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Monsanto seed price hike sparks anger
(Monday, Aug. 11, 2003 -- CropChoice news) -- Carey Gillam, Reuters, 08/08/03: KANSAS CITY, Mo. (Reuters) - Plans by Monsanto Co. MON.N to raise prices on its popular biotech corn and soybean seeds were sparking anger in the U.S. Farm Belt this week.
"I do believe Monsanto should be more careful about trying to jam some more expense down farmers' throats," said Nebraska seed dealer and farmer Steve Wiese. "They need to walk carefully ... some farmers are thinking enough is enough."
Monsanto has been struggling to regain favor in the investment community and last week said it would raise prices on its hot-selling Roundup Ready corn and soybeans in the United States to help increase revenue.
The suggested retail price on its Roundup Ready corn seed would increase on average by about $3 a bag, while Roundup Ready soybean seed would go up by about $2 a bag, said Monsanto spokeswoman Lori Fisher.
The increases represent about a 2 percent markup on corn and a 10 percent hike on soybean. The seeds are genetically modified so that the crops tolerate Monsanto's Roundup weed killer, allowing farmers to efficiently eliminate weeds from their fields and reap higher yields.
Fisher said Monsanto was implementing the price hikes in the United States, where the lion's share of the company's biotech seed business is conducted.
At this point, Monsanto has not decided whether to raise corn and soybean prices in the Southern Hemisphere. Fisher said the company would make a decision on that region as the growing season there nears.
She also said price increases were not unique to the United States. Last year, for example, Monsanto raised cotton seed prices in Australia, she said.
Fisher said customer surveys showed the value of the technology was great enough to support much larger price increases, but Monsanto was not pursuing those.
"Farmers are ascribing a higher value to any seed that has a Roundup Ready trait to it ... because of the advantage it gives them," she said.
Farm group leaders balked at that assertion and said prices should not be increased unless Monsanto was providing additional value in the products. Roundup Ready soybeans already are priced more than 30 percent higher than conventional seeds, according to seed dealers.
"There is a great amount of frustration connected with this entire concept," said Vic Miller, an Iowa corn and bean grower. "Usually, if there is a price increase, there is additional value. We're not getting any additional value."
Farmers also expressed frustration that the price hikes came despite competition from soybeans grown inexpensively in Brazil, where Roundup Ready soybeans are grown illicitly after seed is essentially smuggled in from nearby Argentina.
"They aren't getting it out of their South American stuff so they're putting us on the hook for it," said Nebraska soybean and corn grower Mike Alberts, president of the state chapter of the American Corn Growers Association.
Still, farm leaders said many farmers would be reluctant to walk away from Roundup Ready soybeans, which this year were planted to an estimated 62 million acres, or more than three-quarters of the total U.S. crop, because of the benefits in yields and efficiency.
"We'll know in a couple months when they start purchasing seeds," said American Soybean Association spokesman Neil Caskey. "The jury is still out."
Corn could be a different story. Roundup Ready corn is planted on only about 11.6 million acres, or 16 percent of the total U.S. corn crop, and farmers are running into problems with the product.
Not only are some buyers reluctant to take the biotech corn, farm leaders said, but use of Roundup Ready corn seed is prompting herbicide-resistant "volunteer" corn -- from seeds left over from the previous year -- to sprout in fields where farmers are trying to grow soybeans.
And, farmers said, the seeds already are priced at a big premium over conventional varieties. A bag of Roundup Ready corn seed in the Plains costs $140 to $150, compared with about $90 for a bag of conventional corn seed.
"I don't know if they're ready to pay more for anything right now with the problems we've had the last couple years," said Wiese. "They (Monsanto) may lose some acres."
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