ISSUE: 2004-2005 saw an upsurge in seed industry takeovers and a shake-up in rankings. Today, the top 10 companies control half of the world’s commercial seed sales. With a total worldwide market of approximately US$21,000 million [$21 billion] per annum, the commercial seed industry is relatively small compared to the global pesticide market ($35,400 million), and it’s positively puny compared to pharmaceutical sales ($466,000 million). But corporate control and ownership of seeds – the first link in the food chain – has far-reaching implications for global food security. This Communiqué examines seed industry consolidation and other recent trends in the commercial seed industry.

IMPACT: With control of seeds and agricultural research held in fewer hands, the world’s food supply is increasingly vulnerable to the whims of market manoeuvres. Corporations make decisions to support the bottom line and increase shareholder returns – not to insure food security. Ultimately, seed industry oligopoly also means fewer choices for farmers. A new study by the US Department of Agriculture examines the impact of seed industry concentration on agbiotech research. The study concludes that reduced competition is associated with reduced R&D. Despite seed industry claims to the contrary, concentration in the seed industry is resulting in less innovation – not more.

PLAYERS: A fistful of transnational firms, the Gene Giants, dominates global seed sales. Monsanto, Dupont, Syngenta – all among the world’s top-ranking pesticide firms – lead the pack.

POLICY: Seed industry concentration is already high on the agenda of civil society and farmers’ organizations that are working to support and maintain peasant and farmer-controlled seed systems and against policies and technologies that seek to further privatize seeds. The implications of seed industry consolidation for food security and biodiversity must also be urgently addressed by governments at the FAO Conference in November and by the UN Convention on Biodiversity (COP8) in 2006.

A July 2005 report by Phillips McDougall, UK based agribusiness industry analysts, puts the value of the commercial seed market at US$19,000 million – and estimates that the top 10 companies control 51% of the total market. Given the enormous disparity in the figures, ETC Group estimates that the commercial seed market falls somewhere in between. Using an estimated market value of $21,000 million for commercial seed sales worldwide, ETC Group conservatively estimates that the top 10 companies control 49% of the global seed market.

2005 saw an upsurge in seed industry takeovers and a shake-up in rankings. The perennial kingpin, Dupont’s Pioneer Hi-Bred International, was dethroned from the top spot when Monsanto acquired Seminis in January 2005 for $1,400 million. With the acquisition of Seminis, Monsanto became the world’s leading seed company – and the world’s biggest commercial vegetable seed company.

Given the fast pace of mergers and acquisitions, we expect that the top 10 rankings will flip-flop again soon.

Despite controversy and lack of public acceptance – genetically modified (GM) seeds are gaining market share. According to Phillips McDougall, genetically modified seeds now account for one quarter of the total value of the commercial seed market worldwide. The market for biotech seed traits (herbicide tolerance and insect resistance) has shot up from $280 million in 1996 to $4,700 million in 2004 – a 17-fold increase over the past nine years.

In 2004, Pioneer/Dupont earned 50% of its seed revenues from varieties that included a genetically modified trait. For 2005 Dupont offers the following products for the US market:

Pioneer/Dupont Product Offerings

The growth in GM seed market share is remarkable, especially given that genetically modified seeds have been accepted in relatively few countries and continue to be steeped in controversy all over the world. The lesson? When a few giant firms make up the cast of characters in the commercial GM seed market, it isn’t necessary to have a superior product to win market share.

Seed Industry Concentration – Who Cares?
Whether we’re talking about sneakers, washing machines, beer or cell phones – corporate concentration is everywhere. In 2005, Adidas tied the knot with Reebock, Procter & Gamble gobbled Gillette, Molson guzzled Coors, SBC acquired ATT, Verizon merged with MCI and Maytag is wooing Whirlpool.

But seeds are fundamentally different from razors and running shoes. When ownership of seeds – the first link in the food chain – is tightly held by a fistful of transnational firms – the world’s food supply becomes vulnerable to the whims of market manoeuvred. Corporate boards make decisions to support the bottom line and increase shareholder returns – not to insure food security.

“What kind of industrial strategist—and we must assume there was strategy at some point—would try to stealthily bring to market products that no one needs but everyone has to consume, that the most industry-friendly politician would have difficulty justifying and whose only apparent redeeming feature is to improve the market positioning of the companies that make them?” – Editorial, Nature Biotechnology, September, 2004

A new study by the US Department of Agriculture looks at how seed industry concentration affects research. In the US, private sector spending on crop variety R&D increased 14-fold between 1960 and 1996, while public expenditures stagnated. It’s widely acknowledged that intellectual property laws (plant breeders’ rights and patents) that give companies exclusive monopoly rights over plant varieties spurred seed industry concentration. Looking at biotech maize, cotton and soybeans, USDA researchers found that research intensity slowed as seed markets became more concentrated. “Those companies that survived seed industry consolidation appear to be sponsoring less research relative to the size of their individual markets than when more companies were involved…Also fewer companies developing crops and marketing seeds may translate into fewer varieties.”

The USDA study also notes that public research on crop variety R&D “has a stimulative effect on private biotech research.” The authors conclude that increasing publicly funded research for plant breeding “would not only sustain the oft documented high rates of public return to public research, but could also promote additional private research.” The moral of the story? In the case of agbiotech in the USA, reduced competition is associated with reduced R&D. Despite seed industry claims to the contrary, concentration in the seed industry has resulted in less innovation – not more.

Ultimately, a highly concentrated seed market means less choice for farmers – not more.

Milestone or Miasma? According to zealous proponents of biotech, “sometime during the early days of May 2005, a farmer somewhere in the world” planted the 1 billionth acre of biotech crops (400 million hectares). For supporters of GM crops, tracking the total number of acres planted with genetically modified seeds is like McDonald’s posting the number of hamburgers served under the golden arches:

“Today, we mark a billion acres. At some point in the future, like McDonald’s, so many billion acres of biotech crops will have been planted and harvested around the world that we’ll quit counting these biotech acres altogether.” – Truth About Trade and Technology, an advocacy group that supports free trade and agricultural biotechnology, Des Moines, Iowa, USA.

The global proliferation of hamburgers sold by the world’s mega fast-food enterprises is an apt comparison to the spread of the Gene Giants’ biotech seeds: There are enormous social costs imposed by the ubiquity of these corporate products – costs that are not usually recognized or addressed until after the product/technology is widely deployed.

Take GM contamination, for example – unwanted gene transfer via cross-pollination from GM crops to conventional or organic crops nearby. In the early days of biotech it was discussed as a remote possibility, it soon became a reality, then a nuisance, and now a crisis (for some). With the rapid expansion of GM crop area, farmers are finding it increasingly difficult to produce purely non-GM varieties. According to Canadian researchers writing in Ecological Economics earlier this year, “Loss of, or limited ability to produce certified non-GM crops has the potential to impose significant production and consumption externalities on producers, consumers and other downstream users.” They note that “the opportunity costs to farmers could rise dramatically as the number of GM-free producing areas declines, especially if disgruntled consumers choose simply to avoid food product lines with GM content.”

Today, scientists are sparring over how to measure GM contamination and what it means. Regulators and scientists are trying to determine isolation distances to thwart pollen dispersal and cross-pollination.

At least 28 governments plus the European Union are grappling with requirements for the labelling of GM foods, and how to set tolerance levels for GM content (in non-labelled foods).

Consumers in some markets are rapidly losing the ability to choose non-GM foods, or must pay more to avoid biotech. Farmers who choose not to grow GM crops are faced with loss of markets if their crops are contaminated, or lawsuits if unauthorized patented genes are found on their property.

How will society deal with social costs imposed by GM crops and GM contamination? Who will decide? Who will pay? The Canadian researchers offer two troubling suggestions: “…either a tax on GM growers could be used to compensate non-GM growers for any loss of income due to co-mingling or, alternately, non-GM growers could pay GM growers to restrict their planting.” Both proposals are unacceptable because neither puts the burden squarely on the source of the contamination: the biotech industry.

There are ominous signs that policy decisions are being made to accommodate the Gene Giants and to transfer the costs and burdens of GM contamination to farmers and consumers.

In the United States, state governments are passing laws ghost-written by the biotech industry that make it illegal for local governments to ban or restrict genetically modified crops. Determined not to allow local prohibitions of GM crops like those approved by three counties in California, the industry has pushed at least 14 states to pass pre-emption bills that are designed to mute citizen concerns about GM crops.

Another example is that the seed industry and allied governments are aggressively promoting Terminator seed technology as a viable method to stop geneflow. Delta & Pine Land, the US-based company that is actively developing genetic seed sterilization, makes the outrageous and scientifically unsupportable claim that Terminator “provides the biosafety advantage of preventing even the remote possibility of transgene movement.” New seed laws are being adopted in many countries that aim to restrict the rights of farmers to control and use their seeds. An in-depth report by GRAIN examines the imposition of new, repressive seed laws that are replacing older seed legislation in many countries According to GRAIN, “the main purpose of these seed laws is to provide better protection of private seed varieties developed by companies and sideline farmers’ own seeds completely.”

GM Seeds and Pesticides – Another Industry Myth Shattered: Since the early days of biotech, the industry has promised that genetically modified seeds would reduce the use of pesticides in agriculture. A 2004 study by Charles M. Benbrook looks at GM crops and pesticide use in the US from 1993-2004 (the US accounts for 60% of the total GM crop area worldwide). The study concludes that overall the use of agrochemicals on GM crop acreage has risen about 4.1% since 1996. The findings contradict the industry’s oft-repeated claim that biotech crops reduce pesticide use in agriculture.

According to Benbrook:
GE [genetically engineered] corn, soybeans and cotton have led to a 122 million pound increase in pesticide use since 1996. While Bt crops have reduced insecticide use by about 15.6 million pounds over this period, HT [herbicide tolerant] crops have increased herbicide use 138 million pounds. Bt crops have reduced insecticide use on corn and cotton about 5 percent, while HT technology has increased herbicide use about 5 percent across the three major crops. But since so much more herbicide is used on corn, soybeans and cotton, compared to the volume of insecticide applied to corn and cotton, overall pesticide use has risen about 4.1 percent on acres planted to GE varieties. – Charles M. Benbrook, “Genetically Engineered Crops and Pesticide Use in the United States: The First Nine Years.” Biotech InfoNet, Technical Paper Number 7, October 2004.

Farmers are being forced to apply greater amounts of herbicides on genetically modified herbicide tolerant crops because some weeds have developed resistance in the face of heavy reliance on herbicide tolerant crops. Benbrook finds that “reliance on a single herbicide, glyphosate, as the primary method for managing weeds on millions of acres planted to HT varieties” is the primary factor that requires farmers “to apply more herbicides per acre to achieve the same level of weed control.”

Glyphosate, the world’s most commonly used agricultural chemical, is typically considered less hazardous than other chemical weedkillers. But new studies on glyphosate, and Monsanto’s proprietary formulation, RoundUp, raise serious concerns about the safety of the chemical for human health and the environment. About three-quarters of the worldwide area devoted to GM crops last year was planted with crops engineered to tolerate spraying of glyphosate.

Conclusion: Seed industry consolidation means less competition, resulting in fewer choices for farmers and greater vulnerability for local farming communities and global food security. Choices are further reduced with the spread of GM contamination encroaching on conventional and organic crops.