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March 15, 2010

Seeding monopoly

It made sense that the first USDA/Department of Justice workshop on competition in agriculture reserved a panel to focus on the beginning of the food chain: the seed industry. 

The panel at the March 12 workshop in Ankeny, Iowa zeroed in on Monsanto's control of the seed industry, primarily for corn and soybeans. The Justice Department has begun a preliminary investigation of Monsanto's practices in the soybean market. Seven state attorneys general are also investigating Monsanto's soybean pricing practices - where the company holds an estimated 93 percent market share, reports Bloomberg. Monsanto's practices were a common target at a Thursday night townhall forum in Ankeny that we blogged about last week.

For farmers at the workshop, rising seed prices and the lack of choices in the marketplace were the issue. Seed prices have risen some 146 percent since 1999, and 64 percent in just the last three years, according to a report by the Farmer to Farmer campaign. (For more on rising seed prices, see Dr. Charles Benbrook's comparison of organic and biotech seed premiums.)

Iowa grain farmer Eric Nelson told the 800 plus attendees that rising technology fees for biotech crops ate away any potential profits he might gain from increased yield. Nelson said he can get the same yield gains with conventional crops, and get a premium price. One of the main problems, according to Nelson, lies with current land grant research, which is funded by the big seed companies and not serving the greater public.

"We need to require that all germplasm be available to the public," said Nelson. "We need to look at the safety and wisdom of granting long-term patents on living things."

Not surprisingly, Monsanto VP Jim Tobin had a different view. Tobin argued that patents has attracted a great deal of innovation that wouldn't have occured otherwise. He said that innovation continues today - with a pipeline full of new products coming on the market. "There's a lot of choice today, they'll be a more choice in the future and tremendous competition for the farmer's needs," said Tobin.

The American Antitrust Institute's Diana Moss, who has written extensively on Monsanto's domination of the seed industry, was blunt in her analysis. She described the seed platform as essentially two markets, one for traits and another for traded seed.

"We've seen an increasing degree of vertical integration among these two markets," said Moss. "In the traits market, there is in effect a monopolist in Monsanto. In the downstream market, they give the illusion of choice."

Moss compared the seed industry to Microsoft's Windows operating system. You may buy a Dell or a HP or any number of computers - but they all have the same operating system. The result has been rising prices and less innovation.

The control of seeds goes to the heart of agriculture - both at the international and local level. While the USDA co-organized this workshop on Monsanto's control of the seed industry, earlier this month USDA Secretary Tom Vilsack touted efforts to gain greater acceptance of biotech seeds in other countries as part of the Administration's efforts to increase agricultural exports. And for those working to expand vegetable production targeting local markets in the U.S., keep in mind that Monsanto also owns Seminis, the world's largest vegetable seed company.

Scrutiny of the seed industry deserves much more than one panel at one workshop. The USDA and Department of Justice should add another workshop to their plans this year to focus exclusively on the seed industry.

Ben Lilliston

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