DuPont sends in #former cops to enforce #seed #patents-Bloomberg
DuPont Co. (DD), the world's second- biggest seed company, is sending dozens of former police officers across North #America to prevent a practice generations of farmers once took for granted.
The provider of the best-selling #genetically modified #soybean seed is looking for evidence of farmers illegally saving them from harvests for replanting next season, which is not allowed under sales contracts. The Wilmington, #Delaware-based company is inspecting #Canadian fields and will begin in the U.S. next year, said Randy Schlatter, a DuPont senior manager.
DuPont is protecting its sales of Roundup Ready soybeans, so called because they tolerate being sprayed by Monsanto Co. (MON)'s Roundup herbicide. For years enforcement was done by Monsanto, which created Roundup Ready and dominates the $13.3 billion #biotech seed industry, though it's moving on to a new line of seeds now that patents are expiring. That leaves DuPont to play the bad guy, enforcing alternative patents so cheaper "illegal beans" don't get planted.
"Farmers are never going to get cheap access to these genetically engineered varieties," said Charles Benbrook, a research professor at Washington State University's Center for Sustaining Agriculture and Natural Resources. "The biotech industry has trumped the legitimate economic interests of the farmer again by raising the ante on intellectual property."
Monsanto controls about 28 percent of the soybean market in the U.S., the largest producer and exporter last year, while Dupont has about 36 percent. The weed-killer tolerant seeds and related licenses generated $1.77 billion in sales for Monsanto in the year through August, 13 percent of the company's total. DuPont had $1.37 billion in soybean revenue last year, 3.6 percent of total sales, according to data compiled by Bloomberg.
The #grain is used to make animal feed, cooking oil, tofu and biofuels, and it's the biggest crop after #corn in the U.S.
DuPont dropped 0.5 percent to $43.24 at the close in New York. It has declined 5.6 percent this year, the fifth-worst performer of 31 companies in the S&P 500 Materials Index. (S5MATR) Monsanto has gained 30 percent, the sixth-biggest gain in the index.
Attacks on the modified #food #industry aren't new. Farmers criticized Monsanto in the 2008 Oscar-nominated documentary "Food, Inc." for contracts that keep them from saving seeds. The St. Louis-based company has sued 145 U.S. farmers for saving Roundup Ready soybeans since 1997, winning all 11 cases that went to trial, said Kelli Powers, a Monsanto spokeswoman. The U.S. Supreme Court last month agreed to consider the legality of such planting restrictions.
DuPont currently markets Roundup Ready soybeans under license from Monsanto, which is shifting to a newer version of the crop along with most of the rest of the industry. The new seeds produced an average of 4.5 bushels an acre more than the originals this year, Monsanto said today in a statement. Some farmers were anticipating a return to low-cost seed after patents on the original beans expire, Benbrook said.
Monsanto Chief Executive Officer Hugh Grant raised such a prospect in 2010 when he said that growers could replant Roundup Ready soybeans after the patents lapse.
"Our challenge is to get customers to understand the fact that strong intellectual property protection is a benefit that ends up at the customer level," Schlatter, who works for DuPont's intellectual property program office, said by phone. His company holds more than 225 soybean patents, he said.
"If we can't make a profit, we can't invest and we can't bring out new products."
Monsanto widely licenses its technology, getting the two versions of Roundup Ready soybeans into 82 percent of the global crop last year and 94 percent in the U.S. Patents on original Roundup Ready beans expired in Canada last year and they expire in the U.S. in late 2014.
Soybeans are easier for farmers to replicate than other hybrid crops such as corn because second-generation beans don't lose vigor, tempting farmers to hold onto seeds.
The Supreme Court on Oct. 5 agreed to review a federal appeals court decision that Vernon Hugh Bowman, a farmer, infringed Monsanto's patents when he purchased and planted Roundup Ready soybeans from a grain elevator to save money. The U.S. Court of Appeals for the Federal Circuit, rejected Bowman's contention that Monsanto had "exhausted" its patent rights by the time he bought the seed.
Monsanto pulled out of the Argentine soybean market a decade ago after the country stopped enforcing Roundup Ready patents. Pirated Roundup Ready beans are ubiquitous in the country. Monsanto is working on agreements to get paid for a newer technology that would allow it to re-enter the market on a trial basis in a year, the company said today in a presentation on its website.
Monsanto, which carries out the same kind of farm visits as DuPont, is shifting enforcement efforts to its new Roundup Ready 2 technology, Powers said. It has switched most U.S. customers to the new genetic trait, with 32 million acres planted last year and about 40 million acres estimated for next year.
Dow Chemical Co. (DOW), which competes in the biotech seed market, doesn't need farm inspectors because it's licensing the new Roundup Ready 2 trait from Monsanto, said Garry Hamlin, a Dow spokesman.
DuPont has contracted Saskatoon, Saskatchewan-based Agro Protection International for its farm audits. Agro typically hires retired police officers to visit growers, its President Dennis Birtles said. It has about 45 employees inspecting farms in Canada and is adding as many as 35 to begin work for DuPont in the U.S. next year, he said.
"Everyone always goes to the idea that we are trying to intimidate people and nothing could be further from the truth," Birtles said. "We are trying to create deterrence."
The inspectors are trained to remain polite and respectful as they examine planting and purchase records and tour farmers' fields, Birtles said. Crop clippings are sent to DuPont for genetic analysis.
Agro found no major violations in "a couple hundred" visits to DuPont's Canadian customers this year, Birtles said. Similar work for other clients typically find violations in about 2 percent of visits, he said.
Brian Corkill, who grows 500 acres of soybeans and 1,200 acres of corn in Galva, Illinois, said he knows another farmer who was caught holding on to modified seeds two years ago. Corkill said he would have no problem with inspectors visiting his farm.
"I don't know if it's worth the risk of saving seed," he said by phone. "We have all reaped the benefits of biotech seed and we have to remember that."
Agro will begin U.S. farm inspections two years before the Roundup Ready patent expires in the country, so as to let growers know that alternate patent protections are in place, Birtles said.
"In my business, it is easier to slow the tide from the very beginning than to try diving in three years later and then get people to stop doing some bad habits," he said.
By JACK KASKEY, Bloomberg News
Story Created: Nov 28, 2012 at 4:36 PM EST
Story Updated: Nov 28, 2012 at 4:37 PM EST