Organization for Competitive Markets
P.O. Box 6486
Lincoln, NE 68506
www.competitivemarkets.com
For Immediate Release: July 24, 2008
Contact:
Kristina Hubbard, hubbard@competitivemarkets.com, 406-203-4433
Fred Stokes, tfredstokes@hughes.net, 601-527-2459
Monsanto Corn Seed Price Hikes a Threat to Agriculture
Lincoln, NE – The Organization for Competitive Markets (OCM) says Monsanto’s market power is driving up seed prices and increasing economic risk to farmers.
“Monsanto’s market power has been quietly accruing over several years and has now begun materially impacting price,” said Keith Mudd, OCM’s board president. “The lack of competition and innovation in the marketplace has reduced farmers’ choices and enabled Monsanto to raise prices unencumbered.”
Monsanto executives recently told DTN that they expect to raise the price of some seed corn varieties to $300. The Monsanto executives consider themselves only restrained by the “red-face test.” “There is no competitive restraint to this price hike,” said Mudd.
OCM points to a specific quote from the DTN article:
Even the list price on seed corn will topple the $300 per bag barrier starting this fall, up about $95 to $100 per bag, or 35 percent on average, according to Monsanto officials who met with DTN and Progressive Farmer editors this week…For 2009, 76 percent of the company’s corn sales will be triple stack, ‘so we think we can get the pricing right to show farmers the benefits,’ John Jansen, Monsanto’s corn traits lead. ‘We can pass the red-faced test from the Panhandle of Texas to McLean County, Ill.’
“A $100 price increase is a tremendous drain on rural America,” said Fred Stokes, OCM’s executive director. “If a farmer in Iowa who farms 1,000 acres plants one of these expensive corn varieties next year, the cost per acre will increase from $82 to $123, or a gross increase of more than $40,000. We believe Monsanto has quashed competition to the extent that it can raise prices with little restraint,” continued Stokes. The cumulative drain on farms by state is reflected in the table below:*
acres Percent Planted to Monsanto Traits Gross Monsanto Revenue Increase Per State
Arkansas 560,000 70% $16,170,000
California 670,000 70% $19,346,250
Illinois 13,200,000 70% $381,150,000
Indiana 6,600,000 70% $190,575,000
Iowa 14,300,000 70% $412,912,500
Kansas 3,700,000 70% $106,837,500
Louisiana 750,000 70% $21,656,250
Maryland 540,000 70% $15,592,500
Michigan 2,500,000 70% $72,187,500
Minnesota 8,200,000 70% $236,775,000
Mississippi 980,000 70% $28,297,500
Missouri 3,500,000 70% $101,062,500
Montana 70,000 70% $2,021,250
Nebraska 9,100,000 70% $262,762,500
New York 1,060,000 70% $30,607,500
North Carolina 1,100,000 70% $31,762,500
Ohio 4,000,000 70% $115,500,000
Pennsylvania 1,450,000 70% $41,868,750
South Dakota 5,000,000 70% $144,375,000
Tennessee 840,000 70% $24,255,000
Texas 21,000,000 70% $60,637,500
Virginia 530,000 70% $15,303,750
Wisconsin 4,050,000 70% $116,943,750
OCM is a nonprofit organization working for open and competitive markets and fair trade for American food producers, consumers and rural communities. OCM’s Seed Concentration Project aims to foster competition, innovation and choice in the crop seed industry.
* This chart assumes plant population of 33,000 plants per acre. A bag of corn seed has 80,000 seeds. Each acre is planted with .4125 bags. The final calculation is (total state corn acres in 2007) x (percentage planted with Monsanto traits as per Monsanto claimed national average) x (.4125 bags/acre) x ($100 price increase).
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