Thursday, May 13, 2010

The effect of seed prices on food production

When shopping for groceries, I would imagine few people associate the price of an item w/ the cost of the materials needed to grow the ingredients. Most would probably associate the cost of their grocery items coming from labor and transportation. Unfortunately, we as consumers may be seeing higher prices at the grocery store not because of rising labor and transportation costs, but because of rising seed prices.

In an article from the LA Times, reporter PJ Huffstutter explores why seed prices are rising. The farming industry produces more than $80 billion worth of soybeans and corn annually with seeds costing about $17 billion in 2009, up 56% from 2006. In the article, Huffstutter describes farming for the Leake family who owns a soybean farm in North Dakota. The Leakes state that the availability of seed suppliers has greatly diminished from 50 about 10 years ago to now only 4 seed companies in the area. The reason for the dwindling number of suppliers is that a few companies have bought out all of the competitors, leaving many farmers to complain of unfair competitive practices by the few, giant seed suppliers left. Bill Wenzel, national director for the Farmer to Farmer Campaign, supports this statement saying that the number of independent seed companies in the U.S. has shrunk from 300 to less than 100 in the past 10 years.

Fifty percent of the world's proprietary seeds for major crops come from only 4 companies; the leader being Monsanto Co. In a 2009 report by Farmer to Farmer, 92% of U.S. soybean acres and 85% of U.S. corn acres are grown with Monsanto seeds. By having such a large hold on the seed market, Monsanto has been accused of unfair marketing practices. The Leakes report that in 2000, a bag of Monsanto Roundup Ready soybean seeds cost $17, but today has increased to $50 (an increase of 294%). The U.S. Justice Department is currently investigating Monsanto's "market dominance to undermine rivals and raise prices", reports Huffstutter.

Disclaimer: I am not bad-mouthing Monsanto or any seed company. I am only trying to bring issues to the table that affect farmers.

As a farmer, how have seed prices affected your bottom line? Do you think the major seed companies are reaching oligopolistic market shares? Do you think seed prices will ever decrease even after the government steps in?

1 comment:

The Real 54 said...

I definitely wouldn't take into account the cost of seeds in creation of food, probably because you go to the store and buy a packet of seeds for 50 cents or something. I'm curious as to the effects that Terminator seeds have on the market costs. Shocking that I wouldn't expect government intervention in this area to help prices unless it were to outlaw the creation of terminator products.