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Monsanto at the Supreme Court

According to NPR:

This week, the Supreme Court will take up a classic David-and-Goliath case. On one side, there's a 75-year-old farmer in Indiana named Vernon Hugh Bowman; on the other, the agribusiness giant Monsanto.
The farmer is fighting the long reach of Monsanto's patents on seeds — but he's up against more than just Monsanto. The biotech and computer software industries are taking Monsanto's side.

Here is what's at the issue according to the report:

Starting in 1999, he [Bowman] bought some ordinary soybeans from a small grain elevator where local farmers drop off their harvest. "They made sure they didn't sell it as seed. Their ticket said, 'Outbound grain," says Bowman.
He knew that these beans probably had Monsanto's Roundup Ready gene in them, because that's mainly what farmers plant these days. But Bowman didn't think Monsanto controlled these soybeans anymore, and in any case, he was getting a motley collection of different varieties, hardly a threat to Monsanto's seed business. "I couldn't imagine that they'd give a rat's behind," he snorts.
Bowman told his neighbors what he was doing. It turned out that Monsanto did, in fact, care.
"He wanted to use our technology without paying for it," says David Snively, Monsanto's general counsel.

I don't know if what Bowman did was legal or not.  However, I have previously commented that many people do not seem to grasp the economics of the situation.  Here's what I said back in October at the case:

What do you think will happen to the price of the first generation seed if farmers are able to freely replant the progeny?  . . . if the Supreme Court rules that Monsanto does NOT own the progeny, then the value of the seed to farmers rises since they can re-use the seed.  . . .  For the indifference principle to hold (i.e., for equilibrium to be restored), the price must rise.  Monsanto will charge more for it's initial offerings if farmers can freely replant.      

I also subsequently posted on several myths that seem to be circulating in relation to this case.

The implications of the case could be far reaching.  For example, when I sell a book, I get royalties when a new copy is sold.  But, when it is re-sold as used I no longer make any money (but it seems that perhaps I could under the logic used by Monsanto).  What about music?  Back when I was in college, Napster was a big deal, but was subsequently shut down because it was apparently illegal to share songs in this fashion.  It seems that some forms of music (electronic) are treated like Monsanto seed but other forms (old vinyl records) are not.  Picasso made money the first time he sold a painting but not when the buyer re-sold it.  But, what if he had copyrighted the image? Or patented his painting process?

The underlying issue here is when and how long do innovators hold the rights to their creations?  And, are these rights maintained even after the original invention is re-sold?  

Assorted Links

The Market for Animal Welfare

That's the title of a magazine article about a talk I gave a couple months ago in Canada.  The talk (and the academic paper I published about it in the journal Agriculture and Human Values) delves into an idea I've been developing for a while that attempts to release some of the steam from the animal welfare debate using a bit of free-market economics.  

The idea, in short, is to create a separate market for animal welfare that is decoupled from the market for eggs, meat, and milk.  Farmers have a product they're supplying (animal welfare) that is only indirectly (and poorly) reflected in the price of food.  Animal advocacy groups have a product they want to buy (higher animal welfare) but there is currently no mechanism for them to achieve this outcome in a market setting.  It is no wonder then, they they often turn to bans, litigation, and protests.  The idea is create an index of animal welfare being produced on the farm and assign "credits" or "units" based on production that can be sold in a newly constructed market.  The idea somewhat analogous to pollution trading markets, and I argue that it could be more effective than bans on production processes (like gestation crates), meat taxes, and other policies that are currently on the table.  

If you want more details, see my paper.  I'll leave you with the conclusion from the  article in Canadian Poultry Magazine:

Coming back to the concept of Animal Well-Being Units, would people be willing to buy animal welfare? Lusk asked. For those who feel strongly about animal welfare but have already changed their diet to reflect their preferences, buying welfare credits is an option that could appease their need to support animal welfare: they can’t not buy eggs anymore if they’re already not buying eggs. Agribusiness, animal welfare groups, you and me, we could all buy AWBUs and producers could participate and make money for doing so.
“The current market price for animal welfare is zero,” says Lusk. “Therefore not many farmers are going to sell it.”
From this economist’s perspective, we’ve just got the price wrong.

Animal Welfare and Food Safety

Food Safety Magazine just published an article Bailey Norwood and I wrote on animal welfare and food safety.  

Here are a few excerpts:

The premise of [the movie] Contagion is that raising hogs on “factory farms” encourages the emergence of deadly pathogens. How accurate is this caricature? In reality, a bat is more likely to drop food near hogs or chickens raised outdoors. Would the movie have been more realistic if the bat infected a pig raised on an organic farm, a farm where animals roamed “free range,” or a farm owned by a small producer slaughtering his own animals and selling locally? Or would a more accurate film show the bat shedding feces near a field of broccoli, sickening people consuming fruits and vegetables instead of meat? Is it true that animal welfare and food safety are trade-offs, or are they instead complements? When we pay more for humane meat, are we also getting safer food or are we accepting greater risk? These are the questions we investigate in the present article.

and

Americans today consume more poultry than any other meat product so even if a meal containing poultry is safer than beef or pork, more illnesses may result from poultry consumption simply because chicken is consumed on such a large scale. Using the data in Table 1 to claim poultry is risky is a bit like claiming roads in Texas are more dangerous than those in Wyoming simply because more Texans die in car crashes—however, the population size of the two states would seem the more logical culprit. Analogously, the volume and value of the food should be taken into consideration when comparing risks. Consumers might voluntarily accept riskier food if they value it more.

and in summary:

In general, production systems that provide animals outdoor access have the potential to expose animals to pathogens, viruses and other parasites. In some cases, it appears that this potential is realized. However, in other cases, perhaps due to effects of lower stocking densities or better managerial competence, the risks can be alleviated or even reversed. In short, animal housing conditions are but one factor, and a far from deciding factor, affecting food safety.
However, consumers don’t always see it that way. Consumers conflate perceptions of safety with perceptions of animal welfare. They are not necessarily irrational in doing so, as care and managerial competence in one domain are likely to be correlated with meticulousness in another. 


GMOS and Crop Yield

There was an interesting paper published last week in Nature Biotechnology by some University of Wisconsin professors of agricultural economics and agronomy (by the way, one of the authors, Chavez, is a preeminent agricultural economist - he's also one of the most well read economists I've ever been around).

The study used crop yield data from plots in Wisconsin and showed that not all biotech corn varieties outperform conventional varieties in terms of yield.  As they put it:

Compared with conventional hybrids, the impact of transgenic traits (both single and stacked traits) on mean yield ranges from −12.2 to +6.5 bushels per acre.

Not surprisingly, the result has been picked up by the anti-biotech crowd, such as Tom Philpott at Mother Jones.  

According to the biotech industry, genetically modified (GM) crops are a boon to humanity because they allow farmers to "generate higher crop yields with fewer inputs," as the trade group Biotechnology Industry Organization (BIO) puts it on its web page.
Buoyed by such rhetoric, genetically modified seed giant Monsanto and its peers have managed to flood the corn, soybean, and cotton seed markets . . .
Turns out, though, that both assertions in BIO's statement are highly questionable.

There are numerous problems with Philpott's arguments.

First, is rhetorical.  Monsanto didn't "flood the market."  Somebody had to buy those seeds.  Those somebodies were farmers who willingly adopted, and even paid price premiums to have biotech seeds.  Which leads to the second issue.

As the Nature Biotechnology study shows, the biotech varieties had an important risk-reducing effects, even if they sometimes led to slightly lower yields.  Moreover, biotech can save on other inputs like labor.  When I was a teenager, I spent a lot of time hoeing and spraying cotton weeds. That job is (thankfully) now obsolete due to biotechnology.     

You also can't just cherry-pick the results you want to emphasize if you want to actually be objective.  As I reported earlier, larger studies conducted over a much wider geographic region DO show yield improvements from biotech adoption (though that study shows - like the more recent one in Nature - that yield effects of traits are not additive).  Moreover, check out table 1 (gated) of the aforementioned study in the American Journal of Agricultural Economics, which shows 31 different results from numerous studies, almost all of which show a yield boost from biotech.  Or see this study in Science by another preeminent agricultural economist showing significant yield gains (and pesticide reductions) from biotech adoption in India.  The totality of the evidence suggests that - in most locations and for most crops - biotech does increase yield most of the time (though not always and not in all locations and not for all crops).

That gets to my last issue with Philpott.  He (and others) continually reference the work of Charles Benbrook on pesticide use associated with biotech.  But, rarely do they differentiate between pesticides use (which biotech DOES reduce) and herbicide use (which biotech has increased).  Also ignored is the relative toxicity and environmental effects of pesticides vs. herbicides or the reduction in toxicity that has occurred over time as a result of biotech (see this recent critique of Benbrook's work).  If that weren't bad enough, such authors also fail to point out that use of herbicide-resistant biotech facilitates no- and low-till farming practices, which are a real environmental benefit (indeed, the data shows that biotech adoption is strongly correlated with no- and low-till adoption).  

I'm not saying there are no downsides to biotech use (e.g., more rapid development of herbicide resistant weeds; potential market power in the seed/chemical sector).  But, one has to look at the totality of the evidence and not just cherry-pick.  Moreover, you have to look at the decisions made by real-life flesh and blood farmers all over the world who have voluntarily adopted GMOs.  The fact that biotech was so readily adopted by farmers (and is still so widely in use) aught to tell you something.