From: Jane Roberts, The Commercial Appeal, Memphis, Tenn.
Published September 26, 2004 12:00 AM

Planters Take on Monsanto Over Seed Fees — and Sometimes Go to Jail

Sep. 26—Four months in prison last year hardened Kem Ralph's will to beat agrichemical giant Monsanto in a fight that has made him a cause celebre among farmers who save seed.


Monsanto won a $2.9 million patent infringement judgment against Ralph, who not only unlawfully saved the St. Louis-based company's genetically engineered seed but burned the evidence and lied about it in court.


A federal judge sentenced Ralph to prison on mail fraud charges connected to the seed he saved at a Missouri gin.


Ralph says the behavior was warranted. He says Monsanto has an illegal monopoly on seed that the USDA says now accounts for more than 80 percent of the soybeans and cotton grown in the United States.


"I'm a fighter," says Ralph, 48, who farms about 3,000 acres in Shelby, Tipton and Haywood counties with his brother, Roger.


"Monsanto has a lot of political power, but it's just a matter of time — I'm going to beat Monsanto," he says, his ruddy complexion growing redder with every shouted word.


A handful of farmers across the region are in court with Monsanto, fighting for what they say is their inherent right to save seed.


One is Mitchell Scruggs, a Tupelo-area farmer who obtained genetically altered seed from an unauthorized source in 2000 and planted the seed.


"What's happened is that Monsanto has teamed up with a handful of seed companies to charge whatever prices they want," said Scruggs, 54.


"It's destroying this country to let a big corporation control all the food and fiber through the seed," he said. "I'm concerned just like all the other farmers that Monsanto is a parasite, sucking all the money out of the community."


Monsanto, which makes the widely used herbicide Roundup, offered a patented gene in 1996 that could be inserted into crop seeds to protect the growing plant from the effects of glyphosate-based herbicides, the generic form of Roundup.


Using such Roundup Ready seed allows farmers to spray their fields with the herbicide, eradicating the weeds but not the crop. The result is cleaner fields with less use of chemicals, proponents say.


Monsanto also patented a gene that makes its own natural pesticide in cotton, making the plants resistant to bugs that cause significant crop damage.


In order to recoup its research costs, Monsanto requires seed retailers to collect a technology fee on each bag of the seed they sell. A portion goes to Monsanto as royalty. How much is proprietary information, Monsanto said.


Farmers are required to sign a release saying they will not save the seed from one season to another or give it to others.


Tommy Dickerson, store manager at the Tate County Co-op in Senatobia, Miss., says 99 percent of his customers want genetically modified seed "because it's a whole lot easier. They don't have to make so many trips in the field putting on chemicals."


Cotton farmers, he said, can expect to save $100 an acre with the modified seed. Soybean producers can save $40.


Dickerson's customers pay about $6.25 in technology fees on one bag of soybeans, enough to plant about one acre.


In cotton, the fee averages about $230, Dickerson said, nearly three times the cost of the seed.


The co-op keeps "less than 10 percent" of the fee for cottonseed, sending the rest to Monsanto in royalties, he said.


"I regularly hear from farmers who think they're having to pay too high a technology fee," said Dr. Bill Meredith, research geneticist at the USDA Agricultural Research Service in Stoneville, Miss.


"What happens is they didn't save as much on insecticide costs in cotton because other insects have filled in the void. So, they're having to spray and pay a technology fee too."


Monsanto has a right to protect its intellectual property, Meredith said: "They've given farmers these two genes, and they have some rights to get paid for them."


Farmers argue that there are 50,000 other genes in the seed, giving them the right to save it, Meredith said.


Monsanto has "essentially been the only player in gene-modified seed for the last seven years," he said.


But Meredith expects Dow Chemical Co. and Syngenta will have genetically altered seed on the market next year.


"We've got them in the test plots now, and they're looking good."


Monsanto gets about 500 tips a year from people who suspect their neighbors or customers are saving seed.


It galls Ralph that neighbors are spying on each other. "That is not the American way," he said. "I'm proud to be where I am. I may be standing up to the giant, but I'm slinging rocks.


"Ninety-nine percent of the farmers around here are scared of Monsanto. I'm not," he said.


Monsanto considers every allegation of seed saving to be false until it can verify the facts, said Scott Baucum, Monsanto's U.S. director of trade stewardship. The company has hired investigators from two law firms to do the work: Husch & Eppenberger in St. Louis, and Frilot Kohnke Partridge and Clements in New Orleans.


"At the end of the day, hundreds of thousands of farmers are abiding by the contracts and see the value in these seeds," said Julie Doane, Monsanto spokeswoman. "They ask Monsanto that we ensure others are doing the same."


She said Monsanto spends about $500 million a year in research, often spending eight to 10 years perfecting research so it can be introduced on the market.


Monsanto has 10 seed-saving cases in litigation now. Five have gone to court. Several hundred others have settled.


Monsanto puts the money from the settlements into a scholarship fund, and has given more than $1.5 million to students studying for careers in agriculture since the disputes arose. Seven students from the tri-state area received $1,500 scholarships this year.


"We don't like that bringing a suit is required," Baucum said. "In the vast majority we reach settlement the farmers can live with. In most cases, they continue to go on farming and do well and actually remain customers of Monsanto."


Not Kem Ralph or Mitchell Scruggs. Monsanto bars them from ever buying its seed again.


Ralph says he's better off because, he says, in West Tennessee, conventional seeds produce better yields.


"I'm not saying genetic-modified seed is not good. It makes it easier to keep the fields clear," he said. "I've a got a few weeds. Big deal."


Ralph's case is the focal point in the struggle.


"Mr. Ralph's case is unique because there were multiple years of infringements on a large number of acres," Baucum said.


Over two years, Ralph saved 1,234 bags of modified soybean seed and 925 bags of modified cottonseed.


A jury in December 2002 determined he owed Monsanto $803,402 in lost royalties. The court tripled the award for willfulness and added $527,321 for attorney fees, costs and prejudgment interest.


The court later ordered Ralph to reimburse Monsanto an additional $104,506 for expenses it incurred investigating his lies in court.


A U.S. appellate court affirmed the judgment in early September.


Ralph and his lawyers contend someone forged his signature on the technology agreement.


"The seed was delivered to me after someone else signed for it and then returned (the agreement) to the store," he said.


After Monsanto found Ralph had saved seed, the court forced him to sign a restraining order saying he would do nothing to the seed until Monsanto could investigate.


Instead, Ralph burned the seed in an old gravel pit near his home in a fire that smoldered for two days.


"I don't think Monsanto is the man that I am. They're trying to make me into an example, and an example I am not," he said, spitting the words in a rage over the roar of corn harvesting equipment.


He doubts farmers in West Tennessee will stop planting Monsanto seed.


"Farmers are addicted to it," he said. "It's easy."


The ease, he said, has dulled their senses to the real costs, namely that through technology fees, Monsanto is putting farmers in a lower tax bracket and consequently shorting the U.S. government in tax collections.


"They're robbing from our schools and roads," he said.


"I'm not worried about the $2.9 million in damages against me. I'm worried about the rights of people getting charged such tremendous amounts for seed."


Ralph has also accused U.S. Dist. Judge Rodney Sippel in Missouri's eastern district of bias because he once worked for Husch and Eppenberger. Sippel this spring refused to recuse himself from the case, saying he has no ties to the seed-saving issue.


That ruling is on appeal in the U.S. Court of Appeals for the federal circuit.


To see more of The Commercial Appeal, or to subscribe to the newspaper, go to http://www.gomemphis.comĀ© 2004, The Commercial Appeal, Memphis, Tenn. Distributed by Knight Ridder/Tribune Business News.


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