Monsanto, the multinational agribusiness giant that brought us genetically modified (GMO) corn, soy, and cotton (as well as Agent Orange, dioxin, and other nasties), broke the rules in Brazil, and it’s going to cost them.
While US courts have been pretty tolerant of Monsanto (Supreme Court Justice Clarence Thomas is a former Monsanto employee), the Brazillian courts aren’t putting up with their bullshit. They ruled that a lawsuit from a group of farmers in one region should apply to all farmers across the country – which means Monsanto will end up owing between $2 billion and $7.5 billion.
What happened? The case was pretty straightforward.
- Monsanto makes money off of patented seeds (something that didn’t even exist until just a few years ago; the notion that companies could patent life-forms would have appalled the founding fathers). It collects royalty payments from farmers.
- But that wasn’t enough for Monsanto. I continued to collect royalties on their GMO soy seeds even after their patents had expired in Brazil. Why not? Farmers would have to sue them to get the money back, and Monsanto has had a pretty good track record beating farmers in court, and dragging cases out for years.
- But a group of 5 million Brazilian farmers sued, and won.
- Monsanto tried to argue that the ruling should only apply to the farmers in a single state, but the Supreme Court said “Don’t be ridiculous”.
- Now the GMO giant will have to pay the $7.5 billion back.
Jane Berwanger, a lawyer for the farmers, attacked the very idea that Monsanto should be able to collect a royalty for every generation of their GMO seeds:
“Monsanto gets paid when it sells the seeds. The law gives producers the right to multiply the seeds they buy and nowhere in the world is there a requirement to pay (again).”
Monsanto has appealed the decision, and it make take years before the final ruling comes down.
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(Image by ianmackenz on Flickr via Creative Commons.)
About Jeremy Bloom
Way to go Brazil! Turn the screw.
Monsanto used to be a conventional heavy-duty chemical company. As such, it fought every regulation anywhere near its business areas using an enormous political tribute paying lobbying machine and every tool they had. Then along came genetic engineering technology, and they wanted to get into the area of applying GMO to agriculture — a wise business decision on their part. Early in the game, they realized that if they didn’t obtain a dominant position in this area and control the direction of evolution of this technology, much if not most of their chemical business could be destroyed.
Monsanto was well aware of the fate of the previous era’s vacuum tube manufactures. These big guys totally dominated electronics: they owned the market, the money and the politicians. Then along came the transistor. All the major electronic players of the 50′s realized that the transistor was going to put their vacuum tubes out of business, RCA and the others built multi-million dollar labs and hired the best and brightest, but despite their efforts, they were blown out of the water by an unknown geotechnical firm called Texas Instruments followed by Fairchild Instruments, then National Semiconductor, then Intel, etc. Not one of the major electronic firms of the vacuum tube era is a major player in todays electronics industry. Monsanto has seen how dominant players can be destroyed by innovative “garage” shops, which can move faster and more creatively. They needed a strategy to prevent such innovative fast moving competition from evolving.
In a brilliant business move, Monsanto shifted its position away from using its lobby power to kill all regulation to testifying to Congress (truly shocking testimony at the time) that “more” regulation and oversight is need in this emerging genetic engineering field. The eNGO’s (environmental non-governmental organizations – environmental activists) agreed and picked up the theme as an excellent fund raiser. By ensuring that Congress created our expensive, time-killing GMO regulatory system, Monsanto helped bring about a system which essentially prevented more creative and innovative small businesses from evolving, ultimately killing off their competition.
Let’s look at a specific example: Monsanto makes a great deal of money from Roundup-resistant plants, which prevent competitive weed problems and allow no till-farming and lower energy farming. However, many plants naturally produce chemicals in their roots, which compete with other plants (“root zones” are the botanical equivalents of “war zones”). These chemicals can effectively prevent competition by killing or excluding “weeds” (defined as any other competitive plant in its root zone) — this is seen in nature all the time. Absent the GMO regulations purchased by Monsanto’s lobbying efforts, some garage shop started by an angel investor (AI) or VC with a few biotech grad students and post-docs might well have turned the Corn root zone into a “weed free zone” by that approach, eliminating the need for Roundup and its fancy, profitable, Roundup-resistant plants. Monsanto’s future profits are assured by a decade-long regulatory system whose huge artificial complexity, specialization and up front expenses and legal costs effectively make it impossible for a startup company to survive and develop into a disruptive Monsanto competitor. Yet another road block to this potential approach to “war in the root zones” GMO game is that it could also crimp the eNGO’s fundraising efforts. If neither humans nor butterflies were going to eat the roots (and the expression of the genes could be limited to the roots) it would be more difficult for them to generate people’s fears and the lucrative contributions resulting therefrom.
Think of the options existing in nature in the form of genes that just need to be moved around. For example, apparently parasitic wasps actually create a virus using components from it own cells, which infects and inactivates the immune systems of the insects its larve consume alive, and these virus can be species specific. With genetic engineering, we could, in theory, make plants, which produce viruses lethal to specific pests, when it is attacked. These specific insect viruses would be just digestible food to our system, much like the work going on producing human vaccines against things like flu in tobacco plants or the trillions of bacteria virus (phage) that already exist in our digestive systems. But is any approach likely if it would put insecticides, fungicides, etc. out of business? A species-specific pest approach would be very disruptive to the chemical companies. However, the big guys have little to fear for their bottom line if it takes 10 years and a $100 million dollars to get approval for each gene set attacking each specific insect pest put into each specific plant strain. Anything targeting a specific pest isn’t economically viable.
In conclusion, the anti-GMO activists and their associated eNGO’s have a very symbiotic relationship with the Monsanto’s of the world. The do-gooders are given a golden fund raising opportunity as they spread FUD (Fear, Uncertainty and Doubt) to an ignorant public, while Monsanto gets to grow its business by marketing a restricted set of GMO crops to the farmers, while preventing the evolution of competition which would threaten its profits
The market penetration of GMO foods has been the fastest penetration in history, but the set of genetic changes has been limited to those which do not disrupt the business models of either the eNGO’s or the Monsanto’s of the world.
Whether this mutually beneficial symbiosis between the eNGO’s and the Monsanto’s of the world was created by rational actors deliberately structuring a self benefiting system is irrelevant. Evolution in nature often creates obviously non-optimal designs whose existence prevents any fundamental change that would result in a much better design. An example of this is the vertebrate “camera” type eye in which blood vessels and nerves have developed between the lens and the light sensors – truly a “non-intelligent design”. This design excluded evolution of a far better eye design for vertebrates (the invertebrate eye of the squid evolved with the vessels and nerves behind the retina rather than in front of it).
Regardless of whether Monsanto and the eNGO’s consciously set out to do so, our GMO regulatory system is preventing huge amounts of beneficial innovation, and the effect is the same: we are left with a less-than-optimal regulatory system design which leaves little room for intelligent exploration of the overall problem and opportunities outside of the box created for whatever reasons by those who benefit from being inside it.