Biotech Traits and Seed Industry Restructuring

The introduction of two genetically modified traits, herbicide tolerance and insect resistance, into corn and soybeans in the 1980s and 1990s led to an oligopoly of three multinational companies dominating the seed industry in the USA, and some other countries. This raises concern and prompts us to alert policymakers of the risk to food security and the livelihoods of resource-poor farmers if the same rules and practices are enacted by them in the developing countries.
The application of heterosis (hybrid vigor) in plant breeding to develop hybrid seeds marked the beginning of an organized seed industry in the US. Hybrid corn was the engine around which the seed industry evolved and is still evolving. The success of hybrid corn stimulated the application of heterosis breeding in other crops wherever hybrid technology has been applicable on a commercial scale. Since hybrid corn constitutes the bulk of the seed sales and profits of the seed industry, this article will primarily focus on the hybrid corn industry.

The hybrid corn industry in the US has gone through three phases.
The first phase began in the 1930s when approximately 150 companies were formed. Most depended on products developed in public institutions and focused on the production and marketing of hybrid seed. Some of those companies added in-house research and breeding programs and developed superior proprietary products. They became the major players in the market.
In the 1970s, the second phase began with the enactment of the Plant Variety Protection Act (PVPA). During this period, multinational companies (MNCs) acquired more than fifty companies. This was the beginning of the consolidation of the seed industry. By 1989, seven major companies led the corn seed market, and quite a few medium or small family-owned regional companies were left.
The third phase was triggered when biotechnology enabled the introduction of genetically modified (GM) traits. The MNCs realized that they needed the seed system as a vehicle to deliver GM traits. This triggered the mass acquisition of seed businesses. Between 1980 and 2014, Monsanto (now Bayer) alone bought sixty independent seed and biotech companies. Overall, more than 200 seed companies were either acquired or went out of business during the 1990s and 2000s. At the same time, over a third of public plant-breeding programs were shut down or saw their funding decimated. The consolidation of the industry went to such an extreme that it resulted in the demise of most small seed businesses.
The key acquisition in this period was that of Holden’s Foundation Seed Company in 1997 by Monsanto for $1.2 billion. Holden’s hybrids covered approximately 35–40 percent of the corn acreage before Monsanto acquired it. Holden’s supplied foundation seed increased from public, independent private breeders and from its own breeding program to hundreds of small and midsize companies that produced and marketed the commercial hybrids under their own brands. As a result, the market was fiercely competitive and the pricing for the farmer became quite reasonable.
As of 2024, just three firms—Bayer, Corteva and ChemChina’s Syngenta Group—dominate the corn seed market. Corteva and Bayer account for about 72 percent of US corn seed sales as per industry estimates, and the seed pricing to the farmer has doubled or gone even higher. The same has happened in South Africa where 80–85 percent of the formal seed market is held by the MNCs, and prices are higher for the farmer.
GM crops have been grown in the US, Canada, South-Africa, and Argentina starting the mid-1990s and were since gradually introduced in some other countries. The commercialization of genetically engineered traits for herbicide tolerance and resistance to some insect pests has significantly reduced pesticide use and boosted crop yields. The Bt cotton in India is a typical example, and many other examples exist where GM crops are grown.
GM seed sales currently account for half the value of all seed sales, while they are grown on about one fifth of the global crop acreage. The seed sales of just four MNCs are more than half of the total global seed market of all seeds.
The questions one may rightly ask is: will the Indian seed industry face the same fate as in the US and later also South Africa with the introduction of genetically engineered traits in corn?
How then is it possible to get the engineered traits to the smallholder farmers in the developing countries without creating MNC monopolies?
Would the enormous development in global agriculture have been possible if heterosis breeding or the use of dwarfing genes to breed high-yielding varieties of wheat and rice, were patented by MNCs?
Patents as a driver for consolidation
Patent protection is crucial to the industry to undertake long term, risky and expensive research, and innovation. The number of these patents in plant biotechnology grew dramatically in the 1980s and 1990s. To develop a GM trait, one needed freedom to operate for the patented intellectual property used to develop the product. While many of the patent holders were MNCs, they strengthened their portfolio by the acquisition of biotech companies that held patents on enabling technologies and traits. Hence, patented intellectual property and restrictive licensing have been used by the MNCs to maintain tight control over GM traits and the seed products that carry them.
When patents expire after twenty years, the invention falls into the public domain. Many of the early GM events, such as the glyphosate tolerant soybean event GTS 40-3-2 or the insect resistant maize event MON 810, are no longer patent protected. However, plant breeders have not gained access to off-patent biotechnology traits, contrary to off patent maize inbred lines. One must ask, why?
Regulatory hurdles
Guided by the precautionary principle, stringent regulations govern GMOs to safeguard their safety and mitigate potential risks. National frameworks have been established and are further implemented requiring a pre-market risk assessment, in most cases leading to conditional approval.
Most importantly, the regulatory submissions and data for each trait event are the proprietary regulatory property (PRP) of the data holders. The PRP data holders can maintain regulatory approval in the countries in which GM traits for cultivation are released, as well as in countries where GM crop-derived products are exported. They ensure compliance with all the regulatory requirements and assume the liabilities. The lack of access to the regulatory data is a major barrier for new entrants who might want to access off-patent events.
The regulatory burden and the risk of potential liabilities are key reasons so very few new traits are released, and why only few GM crop species have been introduced. It is not only the upfront cost; it is the risk of huge and long-lasting liabilities. For example, Aventis did R&D field trials with the Liberty Link (LL) trait in rice in the USA. One of the experimental events, that was not licensed for commercial growing, showed up in grain samples in the southern US states where rice is grown. Since the detection of such a regulated event is a non-compliance, liabilities from LL rice remain an issue as of 2024. Similarly, Syngenta faced huge liabilities when its GM Viptera corn was detected in grain shipments to China, without being cleared in that country.
If a biotech trait event, after decades of safe commercialization in a crop, is not declared a “part of the crop’s genome,” this hurdle will continue. Policy makers must consider that consequently, the market opportunities for GM crops are reduced to only a few companies holding PRP on crop/trait combinations. Any attempt by a second party to develop a market for off-patent GM events requires collaboration with the PRP holders or equivalent investments.
TELA maize project and the biotech traits
TELA Maize Project is a public-private partnership led by the African Agricultural Technology Foundation (AATF) with six partner countries from the Africa. Its objective is to make drought-tolerant and insect-protected maize varieties available to the farmers in Sub-Saharan Africa. CIMMYT (The International Maize and Wheat Improvement Center) from Mexico is the lead breeder and contributes germplasm; Bayer Crop Science contributes biotech traits for drought tolerance and insect protection and related information, royalty free. The Bill and Melinda Gates Foundation and USAID primarily provide the funding. The project partners support the establishment of legal frameworks to regulate the commercial use of GM crops and pursue regulatory approvals of the GM events in the target countries.
Once a regulatory framework is in place, AATF, as the lead partner, grants seed companies of the partner countries and their national research systems the right to produce and sell hybrids containing the traits under their own seed brand. The Project involves a Foundation Seed Company, Qualibasic Seed, which is patterned after the US foundation seed company like Holden’s. The licensees must access a transgenic line from Qualibasic or one of its designated basic seed companies. No multiplication of the line or further breeding in the line is allowed by the partners.
Since the seed industry in AATF countries, except South Africa, is in the early stages of development, the partner country agricultural research systems and regulatory bodies are the key beneficiaries in this model.
Once the regulatory framework is in place, nothing stops MNCs from introducing their proprietary hybrids with superior stacked biotech traits supported by PRP data packages up to a standard that local initiatives will find hard to meet. The risk is that a well-intentioned project to bring GM benefits to small African farmers paves the way for the MNC domination in a GM market that has been opened through the national agricultural research systems. Whether the benefits outweigh the consequences of reduced competition and higher prices for the farmers is something for the policy makers to consider.
Is the TELA model applicable to India?
India has a robust private sector seed industry that has flourished since deregulation in the 1990s. Except for Bt cotton, no other crop with a biotech trait has been deregulated so far even though these have perfect safety record for years in other countries A model somewhat like TELA offers an opportunity to introduce crops like Bt corn in India that have been deregulated elsewhere and have proven safety record. If considered, then, it must be amended by provisions to prevent monopolies, ensure active participation of established seed companies with proprietary germplasm, and eliminate constraints on trait incorporation and parental line sourcing.
The future of GM crops hinges on the accessibility of regulatory data packages and the deregulation of GM traits with a proven track record of safety. Until then, policymakers must weigh the trade-offs between nurturing a vibrant seed industry and mitigating the risks of monopolistic control associated with GM crops.
Authored by Suri Sehgal and Jan Leemans, board members, Hytech Seed India Pvt Ltd
Source: hytechseed@hytechseed.in