Why Rising Food Prices Mean Good Times for Monsanto and Its Biotech Seeds

Global food prices set an all-time record last month and, while this news spells trouble for many -- particularly those in developing countries who could barely afford food at last year's prices -- it's a big bright spot in Monsanto's (MON) efforts to gain new markets and win greater acceptance for its genetically modified seeds.

It works like this: rising food prices trigger concerns about food shortages, which then ignite a sort of panic about how we're going to feed a rapidly growing world population -- a fear that plays into Monsanto's well-disseminated messages about how biotechnology is needed to grow all that additional food.

Already, Monsanto and other biotech companies say they're encountering some newly opened doors. Here's what Hugh Grant, Monsanto's CEO told the Financial Times earlier this week:

If you do the 'temperature check' in the world in the past 24 months, a lot of the agricultural areas have made significant policy shifts. The gap in yields between the US and other countries gets magnified in times of shortage.

What he's saying is that because a majority of the soybeans and corn grown in the U.S. are from GE seeds, American farmers get bigger yields per acre (this is a theory, not a settled issue) and they have also an easier time managing pests and weeds (this one is largely true). If you buy into these arguments, then biotechnology starts to looks attractive, especially for developing countries facing crop shortages.

According to DuPont's Daniel Rahier, who oversees the company's biotech policy for Europe, Africa and Asia, some of the countries whose resistance to GE crops is melting include Vietnam, Cambodia, Kenya and Indonesia. He explained it this way:

In Indonesia, for example, it was in recent years very difficult to make progress on biotechnology. Now, the government is actively encouraging companies to file applications to get approvals for biotech seeds.

There's no question that over the next several decades we'll need a lot more corn, soybeans, wheat and other crops. The Earth's population is projected to grow by another 2 billion people by 2050 and some 3 billion people are moving up the food chain and consuming more meat, which requires more grain. But as for what sort of agriculture should be used to meet these needs -- that's still an open question.

Eco-agriculture to the rescue
As a counterpoint to Monsanto's and DuPont's high-tech worldview, a UN report this week concluded that smaller scale, environmentally-friendly "agroecology" can, in fact, feed the world. Specifically it can double food production within a decade in developing countries.

The report's author Olivier de Schutter, a human rights professor, argued that low tech, traditional and organic-esque methods of farming are better for poor farmers because they nurture the local ecology inside of sucking up non-renewable resources. And because there's less stuff to buy -- no expensive patented GE seeds, no chemical fertilizers, no chemical pesticides and herbicides and less farm equipment.

Of course, it's also possible, at least in theory, that some of Monsanto's products not built around the chemical herbicide Roundup could fit into this quasi-organic system. In other words, ditch the chemicals, the natural gas-derived fertilizers and the soil-destroying practice planting of the same crop on massive fields year after year, but keep the GE corn that requires less water -- assuming Monsanto ever gets around to actually developing it. If de Schutter's ideas, which have certainly been espoused by others, ever take hold, biotech companies will need to find ways to become part of eco-agriculture.

But for now it's very much a minority opinion, as far as the U.S. government and big influential groups like the World Bank and the Gates Foundation are concerned. Plus, it's vehemently belittled by most global agribusiness companies, who don't stand to profit very much when farmers use saved seeds, grow native plants to control pests and fertilize their fields with nearby animal manure.

So as global food prices continue to rise, as they're projected to, Monsanto and the chemical-based industrial agriculture it's locked hands with will continue to reap benefits.

Image by Flickr user bdesham
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