Poverty via Monopolization: the Impact That Intellectual Property Rights and Federal Subsidies Have on Farm Poverty

• Publication year: 2021

Poverty via Monopolization: The Impact that Intellectual Property Rights and Federal Subsidies Have on Farm Poverty

Elizabeth Slater
University of Georgia School of Law, eks26130@uga.edu

Poverty via Monopolization: The Impact that Intellectual Property Rights and Federal Subsidies Have on Farm Poverty

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POVERTY VIA MONOPOLIZATION: THE IMPACT THAT INTELLECTUAL PROPERTY RIGHTS AND FEDERAL SUBSIDIES HAVE ON FARM POVERTY

Elizabeth Slater^*

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TABLE OF CONTENTS

I. INTRODUCTION...........................................................................................211

II. BACKGROUND.............................................................................................213

A. SEED VARIETY DEVELOPMENT.......................................................213
B. TRANSGENIC SEED MARKETING.....................................................216

1. How Seed Monopolization Affects Farmers' Income...........216
2. Single-Use Licenses in the Seed Market...................................217

III. INTELLECTUAL PROPERTY PROTECTION FOR SEEDS..........................220

A. PLANT VARIETY PROTECTION ACT................................................220
B. UTILITY PATENTS...............................................................................222
C. TRADE SECRET....................................................................................223

IV. AGRICULTURAL SUBSIDIES........................................................................223

A. POST-MARKET SUBSIDIES TO FARMERS..........................................224
B. THE BLURRING OF PUBLIC AND PRIVATE RESEARCH INITIATIVES ...............................................................................................................226
C. THE PROBLEM WITH PUBLIC-PRIVATE RESEARCH MERGING AND THE INTELLECTUAL PROPERTY REGIME.......................................227

V. FINDING A SOLUTION TO THE SEED PRICING PROBLEMS..................229

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I. INTRODUCTION

In 1970, the Nobel Committee awarded the Nobel Peace Prize to Norman Ernest Borlaug for inventing new cereal crop strains that reduce the "environmental and social ills that too often lead to conflict between men and between nations."¹ In his acceptance speech, Borlaug warned that those attempting to solve poverty and hunger would not be successful unless they work together "to provide food and other amenities of a progressive civilization for the benefit of all mankind."² Since then, the estimated prevalence of undernourishment in developing countries has decreased from 34.75% in 1970 to less than 13% in 2015.³ However, the Green Revolution also rapidly altered the profitability of farming.⁴ For American farmers who supply the world with $118.3 billion of agricultural exports annually,⁵ farming contributed an average of only $296 to each household's income in 2019.⁶

These economic burdens on American farmers have become oppressive, partially due to increased input costs with corn and soy seed ranging between $25 and $70 per acre depending on variety and planting density.⁷ For these farmers, artificially heightened seed prices afforded to inventors are a substantial financial burden. A 2019 survey indicated that "the nonmetro poverty rate was 15.4 percent . . . compared with 11.9 percent for metro areas."⁸

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In the agricultural product market, four companies dominate the sale of seeds and agricultural chemicals: BASF, Bayer, Dow-Dupont, and Syngenta.⁹ Despite seed prices increasing more than 30 percent annually,¹⁰ these companies justify high prices by pointing to the $136 million per new variety spent on research and development from 2008-2012 alone.¹¹ Changing the scheme surrounding agricultural subsidies would help shift the high costs of biotech development off of farmers without chilling new seed varieties' innovation by agricultural product firms.

Producers of new seed varieties are "protected by utility patents, plant patents, certification under the Plant Variety Protection Act, and trade secrets."¹² Makers of genetically modified seeds find the highest degree of protection from the Plant Variety Protection Act (PVPA), which awards twenty years of exclusive control over newly propagated plant varieties.¹³ The exorbitant cost and the degree of luck involved in developing a successful seed variety limit smaller companies' ability to price compete against the big four agri-tech firms in a particular seed market, especially without infringing on another company's intellectual property rights.¹⁴ Increasing federal research subsidies to public agricultural research organizations would help mitigate the trend of agricultural research becoming profit-oriented instead of need-oriented while not discouraging private inventors by reducing patent regime protections.

This Note serves to (1) provide background on new seed development and wealth concentration in the agriculture markets; (2) describe the current intellectual property regime surrounding agricultural products produced through

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biotechnology; (3) describe how the government distributes agricultural subsidies pre-market to research initiatives and post-market to farmers; and (4) argue that increasing federal spending towards public agricultural research would be more effective at reducing the cost of new seed varieties than relaxing current patent protection and would occur without curbing innovation in the seed development market.

II. BACKGROUND

The following section provides background information on the development of new seed varieties. This section describes how seed monopolization affects farmers' income to highlight the importance of reducing price barriers in new seed development. This section also discusses why biotechnology companies sell genetically modified seeds under single-use licenses and how it has upended traditional farming practices.

A. SEED VARIETY DEVELOPMENT

Developing higher yield, better tasting, and more resource-efficient crops has been a priority in the United States since its founding. As President Washington wrote, "I know of no pursuit in which more zeal [and] important service can be rendered to any Country than by improving its agriculture. . . ."¹⁵ Growing significantly from a nation of low-technology subsistence farmers,¹⁶ the North American seed market has become a massive industry worth $24 billion in 2019.¹⁷

There are two methods commonly used to create new plant varieties. The first is by inducing mutations in a plant's genotype and then cross-breeding it with another plant to achieve specific phenotypic characteristics.¹⁸ This method is an extension of how farmers have traditionally domesticated crops for thousands of years, by selecting to plant seeds from organisms with desirable traits or by combining traits between two closely related species through cross-breeding.¹⁹ The second method uses recombinant DNA technology, which

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introduces characteristics from another species by isolating the desired gene, cloning it in a host bacteria, and then introducing the new trait into the target species.²⁰ In food crops, recombinant DNA is used to increase resistance to chemical treatments, diseases, environmental conditions, and pests, along with reducing spoilage and improving the plant's nutrient profile.²¹ In non-food crops, many different industries use the technology in bioremediation (using microorganisms to convert hazardous materials into non-toxic or less toxic substances²² ), the production of pharmaceutical agents, and the creation of biofuels.²³

Genetically modified foods are prevalent in the United States. Over 93 percent of the country's soy and corn is grown from genetically modified seeds.²⁴ Currently, the federal government has approved ten transgenic crops for human and animal consumption.²⁵ Some varieties of genetically modified crops have established a more robust market hold than others. Even though it was released only ten years ago, the genetically modified sugar beet has grown to dominate the market. It represents 95 percent of all American-grown sugar beets in 2019.²⁶ In contrast, only 0.07% of all apples harvested and sold in the United States are genetically modified.²⁷

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Developing new seed varieties is a costly venture borne by biotechnology companies in the hopes of discovering an incredibly profitable variety.²⁸ In 2010, the total market value for genetically grown crops worldwide was estimated at $14.8 billion, with one-third of the benefit, or roughly $4.93 billion, directly benefiting the chemical and seed industry.²⁹ Another third of the benefit is split between farms³⁰ , of which there was an estimated 2.02 million in the United States in 2020,³¹ drastically diluting the per farm benefit of genetically modified crops.

The widespread incorporation of genetically modified seed varieties into farming practices has paved the way for a 22 percent yield increase, despite reducing chemical pesticide applications by 37 percent.³² One study indicated that yield increases from growing genetically engineered crops in the European Union could result in a reduction of greenhouse gas emissions by 33 million metric tons of carbon dioxide equivalents per year, due to a reduction in the total land needed to grow crops and the land's ability to store carbon when not used for agriculture.³³ However, the debate over transgenic crops' environmental effect is incredibly polarized, with skeptics of the practice warning of potentially damaging long-term results.³⁴ One concern surrounding genetically modified crops is the potential for "genetic pollution" of traits from the modified crop into native and invasive plants, creating "super-weeds" that carry herbicide-resistant traits.³⁵ This concern is already present considering the vast number of insect species resistant to many conventional pesticides used in tandem with genetically modified crops.³⁶

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B. TRANSGENIC SEED MARKETING

1. How Seed Monopolization Affects Farmers' Income

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