ANKENY, Iowa — The attitude was widespread that seed was considered to be in the public domain until the biotech era, said Neil Harl, Charles F. Curtiss distinguished professor in agriculture and emeritus professor of economics at Iowa State University. He spoke on a panel looking at competition in the seed industry at the recent Department of Justice/USDA workshop on market concentration in Ankeny.
The Supreme Court in 1980 decided a key case that allowed the patenting of life forms for the first time.
"We continued to have problems because at no point did Congress exercise any kind of oversight over that patenting process," Harl said.
That was followed in the 1990s by "an almost frenetic move to acquire firms," and the number of seed producers dropped from more than 300 to the handful that exist today."
The discovery and development of Roundup Ready, which was patented, coupled with the use of restrictive licensing gave Monsanto unprecedented influence over even seeds sold by competitors, Harl said.
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"The big problem today is what happens at the expiration of patents," Harl said. "What is it going to take to have a generic market? I hope it will have greater insight and involvement by Congress."
Jim Tobin, vice president industry affairs, Monsanto Company, said intellectual property attracted innovation, new investors and new opportunities for farmers to choose products that help them make money.
There are 23 biotech traits available to farmers in corn, cotton and soybeans, Tobin said. There are 50 traits in the pipeline for corn and soybeans for the next 10 years.
"You have to put the very best germplasm with these traits or farmers won’t buy them, and that’s why there’s such a connection to the seed industry," Tobin said.
Ray Gaesser, a Corning farmer and American Soybean Association vice president, recounted how nervous he was the first time he sprayed Roundup on his soybeans in 1996.
"I watched that crop every day for a week," Gaesser said. "The technology worked, and it transformed me and it transformed U.S. agriculture, and so technology has been very helpful for us."
Gaesser wants to have the use of technology, and he doesn’t want regulators to stifle innovation.
"But at the end of the patent, farmers and consumers want to be able benefit from that patent and have a generic market where we can save money on our seeds, and know that those seeds are registered around the world," Gaesser said. "One of the big concerns we have is the registration process."
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Seed traits markets are very concentrated, said Diana Moss, vice president and senior fellow at the American Antitrust Institute.
"There is in effect a monopolist in the market for traits, and that is Monsanto," Moss said.
Looking downstream at markets for traited seed, Mosanto has broadly licensed its technology, which at its core is a good thing, she said. What’s deceptive is that it gives the illusion of choice.
She draws an analogy to the computer.
"People can buy a Dell, an IBM, a Sony or a Compaq, but when it’s turned on, there is only one operating system," Moss said. "The upstream market for traits is essentially monopolized by a single firm. The downstream market has more competition, but it’s still very highly concentrated."
With concentration comes less choice and innovation and higher prices, Moss said.
The operating system model is not a good analogy for the seed business, Tobin countered.
"If you want to grow soybeans, you don’t need Roundup Ready to make the soybeans grow," Tobin said. "There are people who grow conventional soybeans who do just fine. It’s because farmers choose to use a herbicide-tolerant trait that they ask the seed company to have that for them."
