Finally saw Food, Inc.

So I finally watched Food, Inc. (long overdue); I came in with a somewhat skeptical attitude and felt similarly afterward (perhaps that says more about me than about the film). It makes some good points – for example, Kevin’s Law should pass, and much of industrial livestock production looks gross. I don’t object at all to the muckraking style (in the fine tradition of Upton Sinclair). But I felt much of the movie was grafting broader populist themes like “corporations are bad” and “our political system is broken” onto the agriculture and food world, rather than making nuanced and well-argued points that are specific to the latter.

Monsanto might be crossing the line when they attack someone like Moe Parr with litigation (emphasis on "might" - Monsanto has its own side of the story). But the broader argument that “farmers have saved seed for thousands of years” is specious given the importance of intellectual property to spurring innovation. Monsanto’s Roundup Ready soybeans could not have gone from 2% market share in 1996 to 96% market share in 2007 without offering really substantial benefits to farmers, benefits that could never in a million years have been developed through traditional seed selection and breeding. So while wrongful prosecution is not OK, enforcing the contract farmers who use Roundup Ready seed sign to not save their seed is fine with me.

My biggest disagreement with Michael Pollan et al is with how they disparage “efficiency” and are blasé about food prices (“good food costs more”). In the movie they even show a poor Hispanic family that wants to buy broccoli and pears, but they’re too expensive, so they get Big Macs instead. Michael Pollan’s response is “we need a system in which the bad food costs more than the good food.” I am all for ending ag subsidies (dare we hope the word is moving in that direction?), which are one weight that tilts the playing field. But moving to less efficient staple crop production methods will only increase prices and take up more land, resulting eventually in more deforestation and environmental degradation (particularly in the developing world), not to mention more malnourished people. And it won’t even bring broccoli within the purchasing power of the Gonzalez family. In fact, it’s easy to imagine a more extensive production system increasing the value of land and thus the price of all food crops, healthy or not.

Monsanto's patent expiration dance

Via Parke Wilde at U.S. Food Policy, an interesting NYT article on the dynamics of patent expiration on Monsanto's widely-used Roundup Ready 1 soybeans, which occurs in 2014.

In letters to seed companies and farm groups this week, Monsanto said that it would allow farmers to continue to grow its hugely popular Roundup Ready 1 soybeans even after the patent protecting the technology expires in 2014.

The letter countered a widespread impression in the agriculture business that Monsanto planned to force farmers and seed companies to migrate to a successor product called Roundup Ready 2 Yield, which will remain under patent and is more expensive.

Monsanto is trying to position this as a clarification rather than a retreat:

Gerald A. Steiner, executive vice president for corporate affairs at Monsanto, said Thursday that Monsanto was not changing its policy on how it would handle the soybean patent expiration, but was merely clarifying its intentions.

“What’s different,” he said, “is we have made a very comprehensive communication of what we are going to do.”

But the widespread impression in the seed business was that Monsanto was backing away from a previous policy.

Monsanto appears to have strong legal protections in their existing contracts, but it doesn't look like those will stand up to the weight of public criticism:

Some seed industry executives and academic soybean specialists say that Monsanto was not planning to renew licenses for that Roundup Ready 1 trait that expired before 2014, so that seed companies would have no choice but to move to Roundup Ready 2.

But in its letters this week, Monsanto said it would now extend all contracts for Roundup Ready 1 until the patent’s expiration date. It also said it would not enforce language in some contracts that would have required seed companies to destroy or return Roundup Ready seed when the patent expired.

But Monsanto may have another out a few years down the road:

Still, it is uncertain how long Roundup Ready 1 would survive in generic form. Some nations require licenses for the import of genetically engineered crops to be periodically renewed. Monsanto said it would maintain those licenses through 2017. But if they expired after that, American farmers would not be permitted to export the Roundup Ready 1 generic soybeans to certain countries, which would discourage them from growing those crops.

One final thought - Monsanto is much-demonized as a monopolist and worst, but it is hard to get textbook industry structure and competition in industries which require massive R&D investments. Those investments simply don't get made privately without patent protection, which looks suspiciously like a monopoly after the fact.

Monsanto

Interesting Economist article on "whether Monsanto is a corporate sinner or saint."

I haven't yet seen Food, Inc., but this reminds me to.

Via Duncan Green, to whose blog I just subscribed.

RIP Norman Borlaug

A great man with a controversial legacy, but one could argue that he did more for human well-being than anyone else in the history of the world.

In 1960, before his techniques were widely adopted, the world produced 692 million tons of grain for 2.2 billion people. By 1992, largely as a result of Borlaug's pioneering techniques, it was producing 1.9 billion tons for 5.6 billion people -- using only 1% more land. India and Pakistan are now agriculturally self-sufficient as a result of his intervention.

That's from this LA Times obituary, the first of many I am sure. It has an engaging discussion of his quest to improve crop yields through breeding.

Critics (particularly from the organic agriculture world) see him as the forefather of monoculture-dominated industrial agriculture and the myriad environmental and nutritional damages it has wrought. The jury is still out, but in my mind the burden of proof still lies on those who hold that organic agriculture can scale up to feed the world without bringing massive tracts of new land under cultivation.

Update: Here's a great story from later in Borlaug's life:

Borlaug formally retired from the International Wheat and Maize Project in 1979, becoming a professor at Texas A&M University. But in 1984, he got a call from Japanese industrialist Ryoichi Sasakawa, who offered Borlaug funding for five years of work to aid agriculture in Africa.

Speaking through an interpreter, Borlaug said, "I'm 71. I'm too old to start again." Sasakawa called back the next morning and said, "I'm 15 years older than you, so I guess we should have started yesterday. Let's start tomorrow."

Update 2: World-Grain.com has a good quote from Borlaug's Nobel Prize acceptance speech, showing awareness of the wider world beyond his discipline:

"We must recognize the fact that adequate food is only the first requisite for life. For a decent and humane life we must also provide an opportunity for good education, remunerative employment, comfortable housing, good clothing and effective and compassionate medical care."

It also has the interesting tidbit that Borlaug was a Hall of Fame wrestler at the University of Minnesota.

Update 3: Chris Clayton:

In the U.S., we are blessed so much that debate over agriculture focuses on the quality of food, where it comes from, how it's grown and how it's cooked. With the passing of Dr. Borlaug, perhaps people will be inspired to reexamine the higher calling of agriculture and those throughout the world who still have yet to be touched by the green revolution.

Update 4: A few people try to size how many lives Norman Borlaug saved. The Indian Minister of Agriculture says 245 million. The Liberty Papers says 1 billion. Greed, Green and Grains thinks even 1 billion might be an understatement (and with over 1 billion people currently suffering from undernourishment, I think he could be right).

Update 5: A long and interesting interview with Borlaug from 2000.

Update 6: Here is a provocative but loosely-reasoned piece on Norman Borlaug's complicated legacy. I applaud the author's attempt to explore the rippling ramifications of Borlaug's work, but, as this commenter details, there are "several inaccuracies - some tiny, some major."

Update 7: Here's a longer NYT article, including this reference to Vandana Shiva; I'm sympathetic with Borlaug's response.

In a characteristic complaint, Vandana Shiva, an Indian critic, wrote in 1991 that “in perceiving nature’s limits as constraints on productivity that had to be removed, American experts spread ecologically destructive and unsustainable practices worldwide.”

Dr. Borlaug declared that such arguments often came from “elitists” who were rich enough not to worry about where their next meal was coming from. But over time, he acknowledged the validity of some environmental concerns, and embraced more judicious use of fertilizers and pesticides. He was frustrated throughout his life that governments did not do more to tackle what he called “the population monster” by lowering birth rates.

Food industry consolidation

Agricultural input markets tend to be fairly consolidated. The seeds market, for example, is dominated by 4 big players. 6 companies control >75% of the crop protection market. Fertilizer saw the CF/Terra/Agrium takeover drama unfold over the past year, and PotashCorp controls something like 60% of the world's potassium supply.

Farming itself is incredibly fragmented (part of the reason farmers are generally not hugely profitable, heavily-subsidized ones in the U.S. and Europe excepted). Downstream of farming has the ABCDs of food trading (ADM, Bunge, Cargill, Dreyfus), and increasing consolidation among food processors as well. The latest example is Brazilian meatpacker JBS's $2.5bn bid for bankrupt Pilgrim's Pride. $2.5bn is a lot of money for a bankrupt company, and unsurprisingly the combined entity would be huge:

Combined, Pilgrim's Pride and JBS's U.S. unit -- which includes sales at the JBS business in Australia -- would have posted about $20 billion in revenue last year. Tyson's fiscal 2008 revenue was $27 billion.

I predict this is not the last consolidating move in the food sector.

Consolidation generally means two things - economies of scale, and margin pressure on the more fragmented steps of the value chain. In this case, that is farmers, which is concerning because the majority of yield upside in the world is for poor smallholder farms in South Asia and Africa, and the majority of the world's very poor and undernourished people live in rural areas and have livelihoods connected directly or indirectly to farming.