Edited by Stuart J. Smyth, Peter W.B. Phillips and David Castle
Chapter 27: Market power in the US biotech industry
The advent of agricultural biotechnologies has induced structural changes in parts of the agribusiness industry that have precipitated a heated debate about regulatory oversight of some segments of the agri-food supply chain. Chapters 4, 23 and 26 in this volume address important aspects of these changes. The US seed industry has been at the center of the structural changes as large multinational firms with significant investments in agricultural biotechnology integrated forward into the seed industry through multiple mergers and acquisitions. This vertical integration changed drastically the ownership and control of the US seed industry as well as its degree of concentration. Over the last fifteen years, the more concentrated and vertically integrated US seed industry has excelled in introducing an ever-increasing number of new differentiated seeds adapted to regional cropping conditions and delivering a large number of new biotech traits. As the number of seeds offered expanded, product life cycles shortened and the value of biotech traits increased, the prices of seeds paid by farmers also escalated. The increasing concentration of the industry and the parallel increases in seed prices have, in some cases, been viewed as evidence of market power that has been exercised in the US seed and biotech industry and has attracted the attention of the US anti-trust authorities. The key question we address in this chapter then is whether market power has been exercised in the US seed/biotech corn industry in recent years, and if so, to what extent.
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