Indiana Grain Company, LLC

Posted: 03/12/10

By: tomgrisafi

We at Indiana Grain will be curious to see what Agriculture Secretary Tom Vilsack has to say today.

The Justice Department began an antitrust investigation of the seed industry last year, with an apparent focus on Monsanto, which controls much of the market for the expensive bioengineered traits that make crops resistant to insect pests and herbicides.

The investigation is just one facet of a push by the Obama administration to take a closer look at competition (or the lack thereof) in agriculture, from the dairy industry to livestock to commodity crops, like corn and soybeans.

Today, as the spring planting season approaches, Eric H. Holder Jr., the attorney general, and Tom Vilsack will speak at the first of a series of public meetings aimed at letting farmers and industry executives voice their ideas. The meeting, in Ankeny, Iowa, will include a session on the seed industry.

The Iowa attorney general, Tom Miller, has also been scrutinizing Monsanto’s market dominance. The company’s genetically engineered traits are in the vast majority of corn and soybeans grown in the United States, Mr. Miller said. “That gives them considerable power, and questions arise about how that power is used,” he said.

Critics charge that Monsanto has used license agreements with smaller seed companies to gain an unfair advantage over competitors and to block cheaper generic versions of its seeds from eventually entering the market. DuPont, a rival company, also claims Monsanto has unfairly barred it from combining biotech traits in a way that would benefit farmers.

In a recent interview at Monsanto’s headquarters in St. Louis, its chief executive, Hugh Grant, said that while his company might be the market leader, competition was increasing as the era of biotech crops matured.

In a seed market that Monsanto dominates, the jump in prices has been nothing short of stunning.

Including the sharp increases last year, Agriculture Department figures show that corn seed prices have risen 135 % since 2001. Soybean prices went up 108 percent over that period. By contrast, the Consumer Price Index rose only 20 percent in that period.

Many farmers have been willing to pay a premium price because the genetically engineered seeds that make up most of the market come with advantages. Genetic modifications for both corn and soybeans make the crops resistant to herbicides, simplifying weed control and saving labor, fuel and machinery costs. Many genetically engineered corn and cotton seeds also resist insect pests, which cuts down on chemical spraying.

Today more than 90 percent of soybeans and more than 80 percent of the corn grown in this country are genetically engineered. A majority of those crops contain one or more Monsanto genes.

Source: Bloomberg, New York Times

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