Why "Too Big to Fail" Doesn't Work in Agriculture Either

We hear a lot these days about the dangers of "Too Big to Fail" banks, but we should probably be hearing more about "Too Big to Fail" agricultural companies who have dominant positions in the marketplace.

This article at the Daily Yonder is the best survey of the consequences of Monsanto's stranglehold on corn and soy crops in the U.S. It presents what I think is an even handed well researched perspective on the issue. It is a selection of excerpts from a report titled, "Out of Hand: Farmers Face the Consequences of a Consolidated Seed Industry." Take note that this is a report from farmers to farmers. 

Monsanto 1

Here are some key excerpts:

...four firms control more than 80 percent of beef packing; three firmscontrol about 70 percent of soybean crushing; and three firms handle 55 percent of flour milling...

The prevailing leader, the Monsanto Company, accounts for about 60 percent of both the U.S. corn and soybean seed market through subsidiaries and technology (i.e., genetically engineered traits, such as Roundup Ready and Bt) licensing agreements with smaller companies. When looking specifically at genetically engineered traits in the U.S., more than 90 percent of the soybean and cotton acreage, and more than  80 percent of corn acreage, is planted with one or more of Monsanto’s traits.

Monsanto manufactures glysophosphate (Round Up) and the portions of the article dealing with this chemical were the most eye opening.

If you are a corn, cotton, or soybean producer in the Southeast or Mid-South, effects of glyphosate’s prolific use is seen in fields and felt in pocketbooks. (Glyphosate is Round-up.) Glyphosate-resistant weeds are now established in 19 states and deemed a serious economic problem, at times adding more than $20 per acre.  Weed specialists refer to resistant weeds as a “train wreck” making their way across the country...

Some of the worst resistance is found in pigweed (Palmer amaranth). Resistant pigweed now infests hundreds of thousands of acres in the Southeast. For example, 70 to 80 percent of Macon County, Georgia, dubbed the “epicenter” of glyphosate-resistant Pigweed, is infested with the weed, and farmers were forced to abandon 10,000 acres in 2007.151

Monsanto 2

Here are the recommendations from the report:

What Should Change

1. The Department of Justice should closely examine anti-competitive conduct in the industry.

Biotechnology firms have merged with or acquired a significant number of competitors, and though some have drawn antitrust scrutiny, no meaningful action has been taken to deal with anti-competitive players. Farm commodity prices are falling and will not sustain escalating seed prices, which continue to put these firms’ primary customers – American farmers – at a disadvantage. Independent seed companies say that the licensing agreements they sign to access GE traits unreasonably restrain competition. Because independent seed companies are important distribution channels for new seed varieties, this market needs to be protected from predatory practices. 

2. Change patent law and establish Plant Variety Protection Act as sole protection.

By establishing the PVPA as the sole means of intellectual property protection over plants, farmers could regain the right to save seed and the right to choice, as plant breeders would have better access to plant genetics that are currently off limits to innovation because of patents.

3. Change the Bayh-Dole Act (Patent and Trademark Law Amendments Act). 

The Bayh-Dole Act as applied to seed patenting and agricultural innovations should be re-evaluated and reformed to prohibit mandates for seed patenting and exclusive licenses relating to technologies and innovations developed through publicly funded research, because such patents and exclusive licenses are reducing farmer choice, reducing researcher access and directly contributing to this increasing trend of monopoly power, higher prices and/or other anti-competitive practices.