Agriculture Giant Has Won Millions In Suits Against Farmers
By Peter Shinkle
Of the Post-Dispatch
updated: 05/12/2003 02:04 AM
Monsanto reaps some anger with hard line on reusing seed
A farmer secretly gathers seed, glancing nervously over his shoulder and wondering whether a neighbor might dial the anonymous tip hot line.
A corporation sends out spies and goes out of its way to make examples out of growers it catches violating patents.
A defiant farm owner makes a stand and is sentenced to prison.
It's a hardball battle out there between an uncounted slice of farmers and Monsanto Co., the agricultural giant based in Creve Coeur that assembled a staff of 75 and a budget of $10 million a year to win it.
For years, Monsanto fought environmentalists over potential effects of its genetically modified seed. Now, it's fighting activists who embrace the seed but not the contract that comes with it.
Farmers generally find the seed easier and cheaper to use. But some resent a purchase contract that says they cannot reuse seed from the crops they grow.
More and more, their differences are ending up in court. Often, that's federal court in St. Louis. In fact, farmers agree to the court venue, convenient to Monsanto, when they sign the agreement.
Monsanto has not yet lost a single fight. But there are still some farmers battling.
Save Our Seed
Mitchell Scruggs hardly fits the profile of an activist.
A 53-year-old Mississippian, Scruggs runs a cotton gin and owns the biggest farm in three counties surrounding Tupelo. Until a few years ago, he had never protested over civil rights, the environment or anything else.
That changed when he found that Monsanto forbids those using its product from the age-old practice of saving seeds from one crop to plant the next. The licensing agreement says they must buy new seed each year.
Now Scruggs is fighting in the courts, by word of mouth and just about any way he can. He helped form Save Our Seed, a farmers' rights group that advocates seed recovery as it has been done for generations.
"I'm opposed to what Monsanto's about," Scruggs said in an interview last week. "They're raping farm communities and breaking farmers, because farmers do not have any other place to go to get this planting seed."
The manufacturer says it is entitled to protect the value of its "intellectual property" and to recover research costs. It says those who violate the licenses commit "seed piracy."
Scruggs, whose family has farmed in Mississippi for more than a century, is among 73 farmers sued by Monsanto in the past five years on civil claims of patent violations. He countersued, saying that the patents are invalid and that Monsanto enforces a monopoly over the seed industry. The case is pending in U.S. District Court in Tupelo.
But many farmers have accepted Monsanto's agreements as legitimate.
Neal Bredehoeft, who works the land near Alma, Mo., and is a director of the American Soybean Association, said his family saved soybean seeds for decades but stopped to use Monsanto's.
"Monsanto has to have the dollars there to do some research," he said. "I believe they are taking the technology fee and doing research to make a better bean."
The company touts a string of victories in the courts, including a $2.5 million settlement with an Arkansas farmer.
Farmers also are turning to the courts. Some have filed class-action lawsuits asserting Monsanto is violating anti-trust laws by gaining control of seed markets. Monsanto denies it.
A farming revolution
Saving seed has long been an elemental part of farming, although some farmers favored the practice more than others. Many have bought seed for generations. In the 1990s, Monsanto began marketing its patented seeds with genetic modifications. They included soybean and cotton seeds engineered for immunity to Monsanto's own herbicide, known as Roundup.
The new technology meant that farmers could simply spray Roundup to kill weeds without taking labor-intensive measures to avoid also killing their crops.
Monsanto says its Roundup Ready seeds make for better crops with less use of chemicals and less work.
Bredehoeft said he will use Roundup Ready seeds for all 1,000 acres of soybeans he grows about 65 miles east of Kansas City. "The Roundup Ready seeds have really improved the economics of soybean farming," he said.
It's so popular that about 80 percent of the 73 million acres of soybeans to be planted in 2003 in the United States are expected to be herbicide-resistant, according to the U.S. Department of Agriculture.
Monsanto says its technology accounts for virtually all of the herbicide- resistant soybean seeds on the market.
Farmers are allowed to take seeds produced from the crops and use them to feed pigs or crush them as fertilizer for a flower bed. But second-generation seeds cannot legally be planted, said Scott Baucum, lead manager for intellectual property stewardship at Monsanto.
Baucum, who grew up saving seed on his family's cotton farm in western Texas, says Monsanto's product is so good that it's worth buying fresh every year.
A bitter harvest
Some farmers don't see it that way. One of them is Kem Ralph, 47, who raises soybeans and cotton with his brother on a farm in Tipton County, Tenn., 40 miles northeast of Memphis.
In 1999, Ralph decided to help Dewayne Hendrix, a longtime friend and fellow farmer.
When they were young, the two men had started out driving trucks for big-time farmers like Lloyd Bentsen, father of the former U.S. senator from Texas. They had finally gotten their own farms, and by the late 1990s, they were each planting thousands of acres near Covington, Tenn.
But in 1999, Hendrix was struggling financially, Ralph would later testify.
Hendrix had used Monsanto's engineered cotton seed in 1999, and instead of complying with the license, he saved a truckload of seed from his ginned cotton and took it to a company in Kennett, Mo., for processing, federal prosecutors say. There, lint was removed from the seed, and it was placed in bags for the next growing season.
It was a risky step. Monsanto has inspectors who visit farmers' fields, and seed handlers to check for crops grown from saved seed. Monsanto also has a toll-free hot line to encourage anonymous tips.
The company says it is unfair that some farmers honor the agreement and others don't. Many farmers share that view.
In December 1999, Ralph arranged for documents to be sent to the Kennett company indicating that the seed belonged to him, not Hendrix, according to a plea agreement Ralph signed in February. Hendrix's brother picked up the seed and signed a receipt indicating it was Ralph's.
Monsanto catches on
Monsanto began investigating Ralph's handling of Monsanto seed. In January 2000, it sued in federal court claiming that testing discovered illicit Roundup Ready seeds in Ralph's fields in 1999.
At Monsanto's request, U.S. District Judge Rodney Sippel ordered Ralph not to move his crops or seed.
But on March 2, 2000, he took a truckload of cotton seed from his farm and dumped it into a gravel pit. With the help of his brother and some farm workers, he used tires and diesel fuel to start a fire that burned for two days.
When Ralph told his lawyer, Lou Leonatti of Mexico., Mo., about the burning, Leonatti reported it to Monsanto's lawyers. A few days later, Monsanto investigators took samples at the burn site.
On March 24, 2000, Ralph unburdened himself, admitting he burned an estimated 900 bags of saved seed.
His actions would cost him. Judge Sippel ordered Ralph to pay Monsanto about $100,000. Sippel also threw out Ralph's defense, which included a claim that he had never signed a Monsanto licensing agreement.
Under Sippel's ruling, Ralph was automatically found to have violated the agreement. A jury considered only how much he would have to pay Monsanto for using the seed improperly, and it settled on $1.7 million.
In February 2003, Ralph pleaded guilty in St. Louis to conspiring to commit mail fraud when he helped Hendrix hide the saved seed. His plea included a finding that Ralph had obstructed justice by burning the seed.
On Wednesday, Ralph was sentenced to eight months in prison and ordered to pay the company $165,469 more.
The enforcers
Monsanto has built a whole department to enforce its seed patents and licensing agreements. It has 75 employees and an annual budget of $10 million, said spokeswoman Shannon Troughton.
The company tries to settle with farmers before taking them all the way to court, but that doesn't always work out, Troughton said. It often turns to Husch & Eppenberger, the big St. Louis law firm that handles much of the company's legal work.
Of the 73 suits filed against farmers, 30 of them are in federal court in St. Louis because of a provision in the licensing agreements that gives Monsanto the choice of having them heard here. The other cases are spread over 19 states ranging from Nebraska, east to New Jersey, and from Michigan, south to Louisiana.
Monsanto also distributes information to farmers and seed companies about its court victories, including five cases that have gone to trial.
A "Seed Piracy Update" brochure published by the company lists the Ralph case as well as judgments of $780,000 against farmer Homan McFarling of Mississippi and $593,000 against Bill "Dude" Trantham of western Tennessee.
When Ralph appeared in federal court for sentencing Wednesday, Baucum, Monsanto's lead manager for intellectual property stewardship, told the judge that others would make decisions "according to the results here today."
Paul D'Agrossa, attorney for Ralph, told the judge that Monsanto has distributed information about his client in an effort to damage his reputation and "destroy his family."
Emerging from court after Judge Richard Webber sentenced Ralph, D'Agrossa said: "I don't believe justice is served by sending Mr. Ralph to jail for one day. As far as I'm concerned, it's a pound of flesh Monsanto has been after for a long time."
Baucum said later: "We have not been focused on doing anything to Mr. Ralph. We have been focused on defending our interests."
Some critics contend that Monsanto has gone too far.
Missouri state Rep. Wes Shoemyer, a Democrat from the rural northeastern part of the state, complained that the company's commercials encourage farmers to inform anonymously on each other.
"They put a rift in the social fabric of America that I absolutely abhor: Look at your neighbor as someone to turn in," he said.
Shoemyer, a farmer, is the sponsor of legislation that would permit Missouri farmers to save seed if they pay a royalty to the patent owner. The bill passed the House Agriculture Committee 22-0 recently, and Shoemyer said he hopes to advance it as an amendment on the House floor in the closing days of the legislative session this week.
Farmers turn to law
Scruggs, the Mississippi farmer, is using the courts to fight back. He hired James Robertson, a lawyer who served nine years as a justice on the Mississippi Supreme Court.
Scruggs denies that he saved Monsanto seed and also contends that Monsanto's patents are invalid and monopolistic.
Peter Carstensen, a University of Wisconsin law professor hired as an expert for Scruggs, said Monsanto has put an anti-competitive restraint on farmers.
The company denies it.
Last fall, Monsanto sought to remove the dispute over one of its patents from Scruggs' trial, saying it would simplify the litigation. The judge refused the request, and Scruggs says he sees a weakness.
"I don't think any of the patents are good, and I'm ready to go to court, the quicker the better," he said.
But attorney Clifford Cole, who represented Arkansas farmer Ray Dawson, says anyone should be cautious before taking on Monsanto.
Dawson, who once farmed 50,000 acres in three states, used to goad the company by wearing a hat bearing the words, "Monsanto Folds, Dawson Farms."
But in the end, Dawson filed for bankruptcy and later settled with Monsanto for $2.5 million, though the settlement ultimately permitted him to pay only about $200,000, Cole said.
"They were going to beat our brains out," Cole said of Monsanto's attorneys. "These old boys, they're good. They've got the tools, they've got the law on their side, and they've got the money to back 'em."
Reporter Peter Shinkle: E-mail: pshinkle@post-dispatch.com
