both companies to cut herbicide prices (Kilman 1999). Similarly, the introduction of Bt corn and cotton has increased competition in the markets for corn and cotton insecticides and led to insecticide-price cuts.

By the same token, competition from chemical pesticides limits the extent to which firms can exercise market power in the sales of transgenic pest-protected plants. Adoption of Bt cotton, for example, has been limited in areas where insecticide costs have traditionally been low, notably where insect pressure has traditionally been low. As a result, Monsanto's sales of and profit from Bt cotton have been high mainly in Alabama, Mississippi, Georgia, and Florida (Falck-Zepeda et al. 1999).

There appear to be relatively few firms (less than 50) presently engaged in R&D on transgenic crop protection (including microbials and biological controls in addition to transgenic pest-protected crops). Genetic Engineering News (1998) estimated that in 1997 there were 492 companies worldwide engaged in agricultural biotechnology and 186 in pesticide biotechnology. Roughly 45-50 were engaged in breeding plants with pesticidal, growth-regulator, or other traits regulated under FIFRA; nine of these were large multinationals (inclusive of subsidiaries). The National Biological Impact Assessment Program housed at the Virginia Polytechnic Institute lists about 45 US companies in engaged in pesticide biotechnology R&D, of which 11 are major multinationals (inclusive of subsidiaries), and about half the remainder appear to be small startup companies that have fewer than 20 employees.

There is some evidence that the recent wave of mergers and acquisitions has increased concentration in transgenic-plant R&D, at least at the late pre-commercialization stages measured by field trial activity. In 1988-1998, the four leading firms accounted for 63-87% of field trials approved each year. In 1998, the four leading firms—Monsanto, AgrEvo, Pioneer Hi-Bred, and DuPont—accounted for 79% of approved field trials. Mergers and acquisitions in the industry raised the HHI for field trials in 1998 from 1,608 to 2,182 (Brennan et al. 1999).

A.5 COSTS OF REGULATING TRANSGENIC PEST-PROTECTED PLANTS

All transgenic pest-protected plant products will be subject to some level of regulatory oversight prior to commercialization, regardless of whether EPA's proposed rule regulating them as “plant pesticides” is implemented. In most instances, commercialization requires clearance from USDA in the form of a determination of nonregulated status under the Federal Plant Pest Act. Foods derived from transgenic plants, including those with novel elements such as compounds with pesticidal or growth-regulator activity, are subject to review by FDA through its vol-



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