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Competition advocacy group battles agriculture's seed giant

For 10 years, the Organization for Competitive Markets, a small group of farmers, cattle feeders and others worried about concentration and market power in agriculture, has toiled in near obscurity. With mixed results.

OCM filed legal briefs backing a lawsuit by cattle feeders against Tyson Fresh Meats, Inc. In a jury trial, the feeders won a $1.3 billion award for damages due to price manipulation. They lost on appeal. OCM opposed the merger of Cargill and Continental Grain. It went through after Cargill was forced to unload a few key grain terminals. OCM has opposed many mergers among agribusinesses. In most cases, the trend toward fewer, bigger players in agribusiness continues.

Now the group has taken on the seed industry, holding its annual meeting in St. Louis last week, in the backyard of Monsanto. It's obscure no longer.

The Wall Street Journal, National Public Radio, Agriculture Online and others covered speeches by Obama administration officials from USDA and the Justice Department who are promising tougher enforcement of laws covering competition in agriculture. On the day of the August 7 meeting, a front page story in the St. Louis Post-Dispatch revealed that Monsanto's rival, DuPont, the owner of Pioneer Hi-Bred International, has given financial backing to OCM.

For the past two years, OCM has been studying competition in the U.S. seed industry and holding meetings with farmers, says Keith Mudd, a Monroe City, Missouri farmer who plants part of his 1,800 acres to soybeans that all have the Roundup Ready trait. And about three-fourths of his corn has Bt traits.

The group contends that Monsanto controls 90% of the biotech traits sold in corn, soybean and cotton seed to American farmers. That's the traits, not the seed itself, through licensing agreements with competing seed companies, Mudd says.

"We've been extremely diligent in documenting what we've been saying," Mudd said last week when he introduced a panel of legal and economic experts to talk about "competition issues in the transgenic seed industry."

"OCM believes farmers should have as many choices as possible when purchasing their seeds," Mudd told the meeting.

Later, Lee Quarles, a spokesman for Monsanto, disagreed with OCM's numbers, and its assertion that the seed industry isn't competitive enough.

Of OCM's estimate of 90% control of traits, Quarles said, "That is not accurate."

"We broadly license our technology," he told Agriculture Online. "We recognize that farmers want to invest in competing technologies and seed brands." The company has licensed agreements with more than 200 seed companies, including its biggest competitors.

Quarles cited statistics on the usage of Monsanto traits to show that OCM is on the high side. Only in soybean seed, where Monsanto's Roundup Ready traits are found in 94 to 95%, are they close, he said. Monsanto traits are found in 78% to 83% of corn seed and between a third and two-thirds of cotton seed. The company has lost about 10% market share in cotton seed since it acquired the cotton seed company Delta & Pine Land Co. in 2007. And this year, Pioneer gained market share in corn.

And, he said, through licensing agreements, DuPont's Pioneer is the largest seller of Monsanto traits in both corn and soybeans. Bayer CropScience is the leader in usage of Monsanto traits in cotton. "Based on a review of all
the different competitive trait offerings," he said, "it looks like Monsanto offers just over a third of the agriculture industry's trait offerings across corn, cotton and soybeans."

Monsanto had an early lead over its competitors in biotech traits, which is why its competitors are selling Monsanto traits through licensing agreements, Quarles said.

"Something that they (OCM) just neglect to even discuss is that in the 1980s, the late 1980s, we bet the farm on biotechnology," he said.

Now, competing seed companies are introducing their own traits, with more competing traits coming on the market. Meanwhile, Monsanto spends $2.6 million a day on research on new biotech traits, including drought resistant corn and higher yielding soybeans.

Each year, farmers decide which traits to buy and, if they buy from Monsanto, "we literally take their investment in us and reinvest it in them," Quarles said.

While Quarles sees a market that is competitive with expanding traits, OCM does not.

Its panel of experts suggested that the licensing agreements between Monsanto and its competitors may in fact be restricting the use of other technologies -- an argument that DuPont is also making in a legal battle with Monsanto over Pioneer's plans to stack ALS herbicide resistance and Roundup Ready resistance in corn and soybean seeds, under the trade name, Optimum GAT.

Monsanto is suing DuPont for unauthorized use of its Roundup Ready technology in its Pioneer's GAT product. Monsanto alleges that DuPont is stacking Monsanto's Roundup Ready trait, or resistance to the herbicide glyphosate, with another glyphosate resistance developed by DuPont. DuPont has responded that it has the right to stack traits under its licensing agreement and accuses Monsanto of trying to restrict the availability of competing traits.

The panel of experts who talked to OCM about competition in the biotech seed industry didn't have easy answers for dealing with an industry that they said is already controlled by just a few big companies.

For 10 years, the Organization for Competitive Markets, a small group of farmers, cattle feeders and others worried about concentration and market power in agriculture, has toiled in near obscurity. With mixed results.

In recent years, lower courts and the U.S. Supreme Court haven't ruled favorably on many antitrust cases. Nor has the White House, under either political party, been aggressive in slowing consolidation in the seed industry, said Peter Carstensen, a national authority on antitrust law who teaches at the University of Wisconsin Law School.

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