In Iowa, a Look at Agro Firms’ Business Practices
In today’s issue of C&EN, I offer my eyewitness account of the first in a series of U.S. Department of Justice and Department of Agriculture public workshops examining possible anti-competitive business practices in agriculture.
As we’ve reported in previous issues, DuPont has been in a protracted legal battle with rival firm Monsanto over Monsanto’s gene trait patents and license restrictions. Monsanto is only nominally a chemical company these days (it still makes Roundup herbicide), while chemical firms like DuPont, Dow, Bayer, and Syngenta have all entered the genetically modified seed market in a big way. Court decisions as well as government regulations are likely to have a big impact on how GM traits are commercialized.
In recent years, Monsanto’s business practices have attracted a great deal of negative publicity. It was singled out for criticism in 2009’s popular documentary film Food, Inc. Back in 2008, Vanity Fair published a long feature titled Monsanto’s Harvest of Fear that must have given the firm’s executives serious heartburn.
My trip to Iowa to attend the workshop gave me an opportunity to take a bit more of a personal interest in this story. This week I will post some additional information and anecdotes from the visit that I was not able to cover in my print story.
To start things off, I would like to offer a brief Q&A with Monsanto on some of the major points of contention that have brought the company to the attention of the Obama Administration. I’d like to thank Monsanto spokeswoman Kelli Powers for responding to my questions.
C&EN: Farmers have concerns about consolidation in the seed industry affecting their choices not just of GMO seeds, but of the availability of conventional seeds. Those who buy conventional seeds are worried that those products are not being developed and sold in sufficient variety as companies like Monsanto increase the proportion of seed companies that they own. Is Monsanto’s “vertical integration” limiting farmers’ choices in non-GMO seeds?
Powers: Monsanto and many other seed companies continue to offer, and breed with, conventional seeds.
C&EN: Two main pieces of information put together seem to have attracted DOJ’s attention. One is the overwhelming market share that Monsanto has in GMO seed traits. The other is the rapid rise in the price of seeds.
The implication is that high profits would naturally invite more competition, yet there is very little competition. Are Monsanto’s business practices to blame? Why or why not?
Powers: Monsanto has invested in biotechnology over the last 30 years, starting at a time when this technology was considered a financially risky alternative vs. the proven investment in agricultural chemicals. That early, sustained investment has led to an unprecedented amount of innovation that has helped farmers produce more using fewer resources.
Other companies followed, but not seriously until 15 to 20 years later when the technology, acceptance and business were proven. It should be no surprise most of the early traits are from our work.
Monsanto’s early decision to widely license its technology had made the company’s innovations broadly available to farmers across the country through the seed companies of their choice.
Today, these investments have generated robust competition in agriculture in which hundreds of seed companies offer thousands of varieties of seeds and now dozens of different traits available to earn the farmers business annually.
C&EN: Monsanto is being challenged in court about restrictive language in its technology license agreements, which competitors and licensees complain prevents them from creating the best blend of traits. How absolute is the right to control what customers do with trait technology, in Monsanto’s opinion?
Powers: To clarify, Monsanto’s ongoing litigation with DuPont relates to one license agreement, and that is the license agreement with DuPont/Pioneer for the Roundup Ready trait. The terms of our license agreements are confidential, but in this case, some of the license agreement has been made public through the court proceedings. As a result of that, we can tell you that DuPont/Pioneer has the right to stack any trait with Roundup Ready with one exception, and that’s another glyphosate-tolerant trait.
We believe that Monsanto’s broad licensing approach has made a huge difference in the choices available to farmers. This approach has been an important step in putting farmers first in our business.
C&EN: How do you respond to the number of people who draw parallels between Monsanto and Microsoft and say the seed germplasm should be considered a “platform” similar to a computer’s operating system?
Powers: This analogy simply does not work. Traits are not like an operating system since they are not essential to making a plant grow. Farmers choose new products every year and every year they can switch traits, varieties and brands. The same is true for seed companies.
Additionally, competitor technologies like Bayer’s Liberty Link or DuPont’s STS continue to offer alternative platforms for farmers and seed companies to choose, if they desire traits. Conventional seed also is available and works well for many farmers.
C&EN: Can you briefly outline Monsanto’s plans for Roundup Ready 1 soybeans when they come off patent in 2014? How might generic competitors create and distribute RR seeds including for export? When can they start this process?
Powers: See our blog posts at the links below. Monsanto has committed to maintaining the regulatory estate for Roundup Ready at least three years beyond the 2014 patent expiration, to enable generic competitors to produce and distribute generic seeds.
Powers also refers readers to Monsanto’s letter to the American Farm Bureau Federation (PDF)