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2-Plants: US study on yield and farmers' costs of RR soybeans



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Date Posted: 03/17/1999
Posted by: benbrook@hillnet.com
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Much could and needs to be said about the NPR piece on Monsanto (part I), 
the Dupont-Pioneer deal, Monsanto's stock price, and the prospects for 
farmers to make a living growing soybeans in the U.S. But for now just a 
few points.
The NPR piece shows what good PR can do and get for a company that knows 
how to "work with" the media. Not a bright day for NPR. What amazes me is 
that senior Monsanto officials can get away, unchallenged, with saying 
things like "RR beans lowered their (farmers') costs and raised their 
yields." The evidence is now overwhelming and indisputable that average 
yields of RR varieties are about 4-6% less than conventional varieties. 
The definitive and most recent comparative analysis was carried out by 
Dr. E.S. Oplinger of the Univ. of Wisconsin, Madison, who has managed a 
North Central regional project assessing soybean varietal performance for 
years. Dr. Oplinger compared yields of 5,172 conv. varieties paired with 
3,067 RR varieties in 8 states in 1998. The RR varieties yielded between 
86% and 113% of the conv., and average yields were 96% of conventional. 
There were just two areas where RR did better -- Illinois and southern 
Michigan. Outside these areas the average yield drag was greater, on the 
order of 6% to 8% (data from "Performance of Transgenetic Soybeans -- 
Northern US," Dr. E.S. Oplinger, M.J. Martinka, and K.A. Schmitz, Dept. 
of Agronomy, UW-Madison).
This places the minimal average yield drag at about 2 bushels per acre, 
or $10.00 (and it was much more on many farmers). That $10.00 plus the 
technology charge, plus the 2-3 applications of Roundup (not the one 
alleged in the piece), plus the 2 or 3 other herbicide a.i.s that must be 
applied make for the most expensive soybean seed+weed management system 
in modern history -- between $40.00 and $60.00 per acre depending on 
rates, weed pressure, etc. Not long ago, in 1985, the average seed plus 
weed costs on farms in Illinois was $26.72 per acre (USDA cost of 
production data), and represented 23% of total variable costs; now, they 
represent 35-40%. (For details and data sources, see the paper I did for 
the Univ. of Illinois symposium at <www.pmac.net/IWFS.pdf>). No wonder 
Monsanto is throwing in free resprays and replanting, and other crop 
insurance-like benefits as an added bonus.
Every independent set of data, recent analysis of RR beans I have seen 
reaches the same conclusion; the technology increases costs somewhat, but 
imposes a "price" farmers are willing to pay for the 
simplicity/robustness of the weed management system. Oplinger et al. end 
their paper saying: "It is anticipated that soybean growers will continue 
to increase acres planted to RR varieties and will sacrifice yield for 
ease of weed control." They will also sacrifice some net income per acre. 
This is a perfectly rational reason for farmers to adopt the technology; 
weed management is probably the number one management challenge all 
soybean farmers face. Monsanto should not be ashamed to cite these 
reasons in explaining why the technology is being adopted. But Monsanto 
needs to drop the "feeding the world", "lowering costs", "lowering 
pesticide use" claims because they do not hold water and will undermine, 
further, the reputation of the corporation, and in so doing feed the 
already considerable cynicism abroad about the trustworthiness of this 
company.
While Monsanto does not seem to worry much about losing consumer trust in 
Europe and Japan, U.S. farmers (and the U.S. government) should be 
concerned and will, in the end, pay the price if the effort to drive RR 
beans down the throats of Europeans backfires into a search for non-GMO 
soybeans from other countries.
Plus, things are not getting any better down on the farm. Soybean prices 
are way down, export markets are soft. As weed shifts continue in areas 
planted heavily to RR beans, and as resistance spreads to additional weed 
species (the first signs of tolerant weeds are appearing in several 
states), farmers will have to increase rates of Roundup applications and 
intensify use of other active ingredients, to fill gaps in control. Costs 
will rise, the income squeeze will get even worse.
Contrary to a Monsanto scientist's claim on the NPR piece, Roundup does 
not kill everything green except for transgenic crop varieties. If that 
were the case, most farmers using RR systems would not be applying at 
least 2, and on many farms, three additional active ingredients.
Someone posted that Monsanto's stock price is holding. Keep watching that 
space. The Dupont-Pioneer deal seals off the most likely route to 
salvation for Monsanto -- Dupont's deep pockets. Monsanto is desperate 
for a new partner to help cover its $700 million plus cost of capital, 
etc from the seed mergers of the past few years. Not too many companies 
around that can float that sort of cost. There remain a couple of major 
deals to go in the pesticide and seed industries, and then it will be, 
for all intents and purposes, over. Expect Monsanto, Zeneca, American 
Home Products, Novartis, and Bayer to be involved in a few additional 
mega-deals in the next 12-24 months.
We will have one industry where we used to have two, and 4-6 major 
players where there used to be a couple of dozen, and many dozen 
regionally significant players. No one has much of an idea, nor any 
credible way to project the consequences of these changes. Its 
unchartered water in turbulent times. We are all invited along for the 
ride, which will be exciting and at times divisive, as the economic 
interests of one part of the agricultural system (probably farmers) 
suffer at the expense of other players. There will be many surprises, 
positive and negative. What seems clear to me, in any event, is that 
public institutions and policies, like those governing research, 
technology returns, intellectual property, markets, information, are not 
keeping up and that new forces shaping the performance of the new 
seed+pesticide industry will largely emerge within the private sector, 
from the demand side, both farmers for inputs and consumers for food.

chuck benbrook

Charles Benbrook
Benbrook Consulting Services
5085 Upper Pack River Road
Sandpoint, Idaho 83864

208-263-5236 (voice)
208-263-7342 (fax)
benbrook@hillnet.com (e-mail)
http://www.pmac.net

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