Monday, May 27, 2013

Monsanto: the ultimate rent seeker

In over 400 cities across the world, thousands of people are protesting Monsanto. Why?

Monsanto owns 90% of the US seed market much to the detriment of the consumer. Monsanto's dominance of the seed market is not possible without tremendous assistance from state and federal governments. That assistance starts with seed patents that claim resistance to glyphosphate herbicide, aka, Round Up. The seeds sold by Monsanto are "Round Up Ready". As a patent owner, Monsanto is prone to rent-seeking behavior. Let's take a closer look.

Monsanto claims rights to the use of the seeds. In Bowman v Monsanto, the Supreme Court ruled that patent rights are not exhausted with the first sale of the seeds. A farmer named Bowman bought seeds with the patented genes intended for use as feed grain and planted them instead. Monsanto became aware of this use of the seeds and sued. This ruling means that you can't buy their seeds and plant them without buying a license to do so.

Monsanto has also sued and prevailed in court against farmers who had crops that happened to be pollinated by Round Up Ready crops. Organic farmers are suing Monsanto for contaminating their crops with the pollen. Monsanto is winning in the courts, again, to the detriment of the people.

All the while, Monsanto is earning billions from its seeds with patent enforcement from the government. Without patent enforcement, Monsanto could not prevail in court, farmers would be free to use the seeds and that would wipe out any incentive for Monsanto to continue their research. On the other hand, if the seeds were not patented, a green field would open for innovation in seeds.

Unfortunately, all of this business has occurred without extensive, long-term field testing of the environmental impact of the seeds. In fact, Phil Angell, Director of Corporate Communications, Monsanto, was quoted by the New York Times Magazine, October 25, 1998 as follows:
“Monsanto should not have to vouchsafe the safety of biotech food.... Our interest is in selling as much of it as possible. Assuring its safety is the FDA’s job”
There's something wrong when any company is unwilling to be accountable for the safety of its products. We might be able to trust the FDA, but as long as Monsanto can hold out the promise of a a very high-paying job to FDA employees, that might not happen. It is also interesting to see that a company with so much power is not willing to acknowledge any liability for the use of their products.

Rent-seeking tends to make the ends justify the means. Just ask Roy Blunt (R), Senator from Missouri. He defends the Monsanto Protection Act as necessary and objects to any effort to repeal it. He doesn't think that farmers should be held liable for seeds that were permitted to be grown in the first place.

If the seeds are safe, why the strenuous resistance to labeling? Bernie Sanders introduced a bill that would allow states to determine if GMO foods should be labeled. Ironically, the biggest supporters of states rights, the GOP, rejected this bill. Apparently, the House and Senate GOP delegations do not think that states should have the right to regulate food grown in their own states. Notably, Hawaii disagrees.

The FDA, the EPA and our Congress seem to be following two principles: "Do nothing. Stay the course." Listening to the people is not included in their to-do list.
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