Agriculture Reference
In-Depth Information
them—they voluntarily purchase the GM seeds. In this sense
the seed corporations have earned their market share through
the creation of a superior product—just as Google has earned
its large market share in search engines through its superior
search algorithm. The majority of corn, cotton, soybeans, and
sugar beets in the United States are GM varieties for the simple
reason that farmers prefer them. Biotech crops are spreading
across the world, and because not many firms can sell GM
seeds, the four-firm concentration ratio (the percentage of the
market dominated by the four largest firms) for the seed and
biotechnology sector rose from less than 25 percent in 1994 to
over 50 percent in 2009.
It is sometimes said that economists believe a market is no
longer competitive when four companies control 40  percent
or more of a market, but that's only the case when firms are
making an identical product (and even then not all economists
agree on the 40  percent rule). Just as Google is a very differ-
ent search engine than Yahoo's engine, GM seed is not the
same product as non-GM seed. These days, seed companies
compete less on price than on innovation. Given the constant
stream of new seed varieties, one could make the case that the
seed market is actually quite competitive.
This does not mean there are no concerns about market
power. Five large seed corporations are Monsanto, Syngenta,
Dupont, Dow, and Bayer, but these firms do not act indepen-
dently of one another. Monsanto owns most of the patents for
GM seed traits, but other companies have seeds with advanta-
geous traits also. Often, to produce the highest quality seeds
possible, Monsanto and one of the other firms will strike an
agreement and combine their genetics. For example, Monsanto
may own a patent for a GM trait in soybeans, while Dow may
have a variety of soybeans particularly suited to the southeast-
ern United States. By combining these traits they can sell a GM
seed that grows well in South Carolina, increasing the value
of the traits owned by both companies. This is referred to as
a cross-licensing agreements. This cooperation requires the
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