Monsanto's Ever-Stronger Stranglehold on the Seed Industry

The seeds of Monsanto Company (MON) are everywhere in the typical American diet; in those corn chips, corn flakes and soy milk, yes, but also in the yogurt, hamburger and sausage McMuffin; in the soda, candy bars, barbecue sauce and sandwich bread.

A new investigative report by the Associated Press, based on a series of confidential licensing contracts, reveals that not only are Monsanto-patented genes in 95% of the soybeans and 80% of the corn grown in the U.S., but that the company's control over the seed industry is so ironclad, prices are sure to rise precipitously in the next several years.
When prices for corn and soy go up, so do the prices for many American groceries, especially animal products. About 43% of the corn grown in America is slated for animal feed; this affects the cost of both conventional meat (beef, pork and chicken -- even fish) and dairy products. And Neil Harl, agricultural economist at Iowa State University, tells the AP that the way Monsanto controls the seed industry is linked to high prices. The state of the seed genetics industry today, he says, is "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."

Monsanto's Licensing Agreements Are Under Investigation

Last year, Monsanto raised prices sharply; some corn seeds were up 25%, and soybean seeds were up 28%. For 2010, most corn seeds will see a 7% increase, although soy prices are still in limbo, a company spokesperson told the AP. The Department of Justice and the state attorneys general of Iowa and Texas are currently investigating Monsanto over these licensing agreements, though none of the parties involved will discuss the investigations.

At issue is the extraordinary power of the licensing agreements between Monsanto and around 200 smaller competitors that use the big company's genes in their own corn and soy strains. Companies that use Monsanto's genetic property aren't permitted to cross the resulting seed with another competitor's genetic property, unless they obtain written permission from Monsanto -- effectively stopping all partners from interacting with each other or any unconnected companies. In other words: Nobody makes genetically modified corn or soy seeds without Monsanto's say-so.

Another provision in some older versions of the contracts obtained by the AP was an offer of sharp discounts if small companies would use mostly Monsanto seeds, or for at least 70% of their corn seed inventory. These discounts are no longer offered, says Monsanto, because so many farmers already use the big company's seeds. Other objectionable provisions involve strict confidentiality clauses that include the retaliatory measure of canceling all other contracts if partners reveal any part of the agreements; and clauses ordering the destruction of seeds containing Monsanto-patented genes if partners change ownership.

The Impact of Genetically Engineered Seeds

So much has been made of the impact of genetically modified seeds generally, and Monsanto specifically, over the past several years that the picture of the company's place in the agriculture industry -- and in the bellies of consumers -- is both murky and contradictory. Seed engineering is variously considered a perilous development; a largely harmless technology that has nonetheless given rise to ethical concerns; and the salvation for farmers and hungry people.

The real answer, as I see it, is that even a crop bred to use only one pesticide is still a crop that uses pesticide, and many of today's eaters would rather never consume chemicals. Also, there is no study I'm aware of that proposes only one pesticide is better for the environment than none at all. What's more, protecting natural genetic diversity of both plant and pest species is something most scientists agree is, in the end, the best way to sustain the environment and the soil for future generations of farmers; Monsanto's Roundup Ready crops do none of this.

A world in which all of the corn and soy seeds are genetically engineered to resist the same pesticide is probably a world in which global hunger will exponentially increase and superbugs will evolve to eat those specially engineered crops.

Heavy-Handed Tactics

Even without the uncertain hazards or long-term benefits, there is Monsanto's unusually heavy-handed application of its intellectual property. One case, against Canadian Percy Schmeiser, a 40-year veteran of canola farming, was particularly colorful. Schmesier says Monsanto's seed "contaminated" his fields; and then, they sued him for stealing their property. (He's not permitted to discuss the case following a settlement he calls a "victory.") Schmeiser's case is one of the most sensational; but a number farmers have been sued for saving seed (Monsanto's agreements prevent this age-old practice) or for simply growing the seed that blew into their fields.

Monsanto is not skilled at making friends (if you want proof, look at Facebook, where Monsanto has 1,056 fans and an anti-Monsanto group has over 48,000 members). The company even ran a toll-free telephone number that farmers were encouraged to use to turn in neighbors who were saving or stealing seed. Charisma is not its strong suit, and in the court of public opinion, Monsanto has already been found guilty of something. But is it price-fixing? Monopolistic behavior? Most importantly, will these heavy-handed tactics eventually show up as higher prices at the grocery checkout stand?

Well, maybe. Due to the ubiquity of corn and soy in American grocery items, rising prices for these commodities are often blamed for fluctuations in food prices. Corn sweeteners are found in every aisle of the grocery store, in the majority of foods and shelf-stable soybean oil is found in nearly as many. There is some correlation, but it's more speculation than fact; in actuality, for most of the foods that have corn or soy listed as ingredients, the portion of the products' cost due to either commodity is generally only a few cents (even for corn meal, corn flakes and soy milk). Far more directly correlated with grocery prices? The price of oil, which is needed at all points along the production chain, from fertilizer in the farmer's field, to fuel for the tractor, to plastic for the packaging, to diesel to run the truck that delivers the products to the store.

In a roundabout way, the widespread use of genetically modified seeds whose prices are controlled by a single company must increase the cost of food. Farmers are prohibited from saving their own seed and are beholden to the company for its pesticide; soil bereft of both helpful and beneficial organisms requires far more fertilizer; the production and transportation of the fertilizer and pesticide and seeds require fossil fuels. Far more external, annual inputs are required in a genetically engineered agricultural system. With the increased use of energy, demand is greater, oil prices go up, climate change is exacerbated, everything gets more expensive.

Even if one is a believer in the revolutionary salvation portended by genetically modified seeds (and Monsanto is the prophet), the basic economic truths are that their use in the majority of farms will, eventually or immediately, make groceries more expensive. Whether or not Monsanto has done anything illegal or even unethical, I can't see how the company is working for the common good of anyone but its shareholders, its warm and fuzzy taglines notwithstanding.


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