Monsanto’s control over seeds and the seed market

Monsanto’s control over seeds and the seed market: Investigation (Lucy Sharratt – CBAN Coordinator)

Date: Sun, 13 Dec 2009 17:34:11 -0500

Also see that there is a new report: “The Seed Price Premium: The
Magnitude and Impact of the Biotech and Organic Seed Price Premium”
Monsanto seed business role revealed
By Christopher Leonard, Associated Press
December 14 2009

Confidential contracts detailing Monsanto Co.’s business practices
reveal how the world’s biggest seed developer is squeezing
competitors, controlling smaller seed companies and protecting its
dominance over the multi-billion-dollar market for genetically altered
crops, an Associated Press investigation has found.

With Monsanto’s patented genes being inserted into roughly 95 percent
of all soybeans and 80 percent of all corn grown in the U.S., the
company also is using its wide reach to control the ability of new
biotech firms to get wide distribution for their products, according
to a review of several Monsanto licensing agreements and dozens of
interviews with seed industry participants, agriculture and legal

Monsanto’s methods are spelled out in a series of confidential
commercial licensing agreements obtained by the AP. The contracts, as
long as 30 pages, include basic terms for the selling of engineered
crops resistant to Monsanto’s Roundup herbicide, along with shorter
supplementary agreements that address new Monsanto traits or other
contract amendments.

The company has used the agreements to spread its technology – giving
some 200 smaller companies the right to insert Monsanto’s genes in
their separate strains of corn and soybean plants. But, the AP found,
access to Monsanto’s genes comes at a cost, and with plenty of strings
attached. For example, one contract provision bans independent
companies from breeding plants that contain both Monsanto’s genes and
the genes of any of its competitors, unless Monsanto gives prior
written permission – giving Monsanto the ability to effectively lock
out competitors from inserting their patented traits into the vast
share of U.S. crops that already contain Monsanto’s genes.

Monsanto’s business strategies and licensing agreements are being
investigated by the U.S. Department of Justice and at least two state
attorneys general, who are trying to determine if the practices
violate U.S. antitrust laws.

We now believe that Monsanto has control over as much as 90 percent
of (seed genetics). This level of control is almost unbelievable,”

said Neil Harl, agricultural economist at Iowa State University. “The
upshot of that is that it’s tightening Monsanto’s control, and makes
it possible for them to increase their prices long term. And we’ve
seen this happening the last five years, and the end is not in sight.”

At issue is how much power one company can have over seeds, the
foundation of the world’s food supply. Without stiff competition,
Monsanto could raise its seed prices at will, which in turn could
raise the cost of everything from animal feed to wheat bread and

One of the numerous provisions in the licensing agreements is a ban on
mixing genes – or “stacking” in industry lingo – that enhance
Monsanto’s power.

Independent seed company owners could drop their contracts with
Monsanto and return to selling conventional seed, but they say it
could be financially ruinous. Monsanto’s Roundup Ready gene has become
the industry standard over the last decade, and small companies fear
losing customers if they drop it. It also can take years of breeding
and investment to mix Monsanto’s genes into a seed company’s product
line, so dropping the genes can be costly.

A spokesman for Iowa Attorney General Tom Miller said the office is
examining possible antitrust violations. Additionally, two sources
familiar with an investigation in Texas said state Attorney General
Greg Abbott’s office is considering the same issues. States have the
authority to enforce federal antitrust law, and attorneys general are
often involved in such cases.

Any Justice Department case against Monsanto could break new ground in
balancing a company’s right to control its patented products while
protecting competitors’ right to free and open competition, said Kevin
Arquit, former director of the Federal Trade Commission competition
bureau and now a antitrust attorney with Simpson Thacher & Bartlett
LLP in New York. “These are very interesting issues, and not just for
the companies, but for the Justice Department,” Arquit said. “They’re
in an area where there is uncertainty in the law and there are
consumer welfare implications and government policy implications for
whatever the result is.”

Monsanto was only a niche player in the seed business just 12 years
ago. It rose to the top thanks to innovation by its scientists and
aggressive use of patent law by its attorneys.

Roger Boerma, a research professor at the University of Georgia, is
developing specialized strains of soybeans that grow well in
southeastern states, but his current research is tangled up in such
restrictions from Monsanto and its competitors. “It’s made one level
of our life incredibly challenging and difficult,” Boerma said. The
rules also can restrict research. Boerma halted research on a line of
new soybean plants that contain a trait from a Monsanto competitor
when he learned that the trait was ineffective unless it could be
mixed with Monsanto’s Roundup Ready gene.

Some independent seed company owners say they feel increasingly
pinched as Monsanto cements its leadership in the industry. “They have
the capital, they have the resources, they own lots of companies, and
buying more. We’re small town, they’re Wall Street,” said Bill Cook,
co-owner of M-Pride Genetics seed company in Garden City, Mo., who
also declined to discuss or provide the agreements. “It’s very
difficult to compete in this environment against companies like

Lucy Sharratt, Coordinator
Canadian Biotechnology Action Network (CBAN)

Collaborative Campaigning for Food Sovereignty and Environmental Justice
431 Gilmour Street, Second Floor
Ottawa, Ontario, Canada, K2P 0R5
Phone: 613 241 2267 ext.6
Fax: 613 241 2506

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