---W. Virginia probing Monsanto soybean seed pricing
Reuters, June 25 2010
* West Virginia investigating Monsanto for consumer fraud
* Part of wider probe by various states, Justice Dept.
* Involves Roundup Ready 2 soybeans
KANSAS CITY - West Virginia officials have notified global seed giant Monsanto Co (MON.N) that they are probing whether or not the company engaged in unfair or deceptive practices in marketing its new genetically altered soybean seeds.
The West Virginia Office of the Attorney General said in a letter to Monsanto dated June 24 that it wants to meet with officials from the St. Louis-based company to discuss investigators' concerns that Monsanto has violated consumer protection laws.
The letter states because of the "significant issues involved" it is willing to hear from Monsanto before "moving forward with compulsory process or actual litigation."
The Attorney General's office said in the letter that investigators have reviewed several studies by agricultural experts showing that Monsanto's advertised claims of higher yields for its high-priced new soybean seed, called Roundup Ready 2 Yield, have not been realized.
As well, U.S. Department of Agriculture statistics show no increase in the state's average yield for the last harvest.
West Virginia officials said that farmers had relied on advertising claims by Monsanto that its Roundup Ready 2 Yield soybean seeds would yield 7-11 percent more than Monsanto's original Roundup Ready soybeans.
"My office is concerned that West Virginia farmers are paying much higher prices for soybeans with the Roundup Ready 2 trait when the yields do not live up to the claims and do not justify the increased prices," the letter from West Virginia Attorney General Darrell McGraw Jr. states.
Officials said if Monsanto's yield claims cannot be substantiated, it is violating West Virginia consumer protection laws and is subject to "injunctive relief, restitution and disgorgement, as well as civil penalties."
"We believe the West Virginia's Attorney General letter is based on a misunderstanding of our national marketing materials," said Monsanto spokesman Lee Quarles. "Monsanto can provide data demonstrating the performance of the Genuity Roundup Ready 2 Yield."
Quarles said that more than 40,000 soybean yield records collected between 2007 and 2009 showed the "rolling average yield benefit" of its own Roundup Ready 2 seed variety was 3.6 bushels or more than 7 percent compared to competitors' seeds also engineered to tolerate Monsanto's Roundup herbicide.
West Virginia is only one of several states that have been looking into similar concerns over Monsanto's seed pricing strategies and product marketing, with a particular focus on the company's handling of the release last year of its new Roundup Ready 2 Yield soybean seeds.
The U.S. Department of Justice has also been scrutinizing Monsanto's moves in the U.S. seed industry amid allegations by competitors and others of unfair pricing and antitrust violations.
The company has repeatedly said its conduct is above-board and its products are priced fairly for the value they deliver to farmers. But the company last month said it was examining and adjusting its seed pricing across the marketplace and taking farmer complaints to heart.
"Every year, dozens of seed companies advance new varieties that offer the potential of higher yield. These companies stake their reputation on meeting grower expectations. This is no different for Monsanto," Quarles said.
Roundup Ready soybeans, which are genetically altered to tolerate the company's herbicide, have been wildly popular with U.S. farmers and for years have been the soybean seeds of choice, planted on the vast majority of U.S. soybean acreage.
But Monsanto's patent on the product is expiring in 2014 and Monsanto has been trying to convince customers to move to the newer version, which have been priced, by some accounts, more than 40 percent higher. (Reporting by Carey Gillam and Peter Bohan; Editing by Marguerita Choy)
NOTE: West Virginia's Attorney General's letter to Monsanto (PDF) http://bit.ly/axbjLW