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It has become part of American tradition to demonize industry, always framing it in the classic “little” versus “big” or “good” versus “evil” scenario. Regardless of the role that corporations may play in the larger economy, more often than not, “big” means “bad.”
From the trust-busting antics of Teddy Roosevelt in his war against J.P. Morgan’s railroad holdings and Rockefeller’s Standard Oil, to United States v. Microsoft in 1998, large and powerful business interests have attracted the attention of regulators and the ire of the media.
Monsanto, a multinational agricultural biotechnology corporation, is no exception. As the world’s leading producer of an herbicide known as “Roundup” and innovator in the field of genetically engineered seed, the company has been the subject of decades of lawsuits and bad press. Nevertheless, analysts are predicting a comeback.
Says Zacks.com’s Tracey Ryniec in Forbes:
Its dividend is currently 28 cents a quarter, which produces a yield of about 1.5%. Monsanto was one of the few companies that didn’t cut its dividend during the great recession, even as earnings declined.
While shares aren’t “cheap” by valuation standards, with a forward P/E of 25, investors get double digit growth with a company focused on returning cash to shareholders through both the share repurchase and the dividend payout.
The controversy surrounding Monsanto is manifold. The aforementioned “Roundup” broad-spectrum herbicide was genetically integrated into soybean seed in 1996 and corn in 1998, allowing farmers to rid their fields of harmful weeds without killing crops.
This advancement in weed control allowed farmers to employ a myriad of environmentally friendly practices like “no-till” farming, drastically cutting down on soil loss and energy use. Less of the herbicide can be used, which cuts down on the harmful runoff and the cost to farmers (that inevitably gets passed on to consumers).
To protect its investments and to foster future research and innovation, Monsanto has a patent on its genetically engineered seeds. When farmers buy seeds from Monsanto, they sign an agreement stipulating that they will not save and replant seeds, but will pay each time they are used.
The majority of farmers do just that. They recognize the important advances Monsanto is making in the industry and pay for a product that is effective largely because of the millions that have been invested in research and development (approximately $2.6 million each day).
The media has focused on those who decide not to pay, saving, cleaning and replanting Monsanto’s patented seeds, once again making the issue into a big, bad corporation ostracizing a poor, hardworking farmer.
That is simply not the case. According to Monsanto:
A very small percentage of farmers do not honor this agreement. Monsanto does become aware, through our own actions or through third-parties, of individuals who are suspected of violating our patents and agreements. Where we do find violations, we are able to settle most of these cases without ever going to trial. In many cases, these farmers remain our customers. Sometimes however, we are forced to resort to lawsuits. This is a relatively rare circumstance, with 144 lawsuits filed since 1997 in the United States, as of April 2010. This averages about 11 per year for the past 13 years. To date, only 9 cases have gone through full trial. In every one of these instances, the jury or court decided in our favor.
It is not some agricultural spy network that tells Monsanto about suspected patent agreement violations, but other farmers. Monsanto is not ganging up on famers, but rather those who are violating the patent agreement are seen as having an “unfair advantage” and are thus reported. Says Monsanto:
When one farmer sees another farmer saving patented seed, they will often report them. Many of the tips Monsanto gets about farmers saving patented seeds come from other farmers in the same community.
Monsanto’s research into what is known as “Gene Use Restriction Technology” (GURT) has also been the subject of much negative press. Called “Terminator” seeds by its detractors, the seeds can be genetically wired to become lose certain properties (like invulnerability to Roundup herbicides) or even become infertile after certain periods of time.
Environmentalists and humanitarians have argued that such seeds could cause famines and perpetuate poverty if introduced into the commercial market, especially into the developing world. Monsanto however, has made it painfully clear that it has not developed such a seed, and has no plans to do so.
Of course, the use of herbicides never goes over well with environmental watchdogs, and soon unsubstantiated talk of “superweeds” and contaminated water supplies exploded in the media, prompting highly publicized and expensive lawsuits.
Time and time again, Monsanto is demonized in the popular media. “Documentaries” like Food, Inc., The Corporation, The Future of Food, Seeds of Deception, and The World According to Monsanto are highly critical of the company’s practices and turn a cut-and-dry matter of economics into an emotional struggle between small-town farmers and a faceless corporation willing to do anything to increase profits.
Food, Inc. and the rest of the media seek the testimony of scores of self-proclaimed “industry experts,” but each time critics accuse the company of gross ethics violations or immoral business practices, and it seems only right that Monsanto should be able to respond, the company “could not be reached for comment.”
Indeed, a closer examination of the motives of the film’s producers sheds some light on Monsanto’s lack of involvement in the process. As stated on Monsanto’s blog in response to the movie:
We believe taking part and sharing in rich conversations about the important challenges facing agriculture, food production and our well-being are inherently intertwined. Climate change, water use and drought, exploding global populations, rural development and poverty, all deserve our best ideas and our thoughtful participation.
What we’re not interested in doing is being an actor, typecast in a film with pre-determined outcomes; outcomes that conveniently step around important issues facing agriculture today. Beverly Hills-based Participant Media [the company that produced Food Inc.] describes their mission as one of telling “compelling, entertaining stories…” and “entertain[ing] audiences first…”
When it comes to the important topics facing agriculture, we’re happy to participate, we just have no interest in being someone’s participant.
It’s a Catch-22. The media plays off of the emotional side of the issue, and only allows for Monsanto to participate within certain constraints, established to ensure that the production company’s agenda is fulfilled.
When Monsanto refuses to play ball, the documentary can say that Monsanto “did not comment,” depicting them as the large and uncaring entity that the popular press makes them out to be. The dialogue in Food Inc. reinforces this sentiment:
The way the system appeared to work to me was Lady Justice had the scales and you piled cash on the scales and the one that piled the most cash on the scales, hired the most experts and was most willing to tell the biggest lies, that was the winner. That seems to be how our justice system functions now. It’s terrible. It’s terrible. How can a farmer defend himself against a multinational corporation like Monsanto?
The issues surrounding Monsanto are being presented to the public as though farmers are part of an agricultural resistance movement, battling against Monsanto’s tyranny. The reality is much less inspiring; a small group of farmers are breaking the law and are trying to get as much attention as they can in doing so.
The company is even accused of employing Gestapo-like tactics to shut down seed-cleaning machines run by retirees (a serious threat to a multinational corporation). Though Monsanto uses entirely legitimate means of seeking out violators of patent the patent agreements, the idea of threating dark figures appearing in the middle of the night is more appealing to the media. As one farmer complains:
Two men drove in my driveway at 7:00, 7:30 at night, presented a black card to me and they never told me that they were from Monsanto. They said that they had had a surveillance team, caught me cleaning beans. They were–I’m gonna say maybe ex-military or ex-police. They were large and they were intimidating…
Monsanto has responded to each of the arguments raised in Food Inc. on their website, employing facts and numerical data rather than the heart-wrenching stories of a few elderly farmers to prove its point. But the damage is done. As it so often happens, the media has chosen a side, and has placed Monsanto among the ranks of previously labeled “evil” corporate America, right beside Halliburton and Philip Morris.
The fact that Monsanto is set to make a comeback amid the countless lawsuits and regulatory shackles it is continually forced to endure says something about the quality and necessity of its products, as well as the sustainability of its business practices.
Each time the government and media have engaged in such campaigns, the result has been the same; legal scuffles, followed by limited concessions and reshuffling to quell the public outcry spurred by the media.
In each historical instance in which government has tried to punish large corporations be they Microsoft, Standard Oil, Western Union, De Beers, or countless others, innovation and market forces have always prevailed. These businesses have continued to be industry leaders and visionaries, despite the losses they’ve been forced to endure as a result of government interference. Monsanto’s plight is something no business should have to endure.
Those who argue against the company’s practices allow themselves to be beguiled by emotional and circumstantial evidence, overlooking legal and economic arguments pointing to Monsanto’s value to the industry. Capitalism is not a crime, and Monsanto should not be treated as though it is breaking the law, but rather should be celebrated as the citadel of advancement in agricultural technology and efficiency that it is, and has always been.
Regulators, legislators and the media would do well to remember the words of Daniel Webster, that “The right of an inventor to his invention is no monopoly – in any other sense than a man’s house is a monopoly.” Monsanto’s ownership of its products is an exercise of one of the fundamental precepts of our legal system, and is as American as the agricultural industry itself.