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The Hindu,
Saturday, May 01, 1999By Vandana Shiva, Director of the Research Foundation
for Science, Technology and Ecology, New Delhi.
Monsanto ventures into new industry
OVER THE past few years, Monsanto, a chemical firm, has positioned
itself as an agricultural company through control over seed - the first
link in the food chain. Monsanto now wants to control water, the very
basis of life. In 1996, Monsanto bought the biotechnology assets of
Agracetus, a subsidiary of W. R. Grace, for $150 million and Calgene, a
California-based plant biotechnology company for $340 million. In 1997,
Monsanto acquired Holden seeds, the Brazilian seed company, Sementes
Agrocerus and Asgrow. In 1998, it purchased Cargill's seed operations
for $1.4 billion and bought Delta and Pine land for $1.82 billion and
Dekalb for $2.3 billion. In India, Monsanto has bought MAHYCO,
Maharashtra Hybrid Company, EID Parry and Rallis. Mr. Jack Kennedy of
Monsanto has said, "we propose to penetrate the Indian agricultural
sector in a big way. MAHYCO is a good vehicle."According to Mr. Robert
Farley of Monsanto, "what you are seeing is not just a consolidation of
seed companies, it's really a consolidation of the entire food chain.
Since water is as central to food production as seed is, and without
water life is not possible, Monsanto is now trying to establish its
control over water. During 1999, Monsanto plans to launch a new water
business, starting with India and Mexico since both these countries are
facing water shortages."
Monsanto is seeing a new business opportunity because of the emerging
water crisis and the funding available to make this vital resource
available to people. As it states in its strategy paper, "first, we
believe that discontinuities (either major policy changes or major
trendline breaks in resource quality or quantity) are likely,
particularly in the area of water and we will be well-positioned via
these businesses to profit even more significantly when these
discontinuities occur. Second, we are exploring the potential of
non-conventional financing (NGOs, World Bank, USDA, etc.) that may lower
our investment or provide local country business-building resources."
Thus, the crisis of pollution and depletion of water resources is viewed
by Monsanto as a business opportunity. For Monsanto, "sustainable
development" means the conversion of an ecological crisis into a market
of scarce resources. "The business logic of sustainable development is
that population growth and economic development will apply increasing
pressure on natural resource markets. These pressures and the world's
desire to prevent the consequences of these pressures, if unabated, will
create vast economic opportunity - when we look at the world through the
lens of sustainability, we are in a position to see current and foresee
impending-resource market trends and imbalances that create market
needs. We have further focussed this lens on the resource market of
water and land. These are the markets that are most relevant to us as a
life sciences company committed to delivering food, health and hope to
the world, and there are markets in which there are predictable
ustainability challenges and therefore opportunities to create business
value."Monsanto plans to earn revenues of $420 million and a net income
of $63 million by 2008 from its water business in India and Mexico. By
2010, about 2.5 billion people in the world are projected to lack access
to safe drinking water. At least 30 per cent of the population in China,
India, Mexico and the U.S. is expected to face severe water stress. By
2025, the supply of water in India will be 700 cubic km per year, while
the demand is expected to rise to 1,050 units.Control over this scarce
and vital resource will, of course, be a source of guaranteed profits.
As John Bastin of the European Bank of Reconstruction and Development
has said, "Water is the last infrastructure frontier for private
investors." Monsanto estimates that providing safe water is a several
billion dollar market. It is growing at 25 to 30 per cent in rural
communities and is estimated to rise to $300 million by 2000 in India
and Mexico. This is the amount currently spent by NGOs for water
evelopment projects and local government water supply schemes and
Monsanto hopes to tap these public finances for providing water to rural
communities and convert water supply into a market. The Indian
Government spent over $1.2 billion between 1992 and 1997 for various
water projects, while the World Bank spent $900 million.Monsanto would
like to divert this public money from public supply of water to
establishing the company's water monopoly. Since in rural areas the
poor cannot pay, in Monsanto's view capturing a piece of the value
created for this segment will require the creation of a non-traditional
mechanism targeted at building relationships with local government and
NGOs as well as through mechanisms such as microcredit.Monsanto also
plans to penetrate the Indian market for safe water by establishing a
joint venture with Eureka Forbes/Tata, which controls 70 per cent of the
UV Technologies. To enter the water business, Monsanto has acquired an
equity stake in Water Health International (WHI) with an option to buy
the rest of the business. The joint venture with Tata/Eureka Forbes
is supposed to provide market access and fabricate, distribute, service
water systems; Monsanto will leverage their brand equity in the Indian
market. The joint venture route has been chosen so that "Monsanto can
achieve management control over local operations but not have legal
consequences due to local issues." Another new business that Monsanto is
starting in 1999 in Asia is aquaculture. It will build on the foundation
of Monsanto's agricultural biotechnology and capabilities for fish
feedand fish breeding. By 2008, Monsanto expects to earn revenues of
$1.6 billion and a net income of $266 million from its aquaculture
business. While Monsanto's entry into aquaculture is through its
sustainable development activity, industrial aquaculture has been
established to be highly non-sustainable. The Supreme Court has banned
industrial shrimp farming because of its catastrophic consequences.
However, the Government, under pressure from the aquaculture industry,
is attempting to change the laws to undo the court order. At the same
time, attempts are being made by the World Bank to privatise water
resources and establish trade in water rights. These trends will suit
Monsanto well in establishing its water and aquaculture businesses.
The Bank has already offered to help. As the Monsanto strategy paper
states:
"We are particularly enthusiastic about the potential of partnering
with the International Finance Corporation (IFC) of the World Bank to
joint venture projects in developing markets. The IFC is eager to work
with Monsanto to commercialise sustainability opportunities and would
bring both investment capital and on-the-ground capabilities to our
efforts."
Monsanto's water and aquaculture businesses, like its seed business,
aimed at controlling the vital resources necessary for survival,
converting them into a market and using public finances to underwrite
the investments. A more efficient conversion of public goods into
private profit would be difficult to find. Water is, however, too basic
for life and survival and the right to it is the right to
life.Privatisation and commodification of water are a threat to the
right to life. India has had major movements to conserve and share
water. The pani panchayat and the water conservation movement in
Maharashtra and the Tarun Bharat Sangh in Alwar have regenerated and
equitably shared water as a commons property. This is the only way
everyone will have the right to water and nobody will have the right to
abuse and overuse water. Water is a commons and must be managed as a
commons. It cannot be controlled and sold by a life sciences corporation
that peddles in death. |