Free market standards should apply to ag, too (commentary)

Free market standards should apply to ag, too (commentary)

SEMANTIC satiation. That's the formal description of hearing something so often that you simply begin to tune it out.

We witness the phenomenon most often with advertising or political talking points, but every once in a while, despite having become numb, one of those phrases will garner our attention.

That's precisely what happened to me the other day while reading an article about genetically modified organisms (GMOs). The piece discussed convolutions and implications surrounding Vermont's new GMO labeling legislation, but the law (or the article) isn't really important to this discussion (although I'm sure it will increasingly be in the news in the coming months).

Rather, it was feedback from one of the readers that piqued my interest. The comment was: "So, I understand from (your) article that you desire a few seed producers to have ownership of all food consumed by both us and our farm animals. What part of monopoly don't you understand (sic)?"

That's a favorite argument among GMO critics. We've all heard it numerous times, but this time around, it struck a chord. It just doesn't make sense.

Research by J. Sheth and R. Sisodia (The Rule of Three) revealed that industries adapt over time to become more efficient. That results from several key drivers, including implementation of industry-wide standards, attempts to offset fixed costs and increased government intervention. Any shift among those only serves to accelerate consolidation, and like it or not, industries ultimately end up with three companies dominating market share (hence the book's title).

Consider a few examples that touch us all. Airlines: American, United-Continental and Delta, the smallest of which (Delta) generates more than two times the revenue versus its nearest competitor, Southwest Airlines. Or, how about the smartphone business? It's a safe bet that nearly every reader owns a device sold by either Apple, Samsung or Blackberry.

As such, there remain lots of questions regarding this favored anti-GMO argument. Why are three major airlines or smartphone manufacturers acceptable, but the seed industry is held to a different standard? The concern over seed companies just isn't consistent with the rest of the economy.

For starters, the financial requirements of the research and development pipeline have to be considered. Substantial investment is required to move seed technology (of all kinds) forward. That can't happen with small, under-capitalized companies. (That premise parallels and explains the ongoing merger and acquisition activity in the pharmaceutical industry.)

Perhaps more important, all of this ignores the importance of the free market. Agriculture's no different from any other industry; farmers are customers and vote with their dollars.

Large seed companies didn't just appear; farmers and ranchers have given them their business because the plants work. The companies provided their agricultural customers with benefits unavailable elsewhere.

The reader's comment, then, infers that agriculture should be more heavily regulated than other industries. That is, farmers and ranchers shouldn't be able to make purchasing decisions in a free-market setting like other manufacturers of goods or services. Therefore, the connotation is that America's food producers aren't really entitled to those benefits (which are reserved only for non-agricultural commerce).

I admit, that's some broad conjecture. Farmers and ranchers are indeed the ones best suited to make purchasing decisions that affect their respective operations. It's best left to them.

Sure, the anti-GMO seed company position represents pushback against modern agriculture. A share of consumers believe agriculture should operate the way they perceive that it used to in the past.

While some of that is admirable — consumers wanting to align with the values typically associated with agriculture and rural America — requiring GMO labeling as a means to get there by breaking up large seed companies probably isn't a very useful or effective strategy. Worse yet, it means sacrificing principle.

Speaking of principle, what might happen if we expanded the legislative push on behalf of all agriculture?

Farm equipment manufacturers are confined to a short list: John Deere, CNH Global and AGCO. Maybe we should also be on the lookout for calls for tractor labeling on our food, too. After all, we wouldn't want just "a few (tractor) producers to have ownership of all food consumed by both us and our farm animals."

*Dr. Nevil Speer serves as a private industry consultant. He is based in Bowling Green, Ky., and can be reached at [email protected]

Volume:86 Issue:21

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