- Over the past few years, Monsanto, a chemical company,
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 Calagene, 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, Monsanto purchased Cargill's seed operations for $1.4
billion. It bought Delta and Pine land for $1.82 billion and Dekalb for
$2.3 billion. It bought Unilever's European wheat breeding business for
$525 million. In India Monsanto has bought Mahyco, Maharashtra Hybrid Company,
E.I.D. Parry and Rallis. Mr.Jack Kennedy of Monsanto has stated "We
propose to penetrate the Indian Agricultural sector in a big way. MAHYCO
is a good vehicle." According to Robert Farley of Monsanto "what
you are seeing is not just a consolidation of seed companies, it is really
a consolidation of the entire food chain. Since water is an 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 in water
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
business to profit even more significantly when these discontinuities occur.
Second, we are exploring the potential of non-conventional financing (NGO's,
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
sustainability challenges and therefore opportunities to create business
value." Monsanto plans to earn revenues of $420 million and net income
of $63 million by 2008 from its water business in India and Mexico. By
the year 2010 about 2.5 billion people in the world are projected to lack
access to safe drinking water. At least 30% of the population in China,
India, Mexico and US is expected to face severe water stress. By the year
2025 the supply of water in India will be 700 cubic kilometers per year
while the demand is expected to rise to 1050 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
stated "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 - 30% in rural communities and is estimated
to be $300 million by the year 2000 in India and Mexico. This is the amount
currently spent by NGO's for water development 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 market.
The Indian Government spent over $ 1.2 billion between 1992-97 for various
water projects whicle the World Bank spent $900 million. Monsanto would
like to divert this public money from public supply of water to establishing
Monsanto'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 NGO's as well as through innovative
financing 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% 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. Monsanto will also
buy a Japanese company which has developed electrolysis technology. 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 in aquaculture. The aquaculture business will build on the foundation
of Monsanto's agricultural biotechnology and capabilities for fish feed
and fish breeding. By 2008 Monsanto expects to earn revenues of $1.6 billion
and 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 of India had banned industrial shrimp farming because
of it's catastrophic consequences. However, the government, under pressure
of the aquaculture industry, is attempting to change the laws, to undo
the Supreme 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 new Water Business
and Aquaculture business. The World 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 Business, like it's
seed business, is aimed at controlling 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.
The right to water is the right to life. The privatisation and commodification
of water is a threat to the right to life. India has had major water movements
to conserve and share water. The Pani Panchayat and the water conservation
movement in Maharashtra and Tarun Bharat Sangh in Alwar, have regenerated
and equitably shared water as a commons. This is the only way that 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
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