The Economics of GMO

My good friend Sally C. (from Iowa no less) wrote in to comment that GMO seed is quite a bit more expensive than conventional seed. That’s very true. About $170 for a bag of Triple Stack seed and $175 per bag of Roundup-ready corn compared to $80 per bag of plain ol’ old fashioned seed corn. When you consider that farmers use about 50 bags of seed for every hundred acres they plant, we’re talking some pretty serious money.

For most farmers however, the additional seed cost is more than paid for by the additional yields and the savings they realize in gas, herbicides, pesticides, and wear and tear on equipment. Corn is at $3.50 a bushel now, so if you’re pulling out 180 or more bushels an acre, the margin is definitely there. Though as I said, there’s no one way to farm, and for some the extra cost isn’t worth it. Plus farmers love to hate Monsanto, so there’s that to factor in as well.

It may come as news to some who see farmers as bit players in the grand Monsanto-Cargill-Industrial-Agricultural axis of evil that farmers hate Monsanto as much as most food bloggers claim to. Being strong-willed independent types, they instinctively mistrust a big company that has a de-facto monopoly on the latest farm technology. And next year there’ll be even more reason for farmers to hate them since they’re planning a big price increase. But as I said, corn is at an all-time high. Monsanto wants its piece of the action. Is that slimy and exploitative? It may well be, and farmers understandably want to keep the lion’s share of the new ethanol windfall they’re receiving, especially after so many years of low prices and hardscrabble living.

Monsanto will certainly claim that the technology is still worth it. For most it probably will be, but that won’t make the price bump any easier for them to swallow.

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