++2%1,E+4)%
breeding programs. What’s needed is a strategy to support public breeding programs and engage public breeders
in organizing and education efforts. This will allow for better exchange of plant genetic resources. We must work
toward open and honest public breeding that supports the public interest and restores choice in the seed (especially
non-GE seed) marketplace.
Lastly, antitrust law must be enforced when there is evidence of anticompetitve conduct in the seed industry. We
must ensure that farmers have an open and fair marketplace that encourages innovation and provides a variety of
seed options at competitive prices.
Our policy recommendations include:
J4'*/)-&'+'=2%!"#$%-65/%#/"=/0%(4*-%'"%6)Q,4"/0%6%$4=&4!)6&*%&,#E/"%'. %)'#1/*4*'"$?%6&0%*-',=-%$'#/%-65/%
drawn antitrust scrutiny, no meaningful action has been taken to deal with anticompetitive players. Farm commodity
1"4)/$%6"/%.6++4&=%6&0%(4++%&'*%$,$*64&%/$)6+6*4&=%$//0%1"4)/$?%(-4)-%)'&*4&,/%*'%1,*%*-/$/%!"#$W%1"4#6"2%),$*'#/"$%N%
American farmers – at a disadvantage. Independent seed companies say that the licensing agreements they sign to
access GE traits unreasonably restrain competition. Because independent seed companies are important distribution
channels for new seed varieties, this market needs to be protected from predatory practices.
For all proposed and pending mergers that could result in further concentration of the seed industry, the DOJ and
U.S. Department of Agriculture (USDA) should establish a public, consultative process that assesses how the merger
will impact the structure of agriculture. This assessment should be made public with ample opportunity for public
comment prior to any governmental action on the merger.
Furthermore, antitrust law must be enforced when there is evidence of anticompetitive conduct. If the DOJ determines that anticompetitive conduct exists as a result of concentration in the seed industry, it should use all remedies
6*%4*$%04$1'$6+%*-"',=-%*-/%T-/"#6&%M&*4*",$*%M)*%'. %GIH<%6&0%8+62*'&%M&*4*",$*%M)*%'. %GHG:%*'%/+4#4&6*/%*-'$/%6&ticompetitive practices. U.S. farmers deserve an open and fair marketplace that encourages innovation and provides
a variety of seed options at competitive prices.
+*,0/$"%,'$0'"@,I",08"$5',(@.5*"G@,0'"n,#.$')"G#&'$2'.&0"!2'",5"5&@$"%#&'$2'.&0
By establishing the PVPA as the sole means of intellectual property protection over plants, farmers could regain
the right to save seed and the right to choice, as plant breeders would have better access to plant genetics that are
currently off limits to innovation because of patents. This is consistent with the original congressional intent in enacting PVPA. Patent rights were only afforded through the Supreme Court decision in J.E.M Ag Supply, Inc., et al. v.
Pioneer Hi-Bred International, Inc. where the majority opinion, in a split court decision, determined that Congress had
not adequately expressed sole authority in the PVPA. This Supreme Court decision did, however, very importantly
leave the door open to future congressional action to clarify the original intent.
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
C*$":$%,#'-$0'"&D"e75'.2$"5*&7@8"2@&5$@)"$E,-.0$",0'.2&-%$'.'.B$"2&0872'".0"'*$".0875'#)
+*,0/$"'*$"^,)*[:&@$"!2'"FG,'$0'",08"C#,8$-,#S"],I"!-$08-$0'5"!2'H"
The Bayh-Dole Act as applied to seed patenting and agricultural innovations should be re-evaluated and reformed
to prohibit mandates for seed patenting and exclusive licenses relating to technologies and innovations developed
through publicly funded research, because such patents and exclusive licenses are reducing farmer choice, reducing
researcher access and directly contributing to this increasing trend of monopoly power, higher prices and/or other
anti-competitive practices.
49
A$(7.@8"%7(@.2"%@,0'"(#$$8.0/",08"%7(@.2"27@'.B,#"8$B$@&%-$0'"%#&/#,-5""
Y,E+4)%,&45/"$4*4/$%6&0%.6"#/"$%-65/%-4$*'"4)6++2%1"'0,)/0%#,)-%'. %*-/%)'&5/&*4'&6+%$//0%$,11+2%.'"%#6C'"%!/+0%
crops, yet many public programs have become increasingly dependent on the biotechnology industry for major
!&6&)46+%$,11'"*%6$%*-/%1,E+4)+2%.,&0/0%'1*4'&$%0(4&0+/3%F-4$%-6$%E//&%)'#1',&0/0%*-"',=-%1"/$$,"/$%."'#%*-/%
Bayh-Dole Act and Supreme Court decisions on plant patents. In recent 2007 Farm Bill legislation, Congress prioritized public cultivar development as a major capacity restoration focus for the USDA. Now is the time for the USDA
to make this major recommitment to reinvigorating our public breeding and public cultivar development programs
so we can ensure that the needs of farmers and the general public are met and that research is conducted in an open
and honest way. This is the most effective way to increase farmer and consumer choices and options.
A$-&B$"'*$"#$5'#.2'.&0"&0"#$5$,#2*"D#&-"@.2$05.0/",/#$$-$0'5
Independent research relies on access to protected products for purposes of innovation and information sharing.
D6"#/"$%0/$/"5/%*'%A&'(%(-4)-%56"4/*4/$%1/".'"#%E/$*%,&0/"%$1/)4!)%)'&04*4'&$3%Y6*/&*%'(&/"$%$-',+0%&'*%-65/%
the power to prevent performance and safety testing of their products. Removing this restriction from licensing
6="//#/&*$%(',+0%"/0,)/%./6"%(4*-4&%*-/%1,E+4)%E"//04&=%)'##,&4*2%*-6*%)'#16&4/$%(4++%1"'-4E4*%"/$/6")-%N%'"%!+/%
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30,2'"D,#-$#"2&0'#,2'"#$D&#-5",08"$5',(@.5*","D$8$#,@"g9,#-$#"G#&'$2'.&0"!2'h"
Conclusion
50
F-/%O<<a%D6"#%J4++%*''A%$'#/%'. %*-/%!"$*%$*/1$%*'(6"0%"/$*'"4&=%.64"%)'&*"6)*%"4=-*$%.'"%.6"#/"$?%-'(/5/"%UV%)"'1%
seed licensing agreements for farmers remain some of the most predatory contracts in the industry. Restoring fully
the federal rights of farmers to negotiate fair contracts, and including explicitly the right of farmers to negotiate
)'++/)*45/+2?%(',+0%="/6*+2%)'&*"4E,*/%*'%"/$*'"4&=%6%.64"%6&0%'1/&%1+624&=%!/+0%6&0%E/**/"%/&$,"/%.,*,"/%)'#1/*4*45/%
6&0%*"6&$16"/&*%#6"A/*%E/-654'"$3%T/5/"6+%$*6*/$%-65/%6+$'%4&*"'0,)/0%E4++$%*-6*%64#%*'%+/5/+%*-/%1+624&=%!/+0%4&%16*/&*%
infringement investigations and protect farmers’ privacy and property rights. These state initiatives have had mixed
success, yet together the efforts signal a real need and important momentum for federal legislation.
A federal Farmer Protection Act would protect farmers targeted with patent infringement allegations in four ways,
ensuring that (1) the venue and choice of law is the state where the farmer resides; (2) an independent third party
16"*4)416*/$%4&%16*/&*%4&."4&=/#/&*%4&5/$*4=6*4'&$`%7B;%.6"#/"$%6"/%&'*%-/+0%+46E+/%.'"%16*/&*%4&."4&=/#/&*%(-/&%$#6++%
6#',&*$%'. %UV%)'&*/&*%4$%04$)'5/"/0%'&%*-/4"%1"'1/"*2%6&0%*-/%1"/$/&)/%1"'540/$%&'%/)'&'#4)%E/&/!*`%6&0%7:;%*-/%
manufacturer of GE crops is held strictly liable for economic damage caused by contamination.
Grover Shannon
G
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
University of Missouri Soybean Breeder
Delta Research Center
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Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
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55
Scott Morgan
Soybean/Corn Farmer
Stoddard County, Missouri
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57
Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry
58