Monsanto vs Homan McFarling: Judge Clevenger understands
by David Dechant
(Thursday, Dec. 5, 2002 -- CropChoice guest commentary) --Monsanto's prosecution of Percy Schmeiser for saving seed has been well publicized, as it should be. However, Monsanto's other numerous legal actions against farmers need more publicity. The Monsanto v. Homan McFarling case is one such example.
Last week, the Northeast Mississippi Daily Journal reported that Mississippi soybean farmer Homan McFarland will have to pay Monsanto $780,000, unless the US Supreme Court agrees to hear his case and reverses the US Court of Appeals decision, which had found that the Court for the Eastern District of Missouri had not erred in finding Homan guilty of infringing Monsanto's patent.
However, one of the three Appeals Court judges, Clevenger, dissented. He referred to Monsanto's technology agreement as a "contract of adhesion" and, therefore, argued that Monsanto's clause requiring that any disputes be settled in a Missouri court is unenforceable. He wrote, "My colleagues have the honor of making this court the first to enforce a forum selection clause in a contract of adhesion against a defendant in derogation of his constitutional rights." In other words, by requiring that farmers go to trial outside of their home district, the tech agreement violates their Fifth Amendment right to due process under the law.
So just what is a contract of adhesion? It is generally described as a standard form contract. That means it's the same for everyone, written by the party with the strongest bargaining power and offered under the condition of "take-it-or-leave-it," giving the signer no chance of modifying any of the terms.
To any farmer who has signed a Monsanto tech agreement, this sounds familiar. All farmers sign the same contract, and the terms are, in fact, lopsided and very much in Monsanto's favor. There has been no bargaining on farmers' behalf for better terms. If farmers want to plant Roundup Ready (RR) soybeans, they have to sign the contract whether they like it or not. And, as Clevenger notes, over 200 seed companies offer RR soybean seed, but all require that farmers sign Monsanto's technology agreement.
Upon noting that the majority of soybeans planted in the US are Roundup Ready and that Mississippi farmers have weeds that are especially difficult to control without Roundup, Clevenger says, "Taken together, these facts indicate that farmers like McFarling have little choice but to sign the Technology Agreement if they wish to remain competitive in the soybean market."
This is most refreshing to hear! At least there is one Judge who has enough sense not to fall for the simplistic argument that farmers don't have to plant patented seed if they don't want to. Clevenger hits the nail right on the head: the need to be competitive forces many farmers to plant RR soybeans, even if they don't like the tech agreement. And, it's not just in Mississippi. Several Midwestern farmers say that a lot of landlords now expect weed free soybean fields, so if they want to rent land, they have to grow RR soybeans to keep the landlord satisfied.
To further expand on Clevenger's argument, what would happen if Monsanto succeeds in its quest at the World Intellectual Property Organization and the US Patent and Trademark Office to patent soybean genes and genetic markers that confer high yields? One result could be, for example, that Monsanto monopolizes traits that help soybean varieties that produce 10 percent more. Then, it would be able to collect tech fees on nearly 100 percent of the acres planted to soybeans, as no farmer could stay in business growing lower yielding soybeans, and no seed company would be able to sell soybean seed without incorporating Monsanto's patented traits.
Furthermore, the macroeconomic effect of wide scale adoption of RR soybeans makes the tech agreement and Monsanto's iron handed enforcement of it particularly onerous. That is, because soybeans have become easier to grow, more of them are grown, and because a big crop in the aggregate is always worth less than a small crop, soybeans are cheaper than they otherwise would be. In fact, any individual benefit a farmer receives growing RR soybeans is negated or even reversed by having to sell his crop cheaper.
As Iowa State University agricultural economist Neil Harl aptly notes in describing a phenomenon he calls the Great Paradox, "The aggregate effect of these crops is to increase output, but because of inelastic demand, producers receive less money." So while farmers have to adopt new technologies to remain competitive, that same technology puts financial pressure on them. While this has been occurring for years, the one thing that's different with biotechnology is that farmers are expected to give up their traditional rights, such as seed saving. So, it should be no surprise Monsanto expects them to give up their Fifth Amendment rights, too.
So how hard is it to stay clear of Monsanto and its tech agreement? With RR soybeans now making up three fourths of soybean seed sales, it is hard not to buy RR soybean seed. For example, I told my seed salesman months in advance that I wanted six bags of short season soybean seed to plant as a trial, as I had never grown soybeans before, not being a traditional crop here in Colorado. I emphasized that I wanted conventional, non-GMO seed. But when the salesman delivered the six bags, they were all RR. When I asked the salesman why he didn't bring conventional seed, he said, "that's all I could find in a short season variety. Take the seed, get it off my hands." I told him, "thanks but no thanks," and he loaded the six bags back onto his pickup.
Moreover, seed companies are combining other traits in RR soybeans. Last year's Garst seed catalog, for instance, advertised 12 new cyst nematodes resistant varieties as the "dirty dozen." However, all twelve were RR, so if a farmer wanted to plant one of these new nematode resistant varieties, he would be planting a RR variety. And, as a recent Soybean Digest article reports, "With the exception of a handful of food-grade/conventional soybeans, Roundup Ready varieties are the list of new selections for the 2003 planting season."
In the end, if the Supreme Court allows the Appeals Court verdict to stand, Homan McFarling is likely to lose everything. He has a reported net worth of $75,000 and all he'll have to show for a lifetime of hard work is a huge debt to Monsanto. And, it will be a miracle if his health isn't affected, too. Again, making this particularly onerous is the fact that Monsanto eagerly introduces its patented seed into countries where it knows fully well beforehand that it cannot prohibit seed saving, like it did in Argentina, China, and wants to do in Brazil. In fact, it is still releasing new varieties in Argentina, even though it cannot stop seed saving.
Perhaps if North American farmers had someone to negotiate the tech agreement on their behalf, they would have gotten far more amenable terms. Daniel Charles reports in his book, "Lords of the Harvest," that Pioneer seed company paid a mere $500,000 to Monsanto for the right to use the RR gene forever. In fact, given the volume of seed that it sells, Pioneer could have charged no or very little tech fee, rather than following all other seed companies in charging a uniform fee.
Monsanto doesn't have to rule with an iron hand. A chart in the USDA's Economic Research Service report, "Agricultural Research and Development: Public and Private Investments Under Alternative Markets and Institutions," shows that at least 73 percent of the soybean and cottonseed planted in 1992 was purchased new, and this is before the Plant Variety Protection Act was tightened up in 1994. And, the share of new seed sold every year can be even greater, if seed companies would give a little friendly encouragement and keep the price reasonable.
Finally, it is important to remember that making crops easier to grow or making them produce more doesn't always benefit farmers. It doesn't take a PhD to figure out that when something is easier to grow, fewer farmers are needed to grow it. Or alternatively, more of it gets grown, again hurting farmers because a big crop in the aggregate is usually worth less than a small one.
In no way does this mean that production-increasing technology should be rejected. The point is that when farmers don't benefit upon wide scale adoption and when consumers don't want to eat food grown with such technology, why be in a big hurry to adopt it and spread it around the world? Something first should be done about the terms under which competitive pressures force farmers to eventually adopt it. Otherwise, there are going to be thousands more farmers who find themselves in a legal battle with an infinitely more powerful opponent.
About the author: David Dechant grows alfalfa, corn and wheat in Colorado.
1. Monsanto did not get any U.S. patents on soybeans for discovery of high-yield markers.
However, it still could get one on any given Tuesday! It appears to have filed for a patent on glycine max plants and seeds. The company named the United States as "designated state" for its patent application published under the Patent Cooperation Treaty (publication number WO/0018963). Extreme secrecy makes it difficult to know whether the U.S. Patent and Trademark Office will issue a patent corresponding to the above number.
2. Monsanto has applied for another, very similar patent in the United States. The representative patent claim is as follows:
Claim 23. "A Glycine max plant comprising an allele of a quantitative trait locus located on linkage group U03 associated with enhanced yield in the Glycine max plant, wherein said Glycine max plant has a yellow seed coat and wherein said allele of the quantitative trait locus is also located on linkage group U03 of a black seed coat Glycine max PI290136 plant and linked to a DNA molecular marker selected from the group consisting of SEQ ID NO: 19-37."
Patent Application Number: 10/037,598
Filed in US: 04 January 2002
Patent Owner: Monsanto
Status: Sitting in the Patent Office waiting for examination to begin.