The "M" Word
By Matthew Dillon
October 2008
OCM’s Seed Concentration Project works to bring innovation and fair market competition to the seed and trait sector. There are a handful of big names in the seed and biotech trait market; Syngenta, DuPont, Dow, Bayer, and Monsanto are the big five. All five companies have licensing agreements with independent companies, hold patents for which they have the ability to ensure that their traits are not being illegally reproduced, and have acquired smaller firms to increase their trait portfolio. How often do you hear or read the first four companies names when people are discussing problems of concentration in seed, bullying, predatory behavior, profiteering, and so on?
Now I’m not going to defend any of these gene-chemical-pharmaceutical giants, but it is interesting how Monsanto is the name that rises to the top when you do a Google search for seed mergers, or seed concentration, or patent infringement lawsuits. Monsanto is the name that boils out of the mouths of enraged independent seed companies when I ask them about their concerns. Monsanto is the name of that the United Nations General Assembly recently accused of benefiting from the world food crisis as others suffer and starve. Monsanto is the name that farmers are afraid to whisper for fear of lawsuits that will gut their livelihoods. Monsanto is the name that activists turn into “Mon-satan” and that protestors shout out across the globe. Monsanto is the name that Attorney Generals are writing down on their legal yellow note pads in response to complaints about antitrust issues. Monsanto is the name in bad behavior in the seed industry.
Why this name above all others? None of the other four companies are thought of as saintly in the world of business, and there has been controversy around many of their chemical and pharmaceutical operations and products, but their names are rarely called out when it comes to bad behavior in the seed sector. This was true long before Monsanto became number one in seed/trait sales (which occurred about three years ago), and so it is not a case of the biggest always being accused of being the “baddest”. It seems that there is something in Monsanto’s business practices that irritates, or scares those with whom they work, and who purchase their product.
Even when farmers and seed companies like Monsanto’s product - and obviously many do - they fear the company. Here’s an example: Last week Minnesota Public Radio had an article about Roundup Ready sugar beets. The journalist, Dan Gunderson, pointed out that sugar beet farmers want a product to help them combat weed problems, but that the farmers are a bit hesitant about Monsanto. The sugar beets didn’t perform well in their first big year, with significantly lower yields than their conventional varieties, and with paying Monsanto $60/acre in trait fees the overall profitability of the crop suffered. The producers interviewed believe that this yield issue will get worked out over time, and still want the traits. The article says that within the next 2-3 years Roundup Ready sugar beets will be the only choice that farmers have. Plant them or nothing at all. And here is the rub that I believe makes Monsanto “the name” many fear. Gunderson writes:
“Nick Sinner, executive director of the Red River Valley Sugar Beet Growers Association, said people are concerned about that (Roundup being the only choice) because farmers don’t want Monsanto, the creator of the Roundup brand, holding all the cards when it comes to buying seed.
‘We want to have a good working relationship with Monsanto because they hold the rights to that technology,’ Sinner said. ‘We also think competition is a great thing, so if there are other technologies that come along that will work for weed control and keeps everybody honest in the long run, that can be a good thing.’”
Yes Nick, it can be a good thing, but only if farmers, seed dealers, and advocates like OCM work to keep the seed industry a competitive, fair, and innovative sector. That means keeping the pressure on our regulators, justice departments, and other public officials to curtail anti-competitive practices.
OCM Hosts Second ‘Taking It Back’ Event in Iowa
By Kristina Hubbard
October 2008
OCM sponsored its second “Taking It Back” event on September 11, 2008, at the Clay County Fair in Spencer, Iowa – the largest county fair in the U.S. These events continue to bring visibility to the problem of market concentration in our seed industry and educate farmers on how they can support the ongoing antitrust investigation into Monsanto’s trade practices.
Fifty-five people attended the meeting, including farmers, seed dealers and independent seed companies, local political figures, local media and non-governmental farm groups. We even made the front page of Farm News, a paper out of Fort Dodge, Iowa, with an article entitled: “OCM goal: Break up seed companies’ monopolies.”
The event was co-chaired by Representatives Marcie Frevert (District 7) and Mark Kuhn (District 14), and was co-sponsored by Iowa Farmers Union and American Corn Growers Association.
Representative Mark Kuhn, who farms in Charles City, shared his perspective on the trends in seed pricing. He explained, "I've been approached by many seed dealers this year, so I know what seed corn is going for. I'm told a bag of seed with all the latest traits will cost me as much as $360 per bag. This is a real issue for farmers." Representative Kuhn then held up the latest edition of Farm Industry News. He ripped off an advertisement on the cover, which touted higher yields for certain crop genetics, and read the title: "$500 Seed?" Talk of seed prices potentially reaching $500 per bag couldn’t have been more fitting to the evening’s discussion.
Fred Kirschenmann of the Leopold Center for Sustainable Agriculture at Iowa State University provided prospective on the lack of seed varieties available to farmers today and the danger this poses to American agriculture. “Once you lose an important seed variety, you can’t go into your toolshed and make a new one,” he said. “Because of specialization and concentration in agriculture, we have dramatically lost many of our seed varieties which I would argue is the treasure chest that we’ll need for our future agriculture.” He highlighted the need for different breeding agendas that work for farmers instead of industry.
George Naylor, past president of the National Family Farm Coalition, took the stage after Kirschenmann to discuss his involvement as a plaintiff in an antitrust case against Monsanto. He explained how the experience taught him that economic power leads to political power. He then described a field day he recently attended where a Monsanto representative was the only seed company invited to talk. When Naylor inquired about the one conventional variety in the test plot, he was told it would only be available as a triple stack variety. We are told this is becoming a trend as Monsanto works toward greater market penetration of its expensive triple stack varieties.
Thanks to OCM pressure, Attorney General Tom Miller’s office is paying close attention to our perspective regarding the ongoing antitrust investigation focused on Monsanto’s anticompetitive conduct in the seed trait industry. We’ll continue to support state Attorneys General working on this investigation and ensure that the concerns of farmers and independent seed companies are heard. As we do this, we encourage our members and friends to do their part. Write a letter to the editor asking your state Attorney General to support this important investigation. Gather signatures on a petition supporting this investigation at your next business meeting, conference, or potluck. All of these materials can be found on OCM’s website in the “Download Gallery.” And each piece builds on the next, necessary small steps toward strengthening and expanding grassroots support.
Leaving the Station – How the Monsanto Profiteering Train Roles
By Matthew Dillon
September 2008
On August 12th Monsanto hosted “Whistle Stop Tour III” at their
Monmouth, Illinois research facility. Monsanto press releases referred
to the event as a “field day” for investors and financial analysts.
Those marketing gurus at Monsanto sure love to co-opt language as much
as their lawyers like to appropriate farmers’ rights and public
germplasm. The folksy sound of a “whistle stop tour” and a “field day”
are quite suggestive of bygone days.
Field days use to be an opportunity for farmers to visit public
research stations (where did those go?) or even a neighboring farm and
learn new techniques and share information. That was before farmers
feared their neighbors spreading accusations and rumors of their being
a seed saver of course. Whistle-stop tours were a way for the populace
to interact with candidates and elected officials. The August 12th
event was neither for farmers nor the populace, but rather a platform
to announce to the wealthiest of investors and traders how Monsanto
plans to double gross profit by 2012, and how these numbers will
benefit shareholders. Good ole folksy rural fun – celebrating how you
can charge the farmers more and daydreaming about that new yacht your
stock dividends will keep afloat.
This growth in profitability will be primarily from seed (particularly
in corn and vegetable seed) as compared to herbicide and other
products. Profits in seed are clearly linked to Monsanto’s continued
acquisitions of other companies (which extends their market share) and
to an increase in licensing payments for proprietary technologies.
Additionally, new profits will come from Monsanto’s plans to create a
new pricing structure, where the farmer who most needs their traits
pays the highest price.
The biggest news in acquisitions this summer was Monsanto’s agreement
to invest in a Chinese corn seed company. Currently producing 67
million acres of corn, China is poised to be a major competitor in the
global corn products market. Coincidentally (?), the Chinese government
gave approval to biotech corn and soybeans a week after Monsanto
announced the new joint venture so the market for Monsanto traits is
going to get big real quick.
Monsanto announced at the Whistle Stop Tour that they will increase
market penetration and profit in their tripled stack traits. US Farmers
planted 28 million acres of Monsanto's triple-stack corn in 2008, and
estimate that it will increase to 35 million in 2009, reflecting more
than 65 percent penetration. I’d love to see a study of farmers
purchasing varieties with triple-stacked traits that questioned if they
bought them from need, or because their single and even double-stack
traits are no longer available. The truth is: Monsanto doesn’t even
want competition from its own trait packages. RoundUp Ready resistance
is all that you what you want? Tough luck, they only license that trait
to your dealer stacked with above and below ground pest protection as
well. They see an opportunity to make more money selling you all the
add-ons, and so are making it impossible for a farmer to just buy the
single trait.
Monsanto calls their new pricing plan a “value-based pricing model”.
The model creates seven pricing zones in the United States based on
pest pressure. Pricing of the traits is linked to the value the farmer
receives from combating pests with the trait. If you really need it,
you’re going to pay as much as you can afford to pay for it.
Value-based pricing models are becoming quite popular. Microsoft used
the “value-based” pricing argument when defending itself in antitrust
hearings in 2000. They claimed that, yes, they could have made money
charging customers $49 for Windows 98, but that customers received
value in the operating system that allowed Microsoft to charge $98 for
it. Justice Thomas Jackson referred to Microsoft’s maximizing of
profits through the value-based model in his verdict (USA vs Microsoft,
Section H6), which found them guilty of breaking US competition law.
The case also detailed how Microsoft forced consumers to buy upgraded
operating systems, much like Monsanto does with forced upgrades to
triple-stacked traits.
We’ll continue to work with farmers and other partners in the OCM seed
concentration project to draw attention to these types of practices. We
can only hope that state Attorneys General and the US Department of
Justice will begin to see the patterns in how a single dominant player
uses market penetration to force customers to pay unfair market prices
for products, as well as pay for extra bells and whistles. Got to keep
the investor profit train rolling. All aboard?
By Kristina Hubbard
September 2008
By now you've heard that some seed corn will cost $300 per bag this
fall (a $100 increase in some regions). As farmers contend with higher
fuel and fertilizer costs, and food prices increase around the world,
Monsanto thinks it's entitled to a bigger piece of the pie by
dramatically increasing prices of its traits. While some may disregard
the higher seed prices by asserting that farmers have less expensive
options, the reality is that farmers have less seed options than ever
before.
For example, Monsanto is aggressively pursuing greater market
penetration of its expensive triple-stack corn traits and plans to
increase acreage of triple-stack varieties by millions of acres in
2009. Farmers already tell us that it's difficult to find good modern
corn and soybean varieties that have a single Monsanto trait, that are
less expensive and not stacked with other expensive traits that they do
not want and do not need. Monsanto's dominance and anticompetitive
conduct in the marketplace ensures that competitors' products aren't
easily accessible to farmers. So, locating alternatives to $300 seed
corn will only become more difficult if Monsanto's market power goes
unchallenged.
Curious as to how much money this price hike can drain from rural
America? Here's one example: if a farmer in Iowa who farms 1,000 acres
plants one of these expensive corn varieties next year, the cost per
acre will increase from $82 to $123, or a gross increase of more than
$40,000. We've crunched the numbers for you and created a data table
that reflects the cumulative drain on farms by state (view chart).
It's pretty clear that Monsanto has quashed competition to the extent
that it can raise prices unencumbered. It seems farmers have never had
more forces against them, which is all the more reason for state
attorneys general to ramp up their investigation into Monsanto's
anticompetitive conduct in the seed industry. We’re no longer talking
about the future marketplace; we're talking about unfair prices and
practices happening today. We're talking about $300 seed corn.
OCM Rallies Large Crowd in Missouri to ‘Take Back’ Competition in the Seed Industry
By Kristina Hubbard
August 2008
On Saturday, July 12, 2008, OCM sponsored an event in rural Missouri
called “Taking It Back: Bringing Fairness and Competition Back to the
Seed Industry for Our Farmers.” The event aimed to raise awareness
about the problem of market concentration in the U.S. seed industry and
educate farmers on how they can take action.
A diverse crowd of 164 gathered at Mark Twain State Park. Farmers and
seed companies from across the region, politicians, and
non-governmental farm groups were well represented.
All in attendance enjoyed a diverse line-up of speakers. Bill
Heffernan, Professor Emeritus of the University of Missouri at
Columbia, spoke about the power relationships of agribusiness to
farmers. “We gave them a monopoly and they are making billions,” he
said. James Robertson, a former Mississippi judge, spoke of his efforts
litigating against Monsanto and the tactics they undertook. “They
(Monsanto) are obsessed with wiping out farmer saved seed,” Robertson
said. “It’s the biggest monopoly in the country.”
Troy Roush, an Indiana farmer, spoke of his litigation experience with
Monsanto wherein he spent $400,000 in defending himself against
frivolous litigation. Moe Parr, an Indiana seed cleaner, also told of
his recent legal battle with Monsanto, something he says has broken the
trust between farmers in his community.
State Senator Wes Shoemyer, the chair of the event, spoke about his
attempts to gain a remedy for producers under Missouri state law. Derry
Brownfield concluded the event with his usual colorful talk and shared
his most recent experience with Monsanto.
As follow-up, OCM will engage in a comprehensive strategy to increase
pressure on Attorney General Jay Nixon and continue raising awareness
among farmers and the general public about the problem of concentration
in the seed industry. This strategy includes: 1) providing Jay Nixon a
petition with more than 50 signatures collected at the event supporting
the ongoing antitrust investigation; 2) organizing face-to-face
meetings between OCM members and Jay Nixon; 3) encouraging other
organizations to set up similar meetings; 4) providing OCM members and
partner organizations with additional petitions; 5) providing those who
participated in this event with ongoing opportunities to be involved in
OCM’s Seed Concentration Project; and 6) keeping close contact with the
media, including sending letters to the editor about the antitrust
investigation and providing follow-up materials to media correspondents
who attended the event.
OCM will sponsor similar “Taking It Back” events in other states (see
sidebar), and is already planning a September event in northwestern
Iowa. These events are a crucial piece to our strategy to raise
awareness about seed concentration. OCM will continue to build capacity
from the ground up to apply pressure on state attorneys general
regarding the investigation and empower farmers and independent seed
companies to demand an open and fair U.S. seed marketplace. The timing
of these events and the opportunity to challenge Monsanto’s monopoly
power couldn’t be better. Farmers have already caught wind of even
higher seed prices for next year’s planting, fuel costs are not going
down, and choice in seed is not expanding. OCM is excited about the
momentum behind its Seed Concentration Project. We’re confident that
the outpouring of support that we’ve seen in two short months is just
the beginning of a successful project.
Host an OCM event in your community!
OCM will provide materials, talking points, and even a PowerPoint
presentation to people and organizations interested in hosting their
own “Taking It Back” event. We’ll also help organize the event and get
the word out, as well as provide an OCM staff person when appropriate.
These “house parties” can be as small as 10 – 20 people, and are an
excellent opportunity for sharing information with people concerned
about the problem of seed concentration. These events provide a forum
for discussion, brainstorming, and signature gathering for attorney
general petitions and letters to the editor. OCM is also exploring ways
these events can help fundraise for the Seed Concentration Project.
We’re already in the planning stages for an event in north-central Iowa
and a second event in Missouri. Be sure to visit our website for
regular updates on these events.
Please contact Kristina Hubbard if you or your organization would like
to host an event in your home or greater community. We’ll help ensure
it’s a success!
Monsanto’s Purchasing Spree Continues
By Kristina Hubbard
July 2008
Like many industries, buyouts aren't uncommon in the agricultural
sector. But Monsanto's aggressive acquisition of seeds of all kinds –
the most fundamental component of our food – is troubling given the
company's sordid history and desire to control as much of our food and
fiber as possible.
Between 1996 and 1998, Monsanto bought out or developed a relationship
with the largest domestic and international seed companies in the
world, including DeKalb Genetics, the number two corn seed company.
Only a few major seed companies have survived these buyouts in the last
decade.
Monsanto set its eyes on the fiber market around this time as well
through a $1.5 billion deal to purchase Delta and Pine Land, the
nation's largest cotton seed company. The deal fell through in 1998
under anti-trust scrutiny only to resurface and escape regulatory
hurdles in 2006, giving Monsanto control of 90 percent of the
transgenic cotton seed market. (And did I mention that Delta and Pine
Land came with about 30 of its own subsidiaries?)
Now Monsanto is on another purchasing spree. The company announced in
July that it acquired Marmot, S.A., owner of Semillas Cristiani Burkard
(SCB), the leading Central American seed corn company. SCB specializes
in hybrid corn seed and also produces sorghum, soybeans, and pasture
seed. Monsanto’s control of seed in the region will rapidly expand
where SBC already has a market presence: twelve countries throughout
North, Central and South America and the Caribbean, including more than
900 dealers in Central America alone.
This purchase came just days after it finalized its purchase of De
Ruiter Seeds, a Netherlands-based company that supplies vegetable seeds
to the greenhouse industry (the fastest growing sector in the vegetable
industry, according to Monsanto). After $860 million passes hands, De
Ruiter’s genetic resources and breeding programs will be added to the
Monsanto Empire.
Although Monsanto is known mostly for its soybean, corn, and cotton
seed technologies, the purchase of this vegetable seed company is not
surprising. Monsanto's 2005 purchase of Seminis, the largest fruit and
vegetable seed company, provided it instant control over more than 30
percent of the North American vegetable seed market; more than 20
percent of the world's tomato seed market; and more than 30 percent of
the global hot pepper seed market. With Seminis and De Ruiter
bolstering Monsanto’s revenue, the company could see future vegetable
sales in the upwards of $750 million. That’s 25 percent of the $3
billion global market.
To be sure, a lot of fruit and vegetable research will be influenced
under Monsanto's ownership. The effect of Monsanto’s market power will
extend to popular vegetable varieties and even reach backyard
gardeners.
In addition to its prolific buy-outs, Monsanto maintains unprecedented
control of crop seeds and genetics through partnerships with other
leading biotech firms, such as a recent agreement with Germany-based
BASF.
The two companies announced an exclusive agreement for a new fungicide
seed treatment, part of a $1.5 billion joint effort to develop
high-yielding and condition-resistant crops.
The problem? Monsanto will have exclusive rights to commercialize the
new fungicide in soybeans. The more exclusive licensing proliferates,
the harder it is for farmers to access new technologies in local seed
varieties at competitive prices.
Monsanto says these acquisitions and exclusive agreements will result
in expanded seed options for farmers. We know better. These buy-outs
have resulted in unprecedented concentration in the seed marketplace,
resulting in less choice and higher seed prices for farmers. The only
expansion we’ll see is in Monsanto’s bottom line.
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