THE HINDU, Saturday, May 1, 1999
Letter on Monsanto
By Vandana Shiva (The writer is Director of the Research Foundation for Science, Technology and Ecology, New Delhi.)
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, are 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.
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