Farmers question new seed agreement Has Monsanto done it again? The company that seems to write a new chapter every year on how not to win friends and influence people may have again succeeded in irritating some of its customers with its 2001 Technology Agreement.
Farmers who plant crops containing the company's Bollgard, Roundup Ready and Yieldgard technology last signed a grower license agreement with Monsanto or their local seed dealer in 1998.
Now, Monsanto is asking growers to sign an updated agreement that lists new technologies and explanations of changes in its business practices. The company expected some controversy over a decision to require growers to submit unresolved claims to binding arbitration, beginning in 2001.
"What we didn't expect was the reaction to a paragraph in the new agreement entitled `Exclusive Limited Remedy,'" said David Rhylander, director of marketing for Monsanto's southern region. "That surprised us."
Rhylander said the move to binding arbitration signals a desire by Monsanto to spend less time in court in lawsuits that can last up to three to four years. Monsanto also feels that neither the company nor its customers benefit from having cases heard by judges or juries who have little or no knowledge of agriculture.
"We had a case in Louisiana that was decided in September," said Rhylander. The case started in 1997, so it took us three years. Another case in Texas took us four years. Going through the judicial system takes a long period of time, it takes a lot of money from both parties and it takes a lot of people.
"We're saying that what we want to do is figure out a different way to resolve disputes with our customers that is quicker, fairer and allows us and them to finish the cases and move on with our businesses."
Rhylander said the Exclusive Limited Remedy paragraph is basically the same paragraph that has appeared in the Monsanto Technology Use Guide for its Bollgard and Roundup Ready technologies. (The Technology Use Guide takes the place of the EPA-approved label that would normally appear on a pesticide container.)
Farmers such as those attending the Dec. 3 meeting of the Mississippi Farm Bureau's cotton committee in Jackson interpreted the paragraph to mean that Monsanto would only reimburse growers for the cost of their seed if they experienced problems with their Bollgard or Roundup Ready crops.
"This is the same exact language that has been in the Technology Use Guide for three or four years," said Rhylander. "But we settled claims on Roundup Ready cotton in Mississippi in 1997 and in Georgia in 1998 under that same statement.
"The statement is virtually the same language that appears on the Stoneville Pedigreed Seed Co. BG/RR seed bag or any other seed or agricultural chemical label."
Monsanto has had its share of problems in its dealing with customers.
In December 1995, a number of growers walked out of a meeting in Memphis, Tenn., when a Monsanto attorney began listing steps they would have to follow to comply with the company's then brand-new technology agreement.
Farmers attending the Mississippi Farm Bureau annual meeting in Jackson also were concerned about a provision requiring farmers to notify Monsanto within 15 days after observing problems with any of its technologies.
"A lot of times you can't tell you have a problem until you get to the end of the season," said one producer.
"The problem we've had in the past is that some farmers wait until they harvest a good part of their crop before they notify us of a complaint," said Rhylander. "When you go to a field in mid-October, there is very little evidence you can find to help determine the cause of the problem."
By notifying Monsanto within 15 days of the nonperformance, he said, farmers can have company representatives diagnose the problem and make recommendations about how to treat it or determine what other actions may have to be taken to resolve any claims.
"We believe that our technologies will have demonstrated their effectiveness within 100 to 120 days of planting," he noted. "We think the 15 days provides adequate time prior to harvest to assess the problem and make recommendations for managing the crop through harvest."
Farm Bureau members attending the Jackson meeting appeared to be of a mind to not sign the agreement and, instead, begin looking for varieties of conventional seed to plant next spring.
But, the reality is that not enough seed may be available for farmers to plant all of their acres with varieties that do not contain Monsanto's transgenic technology.
"Cotton farmers in Mississippi planted 86 percent of their acres in transgenic varieties in 2000," said Will McCarty, Extension cotton specialist with Mississippi State University. "About 11 percent of that was BXN cotton and the remaining 75 percent in Roundup Ready, Bollgard or stacked gene varieties."
Several farmers attending the Jackson meeting expressed concern about the agreement's provision for binding arbitration, which is a relatively new concept for growers in the South.
"I hope I don't have any problems, and I'm not eager to sue anyone," said a producer. "But, it just seems like one more case of another big company or all-powerful government agency telling us what we can or cannot do."
"Some people laughed at me three or four years ago, but this is part of what I was talking about when I said we needed more good, new conventional varieties for our farmers," said McCarty. "It's not good for us to be so dependent on one supplier for anything."
McCarty said he and other Mississippi Extension Service members would begin working to try to recruit qualified arbitrators to train with the American Arbitration Association, the organization that will oversee the arbitration process under the new Monsanto Technology Agreement.
"In the meantime, I would suggest that you read this agreement very carefully, and if anything bothers you, have your attorney read it," he said. "Make sure you understand every line of it and can live with it, before you sign it."
Here's how farmers would file complaints under the binding arbitration provision of Monsanto's new 2001 Technology Agreement:
1. Grower becomes concerned with his Monsanto Technology or the seed in which it exists.
2. He has 15 days to advise Monsanto of his concerns and, if possible, resolve the situation without further action.
3. If the grower is still not satisfied, after 30 days from his initial observation he can file for arbitration with the American Arbitration Association. The grower will contact a regional office of the American Arbitration Association and request a form for filing a request. He submits the form and pays a filing fee, which can range from a few hundred to a few thousand dollars. Monsanto has agreed to split the filing fee with the grower 50-50.
4. American Arbitration Association notifies Monsanto of the complaint, giving it 10 days to respond. A hearing is scheduled at a neutral site agreed to by both parties.
5. Before the hearing, American Arbitration Association selects 10 candidates from its pool of qualified arbitrators. The grower and Monsanto separately rank the list, starting with their top choices. American Arbitration Association averages the rankings and selects an arbitrator. In large cases, up to three arbitrators can be selected.
6. Prior to the hearing, the arbitrator must disclose any relationship he may have with either the grower or Monsanto and can be replaced.
7. Most hearings will last at least one day and possibly more, depending on the amount of the information to be presented. Neither the grower nor Monsanto is limited on the amount of time needed to present the case. The arbitrator then has 30 days to make a decision.
8. Damage awards are final and may not be appealed. The arbitrator may or may not include the loser's share of the filing fee in his award to the winner of the case.