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USDA Report Highlights Harms of Seed Consolidation and Restrictive IP

The future of food hinges on the humble seed. Adapting agriculture to a changing climate or a plant pandemic depends, in part, on innovative seed breeding and preserving seed genetic diversity. But a new report [[link removed]] released earlier this month by the U.S. Department of Agriculture (USDA) finds that seed industry consolidation paired with restrictive intellectual property (IP) regimes are stifling small, independent, and public seed breeding programs.

Just four massive corporations sell more than half [[link removed]] of all seeds on a global basis, and for many staple commodity crops like corn, soy, canola, and cotton, just two giants [[link removed]] sell the lion’s share of seeds in the U.S. Along with seed sales, these giants control seed-breeding programs and use patents and onerous licensing agreements to lock up their genetics and popular patented traits. This severely limits how new, small, or public seed breeders can create new crop varieties and shrinks the number of options for commodity crop farmers, pushing them to buy costly brand name products.

To break down barriers and root out predatory business practices, USDA announced plans to collaborate more with antitrust enforcers and the U.S. patent office. The report recommends that the patent office consider limited intellectual property exemptions for seed researchers, a common policy globally. USDA also calls for more investment in public seed breeding programs, which traditionally serve a critical role filling gaps in private research and breeding regionally adapted crops.

The commodity crop seed industry changed dramatically in the 1990s when developments in genetic engineering allowed corporations to create seeds that could tolerate certain pesticide applications. Chemical corporations such as Monsanto and DuPont sought to expand their stake in the seed business through acquisitions. Between 1980 and 2014, Monsanto alone bought 60 [[link removed]] independent seed and genomics companies. All told, over 200 commodity seed companies were either acquired or went out of business during the 1990s and 2000s, USDA found.

These growing conglomerates applied more restrictive intellectual property protections to maintain monopoly control over desired genetically engineered traits, like glyphosate resistance, and the seeds that carry them. Top seed companies switched to more restrictive utility patents instead of USDA-run plant variety protections (PVPs), which, unlike utility patents, grant limited exemptions that allow seed breeders and researchers to develop new varieties from protected strains.

The U.S. is one of just four countries that allows utility patents on plant varieties and not just specific genetic traits. Plant varieties are not well suited for utility patents because it is hard to prove that any given characteristic, like specific disease resistance, is truly a “new” invention that does not already exist somewhere in nature. When companies patent plant varieties using utility patents, they can shut down ongoing research and prevent future breeders from working with their seeds or genetics for decades.

Dominant seed corporations disproportionately benefit from intellectual property restrictions. One study found that in 2015 DuPont and Monsanto held around 80% of all patents and PVP rights for corn and soybean varieties. Across major U.S. commodities today, USDA found that the top four seed corporations own 97% of canola, 95% of corn, 84% of soybean, 51% of wheat, and 74% of cotton IP rights.

Source: USDA

These monopolies either cut off access to their patented gene pool entirely, or they demand onerous and restrictive licensing terms for any competing seed makers that want to use their proprietary traits and seeds. When most of the genetic base (called germplasm) for current varieties of commodity crops are patented, any breeder that wants to improve on top U.S. crops has very little to work with. “New [seed] entrants are very rare,” wrote the Farmers Business Network in a comment to USDA [[link removed]]. “Consolidation will only continue to intensify, as new germplasm must be bred from existing germplasm that is owned and controlled by a few dominant companies.” If this cycle continues and seed monopolies’ walled breeding garden becomes too inbred or genetically similar then the entire U.S. corn, soy, or canola population could become vulnerable to a new disease or ecological shock.

Companies try to prevent their protected seeds and traits from ever coming off patent by making modest changes and applying for new patents. As for the seeds that eventually do come off patent, oftentimes, breeders cannot buy them anymore, or old, poorly kept stocks fail to germinate, USDA found. Breeders also struggle to use off-patent traits if they cannot be isolated from still-patented germplasm. This makes it especially hard to create cheaper generic versions of seeds with popular traits, like dicamba- or glyphosate-resistance.

USDA also found that it was hard for breeders to even identify whether traits and varieties were actually protected, needlessly chilling research. For instance, one seed breeder, Frank Morton, told USDA [[link removed]] that they found a “bag tag,” a built-in licensing agreement that dictates how a bag of seed may be used on an unpatented heirloom-seed variety, revealing the lengths Big Seed companies will go to maintain control over seed varieties. Actions like these “[create] the impression that ‘everything is patented,’” Morton wrote in their comment. “This leads to people restricting their own fair use of public domain varieties, a kind of self-censorship, for fear of legal consequences.”

Without healthy competition, farmers have fewer choices and get pushed to buy pricey name-brand seeds and chemicals. USDA found that dominant seed companies will create an illusion of choice in the market by selling the same seed varieties under different names. Farmers that want to diversify their fields often do not know which variety of seed they’re buying until it arrives at their door, because companies only must put the variety on the bag and not online (something the USDA is trying to change through a Federal Seed Act policy statement, published this month [[link removed]]).

Seed companies also use restrictive IP licensing to closely control and push out the independent seed dealers that produce large volumes of commercial seeds from monopolists’ base genetics. In their USDA comment [[link removed]], the Independent Professional Seed Association said that independent seed dealers “must provide a multinational corporation with a list of all our customers, … the amount of seed purchased by product for each customer, as well as our complete company financials” in order to license seed genetics from top corporations. This raises concerns about price discrimination, as dominant seed breeders could use dealers’ intimate business information to charge exactly as much as they can afford to license their genetics. It also means breeders could take independent dealers’ customers and try to sell them seeds directly.

Seed corporations say IP is essential to incentivizing costly research and innovation, which ultimately benefits farmers by inventing new, high-yielding products. But economic studies [[link removed]] cited by USDA argue that [[link removed]] “much of [the] benefits from private R&D may not accrue to the farm sector at all but accrue as profits to the input supply industries.”

USDA notes that public seed-breeding programs are an essential counterweight to private programs, as they cover regional needs and less profitable ventures that corporations will not take on. Public programs used to dominate seed development, but today, private sector research dollars far exceed public seed research and since the 1980s, over a third [[link removed]] of public plant breeding programs have shut down. For instance, in 2014 [[link removed]] there were just five public corn breeders compared to 25 in 1960. Programs that remain have less staff and funding [[link removed]], and short-term grants increasingly do not cover [[link removed]] the full timeline for bringing new varieties to market.

Thus, to protect plant biodiversity and promote innovation in the face of a changing climate, USDA recommends investing in public seed breeding programs and partnerships with non-profits or small, independent breeders. USDA also announced new collaborative efforts with the patent office to improve the seed patent granting process and evaluate expanding PVPs’ exemptions for breeders and researchers to plant and utility patents. The International Seed Federation recommends [[link removed]] this exemption to “maximize the potential for innovation,” and most other countries maintain these exemptions.

USDA will also work with the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to identify potential antitrust violations by dominant seed corporations. It still remains to be seen if these latest promises will succeed where past efforts to take on Big Seed have failed. After the USDA and DOJ held a joint public workshop [[link removed]] on seed consolidation in 2010, the DOJ later gave up [[link removed]] on an antitrust investigation into Monsanto in 2012. Just this Wednesday, the DOJ decided not [[link removed]] to challenge a merger between AM Fresh and International Fruit Genetics, two major fruit breeding companies, citing insufficient resources. However, the Biden Administration has shown some willingness to take on seed and agrichemical conglomerates, as the FTC sued [[link removed]] pesticide manufacturers last year for paying distributors substantial rebates to block generic competitors, a charge that enforcers could also levy against seed corporations.

Find and share this story originally published on [[link removed]] Food & Power [[link removed]] . [[link removed]]

What We're Reading

The Surface Transportation Board allowed [[link removed]] Canadian Pacific to buy Kansas City Southern in the biggest rail merger in over 20 years. Food & Power covered [[link removed]] how this deal will harm farmers. (Washington Post/Food & Power)

Colorado could become the first state to enact a law ensuring that farmers have access to all the tools and software they need to repair farm equipment, as an agriculture Right to Repair bill passed the state house and senate last week. ( Colorado Politics [[link removed]])

Over 60 agriculture and environmental groups including Food & Water Watch, Family Farm Defenders, and the Indigenous Environmental Network, formed a new coalition to oppose funds for carbon offset and manure biodigester projects in the upcoming Farm Bill. ( Food & Water Watch [[link removed]])

About the Open Markets Institute

The Open Markets Institute promotes political, industrial, economic, and environmental resilience. We do so by documenting and clarifying the dangers of extreme consolidation, and by fostering discussions of ways to reestablish America’s political economy on a more stable and fair foundation.

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Written by Claire Kelloway

Edited by Anita Jain

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