Seed Prices Soar, Monsanto Schemes

It doesn't take an economist to know that the current economic crisis has taken its toll on the price of goods. For farmers, however, this hasn't necessarily been the story: Last year, the price of corn and soybean seeds rose by nearly a third.

The New York Times reported on this issue last month, describing "an unprecedented climb [in seed prices] that began more than a decade ago, stemming from the advent of genetically engineered crops and the rapid concentration in the seed industry that accompanied it."

Genetically engineered crops? Rapid concentration of power? If you're thinking Monsanto, you're right.

As you might know, Monsanto was ahead of its competition with the introduction of its so-called Roundup Ready seed, which allows plants to survive the application of the popular herbicide (also made by Monsanto) and thus produce increased yields. Shortly after, the company introduced a pest-resistant corn seed.

They've dominated the market since, and perhaps unsurprisingly, the increase in seed prices has been drastic. Since 2001, corn seed prices have risen 135 percent, and soybeans have gone up 108 percent. Compare that to a 20 percent increase in the Consumer Price Index over the same time period, and it's clear this isn't by chance.

But Monsanto's under a little pressure now. Farmers are understandably angry (viz. Food, Inc.), and so are rival companies such as DuPont, which has filed suit against the company's licensing practices. The U.S. Justice Department is also in the midst of an antitrust investigation of the seed industry.

Add to that the announcement last week that Monsanto experienced a 19 percent drop in its second quarter profits. Shareholders were told that the doubling of profits within 5 years they were promised might not actually happen.

Monsanto CEO Hugh Grant conceded the company will be more "innovative and flexible" in its pricing (read: cheaper prices for now), but in the long term, will hope to continue to charge premium prices as farmers realize the value of their products (read: lure 'em, hook 'em, and shoot up the price).

Although lower seed prices now may be a short-term relief for farmers, it's pretty clear Monsanto isn't in the business of altruism. And whether you believe that genetically modified foods are good or bad, it's hard to argue against the need for more competition and innovation. I hope such things as A Month Without Monsanto will get more people thinking about this and will inspire a push for less consolidation and greater accountability among the agricultural industry. Farmers need it, consumers need it, the world needs it.

Photo credit: foto3116