Today’s Wall Street Journal has a feature (link here for subscribers) article discussing DuPont’s renewed efforts on crop biotechnology. DuPont “announced it will shift about $100 million to [the biotech division of its subsidiary, Pioneer Hi-Bred], laying off employees in other areas in the process.” Why such a seemingly radical shift? To take advantage of new opportunities created by a growing demand for corn and other crops to produce ethanol. Now, it’s true that biotech can help make ethanol production from crop plants much more efficient, but the demand for ethanol only exists due to government fiat. It’s ironic that DuPont/Pioneer finds itself the odd man out in biotech seeds for essentially the same reason.
Pioneer is a venerable old name in the crop seed biz — arguably the best known seed company on the planet. But, Pioneer was slow to see the potential in crop biotechnology, and now rivals Monsanto, Syngenta, and Bayer essentially control the market. As the Journal notes, some 96 percent of U.S. soybean acreage is planted with Monsanto varieties (most, but not all of which are biotech). What the article doesn’t tell us is that Monsanto has earned about 95 percent of the Argentine soybean market, and its varieties are planted on about one-third of the soybean acreage in Brazil (where there are lots of illegal and otherwise undocumented plantings, so the exact number is unknown). And since those three countries (the U.S., Argentina, and Brazil) account for about 90 percent of the soybeans shipped in international commerce, that functionally gives Monsanto a worldwide near-monopoly.
What The Wall Street Journal doesn’t tell readers, however, is how this global monopoly came about. After all, Bayer CropScience (formerly Aventis) has no fewer than seven herbicide-tolerant soybean varieties approved for commercial cultivation in the U.S., but it has exactly zero percent of the U.S. market. Why? Thanks to the Eco-Freaks and capitulating bureaucrats in the European Union; that’s why. Way back in 1998, the EU had already approved Monsanto’s Roundup Ready soybean — one of the first biotech varieties approved anywhere — when the EU imposed a six-year-long moratorium on the approval of new biotech varieties. Soybean farmers the world over wanted to plant biotech herbicide-tolerant soybeans, but the only one they could ship to the lucrative European market was sold by Monsanto. And the rest is history. The EU has approved a handful of biotech crop varieties since the moratorium ended in 2004, but not any new soybean varieties. And, so long as the EU doesn’t approve an important crop variety that’s traded in international commerce, few farmers will be willing to plant it. Pioneer came late to the party, and now it finds itself on the wrong side of the velvet rope.
If I didn’t know better, I might be tempted to say that Monsanto actually paid off those eco-freaks to pressure the EU into its moratorium. That’s obviously not true. But, since there never was any good reason for the moratorium, I suppose, that explanation makes about as much sense as any other.