The Legacy of Corn
By: Owen Higley
Corn has long been a strong hold crop in the United States, having a national significance to a large enough extent that it has become the namesake and representative image of some of our beloved states including Nebraska and others in the great plains. While it may seem simple, much of the corn we are exposed to today is far more complex than meets the eye. From GMO technology, mass production, and a long agricultural history, corn has evolved in many ways. Digging deeper into some specific details and how the financial asset side of the corn industry has been affected we will examine a specific patent, the historical equity value of a public company heavily reliant on corn, as well as a highly advanced corn variety which exhibits features that are game changing to the agricultural world.
Patents are a form of intellectual property which provide protection over some innovative idea in the form of a 20 year monopoly. One of the several categories able to be patent protected is plant technology, many of the GMOs (genetically modified organisms) the agriculture industry uses come from these types of patent protected ideas. Moreover, in June of 2014, United States Patent No. 8,759,611 was granted protection by the United States Patent and Trademark Office. As stated in the field of the invention (brief and general description) of the patent: “The present invention relates generally to genetic control of pest infestations. More specifically, the present invention relates to recombinant DNA technologies for post-transcriptionally repressing or inhibiting expression of target coding sequences in the cell of a pest to provide a pest-protective effect”. In more general terms, this patent suggests that technology had been invented which could protect plants from damages caused by pests. On the topic of corn, there are several outside factors which can drastically affect yields, decreasing supply of the commodity and harming the well-being of corn farmers, pest infestation being one of the largest contributors. With this patented technology, the individual perosn, company, or other entity entitled to its use gains an advantage of large magnitude, being able to dampen down the effects of pests on harvests. To shed some more light on the extreme value of the patent, the following is an excerpt from the form which highlights the specific process, and a feature of the technology adding onto the already desireable benefits. “In still yet another aspect, the invention provides a recombinant host cell having in its genome at least one recombinant DNA sequence that is transcribed to produce at least one dsRNA molecule that functions when ingested by a coleopteran pest to inhibit the expression of a target gene in the pest. The dsRNA molecule may be encoded by any of the nucleic acids described herein and as set forth in the sequence listing. The present invention also provides a transformed plant cell having in its genome at least one recombinant DNA sequence described herein. Transgenic plants comprising such a transformed plant cell are also provided, including progeny plants of any generation, seeds, and plant products, each comprising the recombinant DNA”. Once again, in more understandable terms, this excerpt from the patent describes a GMO designed for pest control, specifically targeting coleopteran (beetle) pests. It involves inserting DNA sequence which produces a special type of RNA, called double-stranded RNA (dsRNA), which, when eaten by a pest, disrupts the expression of a crucial gene in the insect, ultimately harming or killing it. The technology can be incorporated into transgenic plants, meaning the plants themselves produce this pest-targeting RNA, protecting crops without the need for external pesticides. The key value adding item here is that the technology also covers future generations of these modified plants, meaning the seeds of existing plants already have the pest repelling trait.
The fortunate entity which has the monopoly protection of the patented technology is the pharmaceuticals and crop science company Bayer. Integrated into their “Tricepta” corn blend, Bayer has been able to create a variety of corn, which, by looking at the details, is essentially the super-man of corn. As an example the W4025RIB corn variety is a Tricepta variety capable of thriving in all soil types from light to heavy to poorly drained, allowing for harvesting practices to take place in a multitude of locations, the variety also exhibits higher levels of root strength, stalk strength, and drought tolerance. When looking into the equity value of Bayer (BAYN.DE), a sharp increase in price occurred just around the time patent No. 8,759,611 became protected, in June 2014. Not long after this initial spark in prices, Bayer’s reached its all time high in equity value in February of 2015, showing a potential corespondance between the monopolized patents and the value of the company. However, at the same time the price of corn commodity contracts began to drop and would soon enter a relative flatline in value for the next 5 years (examining chart from 2014 - 2020).
What does this mean? Why would the price of corn as a pure resource struggle so much when a breakthrough in related technology had just been uncovered? The reason is likely due to the idea of a patent and the monopoly power it provides. With Bayer being the only entity able to incorporate the pest controlling GMOs into their product, it means that of the national supply of corn, only a small percentage had these enhanced traits. Moreover, although Bayer accounts for around 30% of corn retail seeds in the United States (per the U.S. Department of Agriculture), it’s not likely that all of the seeds Bayer sold to harvesters were of Bayer’s pest repelling Tricepta corn blend, meaning that only a percentage within the 30% of the nation's corn supply supplied by Bayer had the additional value of U.S. Patent No. 8,759,611 attributed to it. With such a relatively small percentage of corn being extraordinary, and the rest lagging behind in its ability to thrive, the majority of corn had been made to look lack-luster, devaluing corn overall.
Corn's historical value as a commodity has been shaped by a complex interplay of several moving parts including market forces, and agricultural innovations. The introduction of patented GMO technology, such as Bayer's pest-resistant Tricepta corn, has demonstrated the volatility in shaping industry dynamics, and how overall commodity prices can be heavily influenced by any relative current events. While extraordinary advancements have improved crop resilience, the difference between enhanced and traditional corn varieties has contributed to a devaluation of the broader market. By further examining the chart of corn’s value over time, prices can be seen to have recovered to some extent; but as the industry and technology continue to evolve, who's to say when the next agricultural breakthrough will be made, possibly causing a déjà vu scenario, similar to that of 2014.
