Questions Seen on Seed Prices Set in the 90's

By David Barboza
New York Times
January 6, 2004

ST. LOUIS - Senior executives at the two biggest seed companies in the world met repeatedly in the mid- to late 1990's and agreed to charge higher prices for genetically modified seeds, according to interviews with former executives from both companies and to court and other documents.

The Monsanto Company and Pioneer Hi-Bred International Inc. acknowledge that their executives met to discuss genetically modified seeds. Monsanto also said the companies discussed prices, but added that they were engaged in legitimate negotiations about changes to an existing licensing agreement, not illegal price fixing.

Interviews with former and current executives of major seed companies, along with company documents, however, show that through much of the 1990's Monsanto tried to control the market for genetically altered corn and soybean seeds. Monsanto spent billions in the 1980's to invent specialized seeds and sold the rights to make them to big seed companies like Pioneer.

More than a dozen legal experts contacted by The New York Times say that if the goal of the talks between the rivals was to limit competition on prices, they would have violated antitrust laws.

The talks, which occurred from 1995 to 1999, involved licenses that let Pioneer sell altered seeds developed by Monsanto, which is based here. In those talks, according to interviews with dozens of executives and court and other documents, the companies discussed prices, swapped profit projections and even talked about cooperating to keep the prices of genetically modified seeds high.

The talks involved top executives at both companies, including Robert B. Shapiro, then Monsanto's chief executive, and Charles S. Johnson, then Pioneer's chief executive, as well as Richard McConnell, now president of Pioneer, and Robert T. Fraley, now Monsanto's chief technology officer, according to company officials and documents. Together, Pioneer and Monsanto control about 60 percent of the nation's $5 billion market for corn and soybean seeds.

Also in the late 1990's, Monsanto pressured at least two other big seed companies to coordinate their retail pricing strategies with Monsanto's, former chief executives at those companies said. The executives, who ran Novartis Seeds and Mycogen, said they rejected Monsanto's entreaties as anticompetitive and potentially illegal.

Analysts estimate that more than $10 billion worth of genetically altered seeds have been sold in the United States since they were commercialized in 1996. Monsanto and Pioneer did not have to succeed in actually raising retail seed prices to have violated the Sherman Antitrust Act, legal and economic experts say; just agreeing to coordinate prices is against the law.

Companies found to have violated federal antitrust law could be subject to criminal fines and civil class-action litigation. In the civil lawsuits, courts can award triple monetary damages.

"If they're talking to Pioneer about raising the ultimate price to the farmers, that's illegal," said Austan Goolsbee, a professor of economics at the University of Chicago and a former Justice Department consultant on antitrust issues. "Monsanto shouldn't care about the final price. They should only care about the royalty payments they receive from Pioneer."

Royalty payments were at the heart of the matter. Before it realized how successful altered seeds would be, Monsanto sold the technology to some companies, including Pioneer, for relatively modest sums. When the seeds proved to be a hit, Monsanto tried to renegotiate many of those deals to ensure that the seeds sold for higher prices, executives and records show.

Monsanto said it brought up those early agreements only in the context of negotiating a licensing deal with Pioneer for new seeds that Monsanto was developing.

"Monsanto did offer to expand and revise existing licenses with Pioneer," Lori J. Fisher, a Monsanto spokeswoman, said in an e-mail message. "In the context of a potentially new license for technology, it is absolutely within the law to discuss the price and the means of compensation to the licensing party."

Pioneer, a division of DuPont, also denied that the discussions were used to fix prices. "We set our own prices," it said in a statement. "We do it independently, and without consultation with our competitors." It added that it believed that all of its talks with Monsanto about technology licensing were "legitimate and appropriate business negotiations" intended to benefit its customers. "Pioneer at no time engaged in illegal or inappropriate activity regarding the prices of our products," it said.

Some leading antitrust experts, however, said the talks resembled an effort to suppress competition on retail prices for seeds, though they cautioned that they had not seen documents in the case.

Before Monsanto struck the 1992 and 1993 licensing agreements with Pioneer, it had monopoly rights to its technology and could set any price it wanted. But once Pioneer bought the licenses, it became Monsanto's competitor and, legal experts say, the companies were no longer supposed to talk about how much to charge.

"Once you've created the competition," said George Hay, a law professor at Cornell University, "you can't take other steps to snuff it out."

The Justice Department is already looking into whether Monsanto engaged in anticompetitive action in the herbicide market, which it dominates with its Roundup weed killer.

The department is aware of the seed pricing talks, according to government officials. But it is unclear if a formal inquiry has begun. A department spokeswoman declined comment.

And a group of farmers filed a class-action lawsuit against Monsanto in 1999, accusing it of several misdeeds, including seeking to organize a cartel to control the market for biotech seeds. In September, a federal judge here dismissed some claims, but not the accusation of price fixing. The farmers' lawyers have appealed the judge's rulings.

Monsanto began its work on seeds in the 1980's, when it applied the emerging science of genetic engineering to agriculture. One idea was to develop soybeans impervious to Roundup, which would let farmers attack weeds without killing crops. Another idea was to make a type of corn with its own insect repellent, to save the cost and trouble of killing pests.

The company spent hundreds of millions of dollars on these and other projects, and when the first altered seeds were ready for market, it sold the rights to produce and market them. Pioneer was one of the first to sign up, paying $450,000 in 1992 for nonexclusive rights to altered soybean seeds. In 1993, Pioneer paid $38 million for nonexclusive rights to the biotech corn.

Monsanto officials initially viewed the deals as a vote of confidence in biotechnology, former executives said. But soon after, some senior executives complained that the technology had been sold too cheaply.

"I left in '93, and they tried to undo the deal," said Geert Van Brandt, a former Monsanto executive who helped negotiate the 1993 agreement. "They wanted more money; they wanted to have their cake and eat it, too."

By 1995, Monsanto revamped its licensing program to what some executives called a value capture system to reap bigger profits. Under this system, companies that licensed the technology had to require farmers to sign a grower licensing agreement that forbade them to replant seeds saved from harvest. Monsanto also required the companies to charge a technology fee for every bag of biotech seed; licensees were to collect the fee and pay it back to Monsanto.

Most big seed companies - including several that Monsanto has since acquired - agreed to use the system, which legal experts say is a legitimate exercise of Monsanto's licensing and patent rights.

But one major company was absent from the program: Pioneer, which already had the right to sell Monsanto's altered soybeans and corn. Worried that Pioneer might undercut prices being charged by other licensees, Monsanto asked Pioneer to renegotiate the 1992 and 1993 deals, according to executives involved in the talks.

"We bought Roundup soybeans for about $500,000," said Thomas N. Urban, the former chairman and chief executive of Pioneer. "They hated us. Every time we had a meeting, they'd say, `You need to pay us more.' We said, `Why?' "

Monsanto executives wanted to make their pricing system an industry standard, according to former industry executives.

"We had commercial concerns about somebody willfully trading away the value of the technology," said Arnold Donald, Monsanto's former president and a leading figure in the Pioneer negotiations. "If Pioneer and Asgrow went out and charged a normal seed price and didn't put any value on the technology, in that scenario, we have no value."

Asgrow is the nation's biggest soybean seed producer; Monsanto bought it in 1997 for $240 million. Mr. Arnold said he believed that what Monsanto did was legal.

Pioneer, however, was reluctant to go along, according to current and former Pioneer executives, because it saw no advantage in collecting a separate fee for its rival and because it worried about offending customers by adopting the grower agreement, effectively forcing them to buy new seed every year.

But former executives who were briefed on the talks say that Pioneer considered acceding to Monsanto's proposal in exchange for more advanced seeds and for getting the underlying genetic engineering expertise, called enabling technologies, that Pioneer could use to develop new seeds by itself.

Monsanto balked at sharing that technology, according to lawyers and executives. Instead, it offered other incentives, including $25 million, if Pioneer would adopt the grower agreement and technology fee in 1995, according to lawyers. At one point, Monsanto also offered to let Pioneer keep the technology fee just so long as it charged one.

"We said, `Just go with our form and keep the money.' And they didn't want to go," said Mr. Donald, now the chief executive of Merisant, a Chicago company that makes artificial sweeteners.

When talking failed, Monsanto tried a threat. Former Monsanto executives said they told Pioneer they would withhold new technology from Pioneer if it did not renegotiate.

"We said, `You paid us; you have every right,' " Mr. Donald said. " `But now we have a value capture for the industry.' And we said, `If you want future technology from us, you need to honor it.' "

Monsanto and Pioneer, which is based in Des Moines, declined to discuss specifics of their talks.

In 1997 and 1998, Pioneer executives told Monsanto they would agree to simply charge an "elite" or premium price - in effect agreeing not to compete with Monsanto and its partners on price - in exchange for Monsanto's giving Pioneer access to new varieties of modified seeds and the technology to make others, according to people who have seen documents relating to this.

Mr. Shapiro declined to comment when reached by telephone. Other current executives of Monsanto and Pioneer who participated in the talks were not made available for comment by the companies.

In the mid- to late 1990's, Monsanto sought similar agreements from other rivals, according to former seed executives.

For example, Monsanto asked the seed unit of Novartis, the Swiss maker of drugs and nutrition products, to charge premium prices for its altered soybeans even though Novartis, like Pioneer, had a license to market them independently, according to former executives.

"They came to us; they did pose that question," said Ed Shonsey, the former chief executive of Novartis's crop science unit. "We felt it was inappropriate. We refused."

In 1995, Monsanto asked Mycogen, which is based in San Diego, not to compete with Monsanto or its partners on the price of biotech seeds in exchange for access to some of Monsanto's patented technologies, according to former executives and others who were close to the talks.

Carlton Eibl, former chief executive of Mycogen, said Monsanto also sought to combine its seed technology with Mycogen's to bring his company into Monsanto's pricing system.

"They wanted us to license enough of their technology so they could control pricing under the G.L.A.," he said, referring to Monsanto's grower licensing agreement. "That was a fundamental thing about controlling price that we did not agree with. No matter how you look at it, it was anticompetitive." Mycogen later was acquired by Dow Chemical.

Monsanto denied it sought an agreement on price with either Novartis or Mycogen; it said it was simply engaged in licensing negotiations.

GM Crops Linked to Rise in Pesticide Use

by John Vidal
Guardian/UK
January 8, 2004

Eight years of planting genetically modified maize, cotton and soya beans in the US has significantly increased the amount of herbicides and pesticides used, according to a US report which could influence the British government over whether to let GM crops be grown.

The most comprehensive study yet made of chemical use on genetically modified crops draws on US government data collected since commercialization of the crops began.

It appears to undermine one of the central selling points of GM farming - that the crops benefit the environment because they need fewer manmade agrochemicals.

Charles Benbrook, the author of the report, who is also head of the Northwest Science and Environment Policy Center, at Sandpoint, Idaho, found that when first introduced most of the crops needed up to 25% fewer chemicals for the first three years, but afterwards significantly more.

In 2001, the report states, 5% more herbicides and insecticides were sprayed compared with crops only of non-GM varieties; in 2002 7.9% more was sprayed; and in 2003 the estimated rise was 11.5%. In total, £73m more agrochemicals were sprayed in the US during 2001-2003 because of GM crops, says the report, which was commissioned by Iowa State University, the Consumers' Union and others.

During 2002-2003, an average of 29% more herbicide was applied per acre on GM maize. But this trend was not sustained over the eight years. Overall, modest reductions in insecticide usage with maize and cotton were recorded, with no sign that the pests were starting to build up resistance.

UK farm trials found that two of the three GM crops grown experimentally in Britain, oil seed rape and sugar beet, were more harmful to the environment than conventional crops but that GM maize allowed the survival of more weeds and insects. The key to insects' and weeds' survival was the quantity of chemicals used on either conventional or GM crops.

Dr Benbrook said: "The proponents of biotechnology claim GM varieties substantially reduce pesticide use. While true in the first few years of widespread planting ... it is not the case now. There's now clear evidence that the average pounds of herbicides applied per acre planted to herbicide-tolerant varieties have increased compared to the first few years."

Last night, the Agriculture Biotechnology Council, a British GM industry trade group, criticized the findings, saying it was not possible to directly correlate pesticide use with GM crops. "There are lots of seasonal conditions that have effects [on how much pesticide is used]. Global warming is also important. We do not dispute that there was a 20% increase [of pesticides] in 2002 over 2001, but that [2001] was the lowest figure in years."

Peter Melchett, policy director of the Soil Association, said yesterday: "This is compelling evidence that GM maize will lead to higher spray use and serious damage to wildlife if the crop is grown in this country.

"The biotechnology companies have been claiming that GM crops result in large reductions in the use of sprays, and GM maize is their frontrunner for commercial growing in the UK. Until now, there has been no clear evidence over the whole eight years of commercial growing in the US to show their claims are false - that's what the evidence in this report gives us.

"It would be inconceivable for the government to give the go-ahead to GM maize now this damning evidence is out."

However, one of the most important factors involved in the increase of herbicides is thought to have been the recent termination of the patent protection for glyphosate herbicide, made by the leading GM company Monsanto. This is the main chemical the plants are engineered to tolerate.

According to the report, new, competing products have halved prices and encouraged more spraying.

· Tony Blair yesterday said that public opinion would play a part in the development of GM products in the UK. Speaking at prime minister's question time about what impact recent government soundings would have on a final decision on GM in Britain, he said it was "vital that we proceed - by public consultation but also on the basis of the science of GM".

http://www.commondreams.org/headlines04/0108-05.htm

Ever Heard of Hood Robin?

By Devinder Sharma
BioSpectrum, Bangalore, India
January 2004

For Sumitra Behera, 35, a resident of Badibahal village in Angul district of Orissa, selling her one month old daughter for a paltry sum of Rs 10 (approximately 21 US cents), was perhaps the only way to feed her two other daughters -- Urbashi, 10, and Banbasi, 2. Her husband had died about eight months ago. The shocking reflection of the harsh ground realities that prevail throughout the countryside - and Orissa is no exception - will however soon be buried under denials and allegations.

Sumitra Behera supreme sacrifice comes at a time when Ingo Potrykus, the scientist who invented a rice that has been genetically altered to carry a miniscule percentage of Vitamin A, demanded that opponents of genetically engineered crops should be made to stand trial in an international court. "I would make them responsible, have them in an international court and get them to justify the pain and suffering they are inflicting on so many people."

The Switzerland-based Dr Potrykus believes that the 'golden rice' that he has produced will save almost one million children a year from going blind. This prompted the ever-eager Rockefeller Foundation, European Union and the Swiss government to provide US $2.6 million (approximately Rs 125 million) over seven years to the Indian Council of Agricultural Research (ICAR) with the aim to engineer the pro-Vitamin A genes into the local varieties of rice.

If only the same amount of research funding had gone to feed the hungry, over one million impoverished could have been pulled out of extreme hunger in the next seven years. In other words, Dr Potrykus' infructuous [unfruitful] research has deprived at least one million hungry of their basic fundamental right - food. Snatching food literally from the hands of the hungry is perhaps the greatest human crime. How will Ingo Potrykus and his supporters like to be treated for exploiting even the hungry for the sake of amassing more profits for the commercial companies? I leave it to him and his tribe to provide the answer.

In all fairness, Dr Potrykus is not the only one. What about the 2,000 scientists, including several Nobel laureates, who signed the AgBioView Foundation appeal in 2001, urging the US Food and Drug Administration (FDA) not to destroy a mere 3,000 tonnes of genetically modified rice, and instead export it to the hungry millions? Their resolve for hunger vanished when told that they should come and help distribute 45 million tonnes of surplus foodgrains, much of it rotting in the open in India. After all, if they had joined hands, India could have succeeded partially in removing hunger. With 320 million hungry, India alone has one-third of the world's hungry.

What about the Royal Society that castigates the critics of biotechnology, and admonishes the media for printing anything that goes against the commercial interests of the biotechnology companies? What about the Nuffield Council on Bioethics that unethically appoints a working group of experts, all known supporters of biotechnology industry, so as to convince the British government of its 'moral duty' to invest in GM crops research for the sake of developing countries? All of them, the so-called distinguished academic institutions and forums, swear in the name of hunger and malnutrition, but only if it adds to the profit of the GM companies. If it does not bring profit for the companies, let the hungry go to hell.

Let us hear what Prof Derek Burke, a former vice chancellor of the East Anglia University (UK) and a former chairman of the Advisory Committee for Novel Foods ad Processes, has to say about GM technology: " ...the consequence of the loss of this technology for society is the loss of the ability to create new wealth. It's my grandchildren that I'm concerned about. How will they earn their living in 20 years? The answer may lie partly in your hands."

Prof Burke is one of the authors of the Nuffield Council on Bioethics recently released controversial report on the use of genetically modified crops for the developing countries. The report tries to create an illusion as if the interest of the British scientists is the welfare of the poor and hungry in the developing countries. In reality, they are worried at the future of their own scientists, their own children. And you think these are the Robin Hood's of the 21st century? You think they feel compassionately for the hungry and the dying? Think again.

Gone are the days when the legendary Robin Hood would rob the rich and give it to the poor. It is just the opposite now. The rich and elite are sparing no effort to rob the poor, even building profits over the starving millions. Worse still, the hungry are being robbed of what ever little they live with, ironically under the emotional and scientific cover of eradicating hunger and starvation. These are the Hood Robins - always willing to exploit the poor and hungry for the sake of corporate interest.

The Hood Robins change jobs back and forth between corporate agribusiness and the Agriculture Department until the two are indistinguishable. Hood Robins masquerade as scientists, bureaucrats, as educated entrepreneurs and of course as GM food companies. They have successfully co-opted the public sector university research system in a way that means tax dollars support research which ultimately enhances company profits. They help the GM companies spend US $ 119 million for lobbying in 1998 in the US alone. What for? "Educating" the American politicians about the virtues of genetic engineering. Not only the American politicians, they even set up an NGO that regularly imparts orientation courses to the judges from the developing countries.

Scientific research is rigged, alarming evidence of health dangers is covered up, and intense political pressure silences the sane voice of the dissidents. You have probably heard of the four scientists who dared to stand for the cause of 'good science', their voice was silenced for the sake of the neoclassic model of 'sound science', another name for corporate controlled science.

Distortions, omissions, cover-ups and bribes are used to promote an unhealthy and risky technology, and that too with the 'pious' intention of eradicating hunger. Hood Robin's exploits surely read like adventure stories.

Meanwhile, Sumitra Behera has already spent the 21 cents (not enough to buy a bottle of mineral water) that she got for selling her one-month-old baby. She is probably planning to sell her second younger daughter, Banbasi, aged 2. That's the only way she can keep herself alive, fighting her daily battle with acute hunger and deprivation. She is in a way lucky that she continues to survive against all odds. Nearly 24,000 hungry like her die every day the world over waiting for food. Not knowing that Hood Robins have siphoned off the money that was meant to provide them food.

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