Monsanto’s Business Model: A Questionable Strategy to Extend Copyright into Perpetuity?

by Nigel Bolton-Shaw on July 18, 2012

Overview: Monsanto has been receiving a lot of attention because of a lawsuit filed by five million Brazilian farmers against it. But there is a larger issue involving Monsanto, and it has to do with Monsanto’s business strategy and natural law.

What Monsanto and other corporate entities have been trying to do – and this has resulted in the current lawsuit – is recreate a copyright-patent system that goes beyond what has commonly been considered intellectual property.

Ultimately, it is likely unreasonable as it works against “natural law,” which is why Monsanto is having so much trouble enforcing its will. Combine a flawed strategy with the free-flow of information in the Internet era, and you get uncooperative customers and organized resistance.

Though it is not explained this way in this “modern” age, this is likely why five million Brazilians are now suing US-based Monsanto for over six billion euros. Monsanto may have to largely rethink its business strategy in the Internet era.

Business Savvy from Sidewalk

It usually starts as a tug on the sleeve, or a gentle touch on the elbow. And it’s almost always ignored, because it feels similar to the common plaintive touch of a child seeking some change.Unheeded, the tug is quickly followed by a more urgent “Wait!” as you step from the curb and the traffic goes zipping by inches from your toes. And you suddenly remember you’re “not in Kansas anymore.”

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Monsanto now collects royalties from “renewal” seeds that constitute next year’s harvests. If farmers use Monsanto seeds, they need to pay a royalty for continuing to use them. The royalty is two percent every year.

The logic is that if the hand of man creates it, then it is copyrightable or patentable. This is disturbing because it is revealing a larger pattern that seems both conscious and inexorable. Russia Today has covered the Brazilian controversy in an article entitled “Seeds of Doubt.” It’s a good summary, and here is an excerpt:

At stake is Brazil’s highly profitable and ever growing soybean production. Last year, Brazil was the world’s second producer and exporter of soybean behind the United States, according to the AFP report. The crops can be used for anything from animal feed to bio fuel, and worldwide demand is growing.

Genetically engineered soy first appeared illegally in Brazil in the 1990s, smuggled in from neighboring Argentina. The Brazilian farmers found the seed attractive despite the ban in place from the Brazilian authorities because Monsanto had specifically designed the seed to be resistant to its own immensely powerful and popular herbicide Roundup.

When used in tandem, the strong herbicide will kill the weeds while allowing the soy crops to grow unimpeded. After the ban was lifted, genetically modified seed flooded the Brazilian market, and now 85 per cent of the Brazilian soy crop is genetically-engineered. Soy has been extremely successful in Brazil, currently making up 26 per cent of the country’s farm exports last year and netting Brazil a total of $24.1 billion, according to AP. However, Brazil’s farmers were apparently unaware there would be a heavy price to pay.

To make a deal with Monsanto is to make a deal with a company that is one the most powerful and pervasive food giants in the world. It is the world’s number one seed developer, and its patented genes have been inserted into 95 per cent of all American soy, and 80 per cent of all American corn crops. Monsanto has repeatedly levied large damage suits against independent farmers that have unknowingly or unwittingly used their seed.

Food, water, energy – corporations (multinationals especially) inevitably seek control of the basic building blocks of life because that’s where the money is. The strategy doubtless began at least 500 years when the elites of the day came up with the idea of copyright itself. This was evidently a ploy to slow down the spread of printed information and to generally prevent its dispersal. Printed information was essentially undermining to the powers-that-be of the day just as the Internet is threatening it today.

There is some evidence that copyright was applied more broadly in England than Germany. It has been hypothesized therefore that Germany’s intellectual flowering in the 1700 and 1800s was a direct result of the large quantities of printed information available to the public at low prices.

The issue as it concerns Monsanto is not whether the company has a right to sell products and charge for them as it chooses. But essentially, Monsanto holds crops hostage with its position on royalties. The farmer grows his crop using manifold resources including labor. He also grows the seeds that he intends to replant – but finds he cannot until Monsanto is paid again … and again.

Yet it is not Monsanto that will enforce this dictat, but authorities. And thus we can conclude what Monsanto wants to do is against natural law. There is no way that Monsanto could enforce its will on customers all over the world when it comes to seed royalties. Whether the penalties are civil or criminal, it needs government officials and bureaucratic authorities to do that.

If Monsanto tries to pursue this business model on its own, it will soon likely find the costs to be prohibitive. This, in fact, is the reason that furniture makers don’t try to charge twice or three times for the same chair. Or why manufacturers of milk, butter and eggs don’t try to charge a royalty for the end result – a cake for instance.

If Monsanto wants to charge royalties for its seeds, let it enforce this idea on its own. It is only MERCANTILISM – the ability that multinational Monsanto has to motivate governmental agencies to do its will – that allows Monsanto to pursue this apparently flawed business model.

One may argue that Monsanto’s position is one that involves accepted practices of patent law. But this is just the point. There is plenty of evidence that patent law retards progress considerably, while enriching only a few. Just Google “patent law abuses.”

If Monsanto wants to collect royalties on seeds, leave the government out of it. Applying its will via government force in the Internet era may be – increasingly – a non-starter from a business strategy standpoint – as five million Brazilian farmers are signaling now.

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