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DOJ Turns up Heat in Monsanto Anti-Trust Probe Written by Frank Morris

The Monsanto corporation owns a piece of almost every soybean, corn and cotton seed planted in the United states. More than 90% of soybean seeds carry its “Roundup Ready” genetically engineered trait. That generates billions of dollars in royalties for the company, and broad control of the seed industry. Pioneer claims that the company has used Monsanto’s patented, almost must-have technology to build a monopoly. This month a judge recently ruled that Pioneer had infringed on Monsanto’s patent for Roundup Ready seed. But, meanwhile, the US Justice Department and others are looking into allegations that Monsanto has gained a stranglehold on production agriculture, and is poised to extend that control for decades to come.

Luke Ulrich, who grows corn and soybeans south of Lawrence, is thinking about spring. It’s time to buy seed again, but hundreds of seed companies have gone under in the last two decades.

Ulrich remembers the days before genetically modified seeds up-ended the industry. Critics of the big agriculture biotech company Monsanto say its popular Roundup Ready technology is to blame for that. Roundup Ready is a line of gene-modified seeds that inoculates plants against a herbicide, Roundup, that kills just about everything else.

“Ever since they’ve come out with the Roundup Ready trait and that became popular and basically took over farming, we’ve seen significant increases every single year,” Ulrich says.

Ulrich says his seed costs shot up almost 50 percent last year. That’s because farmers are contractually prohibited from saving seeds and planting them the following year.

But farmers face lawsuits if they try to save and re-plant the genetically modified seed because they don’t own the technology. While they bristle at that, they love the Roundup Ready seed.

“There’s nothing like Roundup. A monkey could farm with it,” Ulrich says.

More than nine out of ten soybean seeds carry the Roundup Ready trait.
It’s about the same for cotton and just a little lower for corn.

“Farmers will not buy soybeans without Roundup Ready in it. So, that gives Monsanto an amazing amount of leverage,” says Jim Denvir, a lawyer working for a DuPont. DuPont owns Pioneer, the competing seed company.

Pioneer licenses the Roundup Ready trait from Monsanto as do about 150 other seed companies. Those agreements control what other genetics competing companies can mix with the Roundup Ready trait. Last year, Monsanto sued to stop Pioneer from “stacking” Roundup Ready with another trait. Denvir says Pioneer complained to the Justice Department.

“A seed company can’t stay in business without offering seeds with Roundup Ready in it, so if they want to stay in that business essentially, they have to do what Monsanto tells them to do,” Denvir says.

Monsanto’s critics say it used this “platform monopoly” to crush many competitors. Chris Holman, a patent lawyer who teaches at the University of Missouri-Kansas City, likens it to Microsoft and its dominant Windows operating system.

“Because of the structure of the industry, they are able to really drive participants in the industry into using their technology,” Holman says.

Monsanto spokesman Lee Quarles says those allegations are unfair, though he concedes they’re coming at the company fast and furious.

“We’re actively working to address questions from regulators, both the Department of Justice and state attorneys general as well as other parties in the industry, to address any questions they have about our business,” Quarles says.

But Monsanto is pushing ahead. It will soon market a corn seed combining eight separate genetically engineered traits.

Roundup Ready technology was developed at Monsanto’s world headquarters in St. Louis.

Jim Tobin of Monsanto says it sells itself.

“Farmers get to vote every year before they plant, and it’s that vote each year that determines who has the largest market share or volume,”
Tobin says.

Monsanto spent huge amounts of money and took big risks to develop the Roundup Ready trait. Tobin says it’s revolutionized agriculture. But now, “Well, we’ve invented something new,” he says.

It’s called Roundup Ready 2 Yield. It uses the gene as the original, just placed in a different spot in the genome. Monsanto claims that boosts yield.

Interesting timing: Monsanto’s patent on Roundup Ready 1 expires in 2014 and with it, a revenue stream of maybe half a billion dollars a year in royalties. That’s unless it can switch farmers over to Roundup Ready 2.

“We’d like to have everyone in the soybean business, seed business using the trait,” Tobin says.

Monsanto’s putting the new trait in all its best soybean seeds. And Paul Schickler, president of Pioneer, says Monsanto is forcing its licensees to do the same. He charges that Monsanto is trying to make Roundup Ready
1 disappear.

“That’s our concern: bridging or switching from one patented product, Roundup Ready 1, to the next generation Roundup Ready 2 Yield, doesn’t allow competition for the original technology,” Schickler says.

Unlike in many other industries, there’s no clear path for a genetically modified crop to go generic. If companies wanted to add other genetically modified traits to Roundup Ready 1 seeds, they’d probably need new regulatory approval. Being able to use Monsanto’s proprietary information about Roundup Ready 1 would probably speed and significantly cheapen the regulatory process, but there’s no indication Monsanto would cooperate with that kind proposition.

Companies offering Roundup Ready 1 will also need closely held technical data to update licenses that keep the trait legal in big, important markets like China and the EU. Absent some solution to the overseas licensing issue, Roundup Ready 1 soybeans will likely become illegal in lucrative markets by the end of the decade. That would mean that if just a handful of the then forbidden DNA turned up in a shipment, importing companies would have an excuse to reject the entire boat load. And remember, Roundup Ready 1 is just the first ag biotech trait going off patent. There are dozens more in the pipeline. Unless a way to address the overseas licensing issue is found, trade could be severely disrupted.

Meanwhile, the end of the Roundup Ready patent will likely give farmers a chance to do something they haven’t for years: plant the seed they’ve harvested. Luke Ulrich is ready.

“I don’t care how good Roundup Ready 2 is, if you tell me I can save back my own seed, I’m going to plant my own seed,” Ulrich says.

The problem for guys like Ulrich will be finding seed that has just the Roundup Ready gene alone, one not stacked with other patented traits.
After all, if he can’t find the seed in the first place, he can’t grow it.