Posted: Thursday, October 14, 2010 10:00 AM
Vice president says Monsanto's contract enforcement helps honest farmers
By MITCH LIES
Jim Tobin, vice president of grain and crop industry affairs for Monsanto Co., fielded questions from the Capital Press in a recent phone interview.
Tobin, a former county extension director for Iowa State University Extension Service, joined Monsanto's agricultural unit in the 1980s after earning a master's degree in business administration from Harvard University.
Tobin also has served as director of Monsanto's global product management, co-president of the company's global seed group, director of the company's seed team and director of marketing for Monsanto's U.S. crop protection business and cotton business.
Tobin's responses have been edited for brevity.
Q Monsanto has been accused of extending the life of its Roundup Ready patent by prohibiting research into stacking traits with the technology and prohibiting compilation of regulatory data for export markets prior to the patent expiration in 2014. Can you respond to those charges?
A Over 150 seed companies that license from us currently have a license that will extend through the life of the patent, so they can continue to offer soybeans varieties with the Roundup Ready trait. And it will be their decision and farmers' choice if they want to continue to work with Roundup Ready 1 varieties after the patent expires.
We've also made a commitment to the American Soybean Association and others in the industry that we'll maintain the regulatory support in export countries so that they can be assured that they will be covered through the year 2021.
It will be up to (farmers) and their seed companies to determine how long they continue to buy and use Roundup Ready 1. We've provided all the things that need to be provided so that those seed companies can do that if they wish to, and we've encouraged farmers that if you want to use this technology after the patent is off, you need to be letting your seed company know so they make appropriate plans to have it available.
Q Can you address this issue specifically from the perspective of Pioneer's claims that you are inhibiting product development prior to the expiration of the patent?
A In the case of Pioneer they have the rights to stack everything that they are developing in their pipeline for soybeans except for one trait, and that is the trait that is designed to do the same thing that our trait does: It provides glyphosate tolerance to soybeans.
And when Monsanto and Pioneer negotiated the license that they have today, we and they did not include the ability to stack a glyphosate-tolerant trait on top of our glyphosate-tolerant trait. We didn't think that they needed or wanted to do that. And we would suspect that they didn't plan on doing it, either, because they didn't ask for that.
They now apparently decided that they do want to do that. And we have made an offer for a license to do that and would be glad to provide a license. We haven't been able to yet reach an agreement on that, but we are willing to do that.
Q What about Pioneer's ability to compile regulatory packages for export markets prior to patent expiration? Are you inhibiting that?
A Pioneer can create a regulatory package for any of their traits that do anything other than glyphosate tolerance on glyphosate tolerance. That is in their license today.
A product that they are calling Plenish, they have developed the work to get approval for a combination of Roundup Ready with Plenish already. We've provided regulatory data to them under our license, and, like I say, they can do that with other traits in their pipeline.
The only one they don't have the right to stack right now is what they call Optimum Gat, and that is the subject of an attempted license at this point. But we haven't reached agreement yet.
The disagreement we have is on the glyphosate tolerance portion of that product. It has two different tolerances that are combined in one trait, and the one we have a disagreement on is the ability to do glyphosate tolerance.
Q Do you believe your offer is reasonable?
A We made an offer to Pioneer that we think is very reasonable. They've chosen not to, at this point, take that.
Q Monsanto has been criticized for being too aggressive in protecting patent rights. How do you answer these charges?
A I worked personally on developing our cotton business (in 1995), where we brought a gene that was going to help farmers save about four insecticide sprays -- which at the time was about $32 an acre.
They were buying seed for about $11 an acre, and if they wanted to, they could take it to a local processing plant and have their seed processed and planted again the next year without coming back to the seed company.
We developed a system where we made it clear to the farmer that this new trait is patented: If you want to use it, here is what it is going to cost, but you need to agree that you don't save the seed. In other words, you'll need to come back and buy from us each year. If you don't want to do that, that's fine, you can continue doing what you're doing. But if you want to use this technology you'll need to sign this license, and we had farmers come in and help us on an advisory committee.
One of the things they said is: "We'll sign your agreement if the product works, but you've got to make sure that my neighbor doesn't cheat on the system. If my neighbor can save seed like he did in the past and not pay, that's not fair to me, or to those of us that agree to use your technology. So make sure that you're careful and make sure that others don't cheat the system."
I take that personally. If a farmer says, "I'm willing to sign your contract, but you've got to make sure that others play by the rules," I think that is only fair.
So we have enforced our contracts.
The great majority of farmers find these products to be very beneficial. They are very pleased that they have access to them, and they do want to make sure what they pay is fair, and that others don't in some way take advantage of the system.
Q Can you get too big?
A When you get up in the morning in business, you're trying to do a better job, provide better service and get paid for that service. And we've got a long ways to go, I think, before we would feel like we've gotten too big.
I understand that people will always look at companies that are doing well and ask that question.
I think we just have to be responsible about what we do and do it in a way that farmers have plenty of choices. And I think we do.
Q What do you see as the future of farming in America, particularly in light of the infusion of biotech into agriculture in recent years?
A It's an exciting time, because there is so much being developed.
We've found ways to get paid for new inventions in a number of crops that weren't attracting much in the way of new research in the past.
And because of our patents, we were able to convince our investors to let us spend the 10 years and about $100 million to develop new traits.
We've got a number of things in the pipeline that are very exciting: Drought tolerance is a trait that we're working on for corn, soy, cotton and now wheat that can help farmers take away some of the downside of the periods of time when they don't get the full rainfall that they would like to get throughout the growing season.
We've got some traits in soybeans that will allow us to provide new qualities to soy. We can bring the health benefits of olive oil to soy, which will be exciting. Omega 3 is a fish-derived benefit that could be delivered through soy oil also.
Q These sound exciting. Will farmers be able to afford these benefits?
A It only works if the farmer can make money doing it, and so we work very, very hard to make sure that as we bring these new traits, that they bring enough value that the farmer can employ them and make money doing it.