Seed - Part 1
My grandpa loved being a Pioneer seed corn dealer. He loved talking to everyone, and being a dealer led to the farm’s survival. This is like other farmers working in a factory or driving a truck to help the farm survive. My family also grew seed corn for Pioneer for most of my life. I derogued, where you remove the ugly seed corn plants from the others, and I also worked for Pioneer for a couple summers providing quality control for detasselers, where you castrate specific corn rows.
Our farm ran on Pioneer. My dealer was a good friend and knowledge person. He always answered every question, no matter how absurd. We were wrapped up in the Pioneer brand. The countless free hats and the most comfortable sweatshirts given to farmers. I knew a farmer who was so proud to get the ISU logo on his Pioneer hat. This loyalty stays strong despite the high price point at which Pioneer sells their seed. Excluding land rent, seed was the fourth most expensive input category on the farm.
Pioneer seed is the Cadillac Escalade of seed corn. I could not argue with it. We had years of an intense drought and deluge of rain, and it yielded the same if not better than average.
There were lower cost seed products, but they were still mostly made from the two big players, Bayer or Corteva. Taking a page from the car industry like how GM has the Cadillac Escalade as a luxury brand and the Chevy Traverse economy brand. For Corteva, the Pioneer is the Cadillac Escalade, and their other seed brand, Brevant, is the Chevy Traverse. It does not matter if you are buying the higher end or lower end because the same company has cornered the high and low-price products. There is not actually another company which is solely competing on price. It is an illusion of choice. Bayer also deploys this tactic with DEKALB as their Caddy, and Channel as their Traverse. This illusion of choice gives companies more market power.
Part of this consolidation came from the highly consolidated grain processers. The industry wants an overproduction of these grains for ethanol, biodiesel, high fructose corn syrup, and a variety of other products. These products are not helping farmers or Americans bottom lines, but it helps these companies’ bottom lines. This consolidation to only growing corn and soybeans in Iowa makes it easier to farm, but it also makes farmers less independent. The lack of independence shifts the tables even more in favor of the large corporations.
Another way these companies consolidated and gained power was not by skill and expertise. They lucked out due to the lack of antitrust law enforcement coupled with the changing of government rules.
As stated by Farm Action*, “After the Supreme Court ruled that genetically modified seeds could receive patent protection in 1980, however, that began to change. Major biotech companies developed strong incentives both to enter the seed market — where they could develop and license new patented genetically-modified seeds — and to “consolidate patent portfolios” and thereby avoid patent infringement litigation. Aided by the loosening of merger enforcement under the Reagan and Clinton administrations, they pursued these incentives through aggressive M&A strategies. The result was an explosion of biotechnology acquisitions in the seed market that transformed the seed and pesticide industries.”
The transformations were not due to creating better seeds. It was to merge and combine patent portfolios to increase their market power and led to increasing seed prices. Fewer companies could access the patents, it drove up the cost. These large corporations not only wanted to control farmers, but they wanted to control the entire seed market.
“That these were calculated acquisitions for control is suggested by the significant price premiums that acquiring firms paid for their targets, which frequently exceeded three times annual sales. As observers at the time noted, these premiums suggested an expectation that the purchase-price premiums would be recouped at higher than prevailing rates of profit in the future. Over the same time period, the Big Six also negotiated exclusive contracts with agriculture universities to access their germplasm and also obtained germplasm from a variety of international seed collections.”
The race to secure patents has led to most patents ending up in the hands of these three large companies. Taking away resiliency in our agricultural system by relying on so few seed providers.
“According to the USDA’s 2023 Concentration and Competition in U.S. Agribusiness report, 58% of all Plant Variety Protection Certificates (PVPCs) issued by the USDA and all patents for new crop varieties and closely 47 related innovations issued by the USPTO between 1976 and 2021 are now controlled by the three largest seed companies — Bayer, Corteva, and ChemChina-Syngenta.”
This allows gatekeeping and prevents new competitors from entering the market. As a farmer, seed contracts include clauses. This is different from when my dad first started farming. At that time, he could hold back seeds to grow the next year if times were tough. It was worth it to save a few dollars. Unfortunately, today, a farmer must buy the best seed every year at whatever price they want it to be.
Today’s process is like a subscription to Adobe. I cannot buy the product fully to use for a few years. I must keep coming back for more at a higher price. It also does not help that according to Farm Action, “over the past 20 years, the price of commodity-crop seeds has risen faster than the price for any other farm input — and those price increases have dramatically outpaced yield increases over the same period.”
*All quoted pieces are coming from the same Farm Action report
Learn more about how the consolidation of seed patents led to a different landscape between my dad’s time farming versus mine in Part 2.