Priya Desai
Professor Nixon
ECON 1700 Section 1100
1 November 2018
Monsanto Case Study Outline
1. Introduction: Beginning in 1995, the entry of Monsanto in the Indian cotton seed sector has had a dramatic effect on low and middle class Indian farmers throughout the country. Monsanto introduced a genetically-modified cotton seed that had been created with a pest-resistant toxin called Bacillus thuringiensis, or Bt. With the introduction of Monsanto’s GMO cotton seed came a lot of consequences for Indian farmers because Monsanto had essentially monopolized the cotton seed industry. Monsanto illegally patented their seed, forcing farmers to pay excessive royalties for using the seed. This made buying cotton seed a lot more expensive for low and middle class farmers that were already struggling to make a living, trapping them into debt cycles. Their seed also became ineffective at controlling pests and weeds, leading to crop failure. The negative effects of Monsanto’s entry in` India may be a driving force in the rising suicide rates of Indian farmers.
2. Background
a. Genesis of the Problem- The entry of Monsanto in the Indian seed sector was made possible with the 1988 Seed Policy imposed by the World Bank, requiring the Government of India to deregulate the seed sector. In 1995, Monsanto introduced its Bt technology in India through a joint-venture with the Indian company Mahyco. This seed had been inserted with a pest-resistant toxin called Bacillus thuringiensis, or Bt.
b. In 1998, Monsanto illegally began open-field trials of its GMO Bt cotton. The Research Foundation for Science, Technology, and Ecology sued Monsanto in the Supreme Court of India and Monsanto could not start the commercial sales of its Bt cotton seeds until 2002.
i. Five things changed with Monsanto’s entry
1. Indian companies were locked into licensing arrangements
2. Seed, which had been the farmers’ common resource became the “intellectual property” of Monsanto, for which is began collecting royalties, thus raising the cost of the seed
3. Open-pollinated cotton seeds were displaced by hybrids, including GMO hybrids. A renewable resource became a non-renewable, patented commodity.
4. Cotton, which had earlier been grown as a mixture with food crops, now had to be grown has a monoculture. This leads to higher vulnerability to pests, disease, drought, and crop failure.
5. Monsanto started to subvert India’s regulatory processes and started to use public resources to push its non-renewable hybrids and DMOS through public-private partnerships.
ii. Patents on seed are illegitimate because putting a toxic gene into a plant cell is not “creating” or “inventing” a plant.
iii. The GMOS are failing to control pets and weeds, and have instead led to the emergence of superpests and superweeds.
iv. Monsanto’s royalty extraction and the high costs of seeds and chemicals have created a debt trap
c. Parties Involved and Their Positions with Respect to the Problem:
i. Farmers against Monsanto- right to reliable and affordable seed, the right to life
ii. Government- duty to protect farmers’ right to livelihood, right to life (Art 21 of constitution, protect the life of all its citizens; Cotton Seed Price Control Order), and duty to protect from monopoly, duty to revoke patent according to Art 64&66 of Indian Patent Act
iii. Indian seed companies- feeling pressure, stuck between price control measures exercised in the interest of farmers and Monsanto demanding illegal royalties and terminating agreements
iv. Monsanto- Monsanto is an agricultural company. They apply innovation and technology to help farmers around the world produce more while conserving more.
1. Monsanto’s Position: Significant research has documented the problem is complex and disproved the claim that GMO crops are the leading cause of Indian farmer suicides. Monsanto is committed to helping improve the farmers globally, and they believe they have implemented several projects that have positively impacted Indian farmers and their communities.
2. Farmer suicides in India have been a problem for nearly three decades, which is well before the first GM crop was introduced in India.
3. Benefits of GM cotton to Indian farmers:
a. Cotton yields and returns have increased significantly, providing improved economic conditions for the majority of farmers using Bt cotton
b. Indian farmers and landless laborers have identified improvements in the quality of life of their families
c. Monsanto India and the Indian Society of Agribusiness Professional (ISAP) partnered to create Project SHARE (Sustainable Harvest: Agriculture, Resources, and Environment) to communicate the importance of modern cultivation practices to farmers, enabling them to increase yields, and therefore, incomes.
v. Farmers that support Monsanto: Farmers say they prefer Monsanto’s herbicide-tolerant Roundup Ready Flex (RRF) strain of cotton seeds as they can cut input costs by as much as 10,000 rupees an acre.
3. Discussion/Argument
a. Overview of the Problem
i. Issue of Intellectual Property Rights, patents in the context of false claims and failing technology
ii. Monopoly- Monsanto has violated Competition Laws and there is Prima Facie evidence of a monopoly
iii. Farmers are being trapped into debt and being driven to suicide because the seed is too expensive and the seed that is available is not reliable.
iv. BT I and BT II are failing to control pests and the pink bollworm has become resistant
v. Monsanto has been collecting royalty for the seed without having a patent for it
vi. Monsanto has two patents, one on the methods for transforming plants to express Bacillus thuringiensis delta endotoxins and the other for protection of the Bollgard-II technology. These granted patents are in violation of the Indian Patent Act (section 3J relating to non-patentability of plants, seeds and essential biological processes, section 3H relating to non-patentability of methods of horticulture and agriculture)
vii. Monsanto’s seed monopolies, the destruction of alternatives, the collection of profits in the form of royalties, and the increasing vulnerability of crops has created a context for debt, suicides, and agrarian distress which is driving the farmers’ suicide epidemic in India.
b. Status of the Problem- Monsanto is now extending its patents to conventionally bred seed, as in the case of broccoli and peppers
i. Previously attempted solutions and their success/failure
1. Show Cause Notice
2. Nationwide uniform price for cotton seed
3. Price was reduced in 2006 because of a case brought before the MRTPC by the Government of Andhra Pradesh
4. Central government issued a seed price control order cutting Monsanto’s royalty on BT seeds by 74% since the technology was no longer effective
5. Karnataka High Court Interim Stay Order
6. Delhi High Court ruled that plant varieties and seeds cannot be patented (cited India’s Patents Act of 1970)
a. Failure: Monsanto withdrew its application to introduce a new generation of cotton seed technology that would be more effective and help solve the issue of resistant pests
i. If another company doesn’t step in, agricultural economists warn that the dispute could damage India’s cotton-growing sector
7. Fibers of Freedom- located in the heart of Monsanto’s Bt cotton/suicide belt in Vidharba. It is a community seed bank with indigenous seeds that helps farmers go organic. Their slogan is, “No GMO seeds, no debt, no suicides”.
8. Ministry called for an antitrust investigation into alleged monopolistic practices by the company (launched in February 2016- need to find results of investigation)
ii. Other solutions currently or recently considered or proposed
1. M. Prabhakara Rao is preparing to take on Monsanto by opening his own Indian cotton seed company. With the new Prime Minister, Narendra Modi, who campaigned on the grounds of Indian nationalism, this could be a successful endeavor.
2. The ministry also floated the idea of a compulsory licensing regime that would all but force Monsanto and other firms to hand over their proprietary technology to major Indian seed companies that applied for licenses
a. This has been suspended for some reason (need to research why)
iii. Why other considered or proposed solutions would not completely solve the problem
c. Your Proposed Solution to the Problem: Revoke patent- if Indian companies have the freedom to bring lower cost and more reliable seeds to the farms, and Indian farmers have the freedom to produce their own organic seeds, no one will buy Monsanto’s seed. Monsanto uses the patent to both collect royalties and lock Indian companies into licensing agreements to only sell their cotton seeds.
i. Once the patent is revoked, the Government should offer funds in the form of subsidies to allow for other cotton seed companies to get on their feet and be level competitors with Monsanto. If they are not provided with funds, I believe it will be very difficult for up-and-coming companies to compete with such a dominant, monopolistic firm like Monsanto. These new companies do deserve a return on their investment, similar to what Monsanto feels they deserve and have been charging through royalties, but these royalty payment rates should be determined by the government, so they are not outrageous and unreasonable.
ii. Strengths:
1. Indian farmers would have several seed options to choose from, creating competition against Monsanto.
2.
iii. Expected results- Many new, smaller, cotton seed companies will pop up, allowing for farmer to choose which seed best suits their farming needs (based on type of irrigation system, soil, weather conditions, etc.)
iv. Implementing steps/process
v. Weaknesses/What would be left solve after implementation of your solution (this corresponds to the counterargument)
1. This fiasco can dissuade global seed or technology companies from investing in India. In the short term, India might be able to get by with a local alternative to GMO cotton, but in the long-term, they are going to need a technology that can propel their cotton output.
2. Too much government reliance: how will this be funded? Increasing taxes can have the same effects in terms of debt for famers. How do we know that the next administration will continue these practices? Things could switch right back to how they were before when a new administration comes in
vi. Process or plan for solving what would be left to solve after implementation of your solution
4. Conclusion
5. Bibliography