Thursday, 12 April 2012

The monsanto Monopoly - By: Anna Lailey & JC O'Connell

The Monsanto Monopoly

Originally a chemical company providing chemical weaponry to the United States Government during the 1960’s Vietnam War, Monsanto developed close ties with the United States government, and had an abundance of brilliant chemists and biologists at their disposal. Not long after the war had ended, it became clear that the company could no longer profit from the manufacturing of chemical weapons. As a result, Monsanto created a new type of market which would take the world by storm. In 1980, Monsanto began to genetically modify seeds, organisms and even animal body parts and patent them. The company now controls 90% of the global seed market.  Monsanto has been able to gain monopolistic control over the highly profitable food market through careful manipulation of government officials and the patenting of genetically modified organisms (GMOs) and seeds.  

Barriers to Entry
Perhaps the most valuable piece in creating and maintaining Monsanto’s monopolistic control over the global market is its effectiveness at establishing legally binding barriers to entry. With over 11,000 patents, Monsanto owns and controls almost all plant material we eat and use on a daily basis ranging from corn, soybeans, wheat, canola and sugar cane. Monsanto is becoming increasingly powerful through the patenting and sale of its products. As a result, Monsanto is not only dominating the genetically modified food markets, but through its sheer size, natural crops are becoming increasingly difficult to come by. In essence, Monsanto is quickly gaining control over the world’s most essential natural resource; food. The lack of competition in the market (at the hands of patenting) allows Monsanto to sell their product for a high price without consequence. As a result, farmers are now forced to buy their seeds directly from them, and can sometimes not afford to buy a full year’s worth of seeds for their annual crop.

Watch between 1:35 - 2:00 for a breif explanation on their monopolistic power:

Pricing Strategy
The price of their products is based on the advantage that they hold over the first generation of products (natural seeds). As Monsanto products are all legally protected by US patents, Monsanto products hold an “advantage” over all other related products. This therefore gives the company justification for pricing their products slightly above normal market price. It will be interesting to note price changes in Monsanto’s hit herbicide” Roundup Ready” when its patent expires in the fall of 2014, and new and extremely similar products hit the market. It is estimated that the cost of Monsanto’s Roundup Ready Herbicide will be slashed as competitors enter the market and begin to sell the same product for much cheaper.

The Revolving Door Advantage

Although denied by Monsanto employees, the revolving door theory is something that cannot be overlooked when investigating how Monsanto has been able to achieve its Monopolistic power over the global food market. This is all thanks to a long history of dealing with the United States Government; Monsanto has developed many close ties within governmental organizations such as lobby groups and more importantly; the Food and Drug Administration (FDA) and the United States Department of Agriculture (USDA). The FDA is in charge of investigating and approving food products developed by Monsanto. It is not uncommon for Monsanto employees to leave the company to work in government lobby groups and or the FDA and vice versa. Coincidently, these workers are often the ones to make significant gains benefiting Monsanto as a company.

Perhaps the most high profile and recent case involving the revolving door theory occurred in 2009 when former Monsanto lobbyist Michael R. Taylorwas appointed as a senior advisor and commissioner to the United States Food and Drug Administration.  He was later appointed to the USDA where he was put in charge of food inspection and inspection services. It is clear that with Mr. Taylor’s past relationship with Monsanto would have given him a bias towards Monsanto’s quest to genetically modify all living organisms. It would be safe to say that Michael Taylor would lay a clear path for them for Monsanto to tread, and perhaps would even protect them from scrutiny and competing firms. 

In conclusion, with extensive patenting, close ties with governmental agencies and the engineering of a series of unique and interdependent products, it is clear as to why Monsanto has established a Monopoly. With these tools, it will be simple for this agricultural biotechnology to continue to enjoy its monopolistic power over an otherwise untapped market. 

 Works Cited: 

"News & Views." Monsanto ~ How Monsanto Prices Seeds. Web. 12 Apr. 2012.
"Buckle Your Seatbelt:  The Roundup Ready Patent Expires in 4 More Years. |" Buckle Your Seatbelt:  The Roundup Ready Patent Expires in 4 More Years. Web. 12 Apr. 2012.
"U.S. Department of Agriculture." 302 Found. Web. 12 Apr. 2012.

Photos Cited:
"Bust Monsanto’s Monopoly, Sign This Petition Now!" Hartke Is Online! Web. 13 Apr. 2012.
"Organic Farmers Sue Monsanto over GMO Seeds." The Watchers. Web. 13 Apr. 2012.
" USDA Will Issue $400 Million in Broadband Loan Funds This Year." Web. 13 Apr. 2012.

Videos Cited:

Weavingspider. "The Monsanto Monopoly." YouTube. YouTube, 07 Mar. 2012. Web. 13 Apr. 2012.

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