The Business of GM Crops

In today’s post, I’d like to get back to the business of our food and how GMOs fit into the agricultural system. This will serve as an overview of the current state of things, and we’ll delve deeper into implications and more science on each of these parts in future posts as per the outline on the ‘Highlights’ page. The small blurbs on these facets should give you an idea of where things are headed and the questions I plan to address. So, if there is some burning question that you have, which isn’t mentioned, please feel free to comment below and I will do my best to track down an answer for you.

Ag business is big $

Agriculture in the U.S. is a multi-billion dollar per year sector. For the sake of simplicity, let’s just consider the Farming sector and Agribusinesses that supply farming inputs (seeds, machinery, fertilizer and other chemicals).* Farms make up just under 1% of our national GDP. The USDA ERS calculated a net value of farm income to be $113 billion (includes crops and animals) in 2012. The total value of cash crop production was $217 billion dollars. Agribusinesses that supply farmers with seeds and other supplies also mean big money. The USDA ERS value for 2012 seed costs to farmers was $20 billion dollars. Other manufactured inputs like fertilizer and pesticides cost farmers $42.2 billion dollars. Clearly, agricultural is valuable to our national economy and there seems to be plenty of money to be made in the production of food.**

R&D: identifying targets and their market

Agribusinesses that develop GM crops must identify the needs of the farmers and find ways to engineer those desired traits into profitable crop species. Thus far, the traits (herbicide and pest resistance) have been geared toward maximizing production efficiency. It is also great for agribusiness when you can sell the seed and complementary chemical for maximal profits (ala Monsanto’s RoundUp Ready seed and RoundUp herbicide formulations). No doubt, there are other traits on the horizon currently being studied in the research and development (R&D) pipeline of large agribusiness companies. So, speaking of R&D and the company everyone loves to hate… Monsanto discloses that it has an annual R&D budget of $1.5 billion, most of which is dedicated to biotech and transgenic development.*** So when it comes to developing transgenic crops with profitable traits, what are they talking about? It’s all about maximizing yields on minimal inputs.

Herbicide resistance: Farmers will always have to stay a step ahead of the weeds that can choke out their yields

Pest resistance: Farmers want to sell their crops and offer less of them up as insect buffet

Disease resistance: Sometimes insects aren’t the only thing farmers have to worry about; pathogenic viruses, bacteria and fungi also plague farmers and their fields

Drought tolerance: Weather patterns can be unmerciful and irrigation is expensive even if it isn’t logistically infeasible

Lower fertilizer requirement: If you could get the same yields without having to buy as much fertilizer, wouldn’t you use those seeds?

Generally higher yields: If scientists can unlock a new bonus level within crop metabolism to facilitate this, it will be welcomed by farmers.

Specialty crop properties: It’s always nice to have better flavor, higher sugar content (sweeter corn), oil content (canola), or stronger fiber (cotton), but some crops still have room for improvement as far as industrial scale harvesting and processing goes. Think- firmer tomatoes, crisper peppers and melons that ripen more slowly. Of course, scientists could always make biofortified varieties a la Golden Rice with higher contents of vitamins A-Z (maybe Centrum Rice™), but there’s not much money in it.

Intellectual property that replicates itself

With such large sums of money being spent on R&D to develop these shiny new varieties, agribusiness companies have to guard their technology to make the most of their profits. These new varieties are patent protected so that the company that developed them has exclusive rights to sell them to farmers. Patent protection makes perfect sense on paper (there’s a lot of intellectual property in those seeds), and the system works for other industries (automobiles, electronics, pharmaceuticals, snuggies and oxyclean). However, this intellectual property can replicate itself without a care in the world for licensing. So, how does this work in practice? Here are some things to think about…

What is the premium for this patented technology (price comparison for conventional vs. GM seeds)?

How does patent protection work for living things?

How is this technology licensed when the seeds are bought from these companies and what strings are attached?

What is considered patent infringement? How is it detected and penalized?

Regulation of GM crops

The agribusiness companies have spent years and millions getting their new magic beans ready for the market. They have just argued how novel they are and that they require patent protection to profit off of this intellectual property. Before GM crops can enter the food system, several different agencies are involved in their review. The USDA oversees the agricultural practices related to their cultivation. The FDA evaluates their safety with respect to human consumption. The EPA examines any environmental hazards posed by the new GM crops.

What’s the regulatory process for getting new GM varieties into the food system?

How long does it take?

How much does it cost?

Is it standardized? Are there loopholes?

How do the standards from GM regulations differ from conventional varieties?

Effects of GM crops on the agricultural system

Farmers have been using GM varieties for long enough that they have been the subject of many scientific studies. These investigations should be able to determine how well the GM varieties live up to their marketed promises of yield or reduction in chemicals.

Did the implementation of herbicide resistant varieties result in more or less herbicide use?

Did the implementation of pesticide resistant varieties result in more or less pesticide use?

Are we starting to see herbicide-resistant weeds and pesticide-resistant insects?

What studies have been done on the safety of the widely available GM crops and what are their results?

What studies have been done on the environmental effects on the widely available GM crops and what are their results?

What about GMO contamination of nearby conventional or organic fields? How do you control it? Who should be responsible for testing for it?

These topics emphasize the fact that introducing GM crops into the agricultural system is a minefield even once you have the plant science figured out. As we will cover in the next few posts, it spawns the need for even more fixes- technological, legal and political. Since there is a lot of money on the line, the doors open for judgment errors, fraud, and exploitation (i.e. of a legal system failing to keep pace with technology). More people should know the details about this process and the answers to the questions above so we can honestly evaluate how well the current system is serving us. I guarantee there is room for improvement; after all it is a hybrid of big business and the government. Let’s try to find a better way.


* Businesses that act as other components of our food system (food processors and vendors) generate much greater revenue compared to the actual producers and their suppliers. However, some relationships are not so easy to tease apart. A great number of energy, petroleum and chemical companies feed into the agricultural sector but they also supply many other facets of our economy.

** This is especially true if one starts to add in food processing companies, grocery vendors and the food service industry. However, for now, we’ll just stick to the farm.

*** For comparison, the entire budget of the USDA ARS (Agriculture Research Service) was $1.1 billion in 2012. The budget for USDA NIFA (National Institute of Food and Agriculture), which funds a considerable amount of research and extension, was $1.3 billion in 2012.



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