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Privatised seed corporations are grabbing the market in basic food staples. Khadija Sharife explains how they pay nothing for the market dominance.

In a globalised world, there is nothing so invaluable as the knowledge economy, comprising intangible assets.

The most substantial asset class is intellectual property or ‘creations of the mind’, especially critical to the profit base of entertainment, pharmaceutical and biotechnology corporations.

According to Forbes magazine, by 1999, three of the four richest people in the world made their fortune from intellectual property rights. They owed their fortune, said Michael Perelman, to ‘Microsoft, one of the major holders of intellectual property rights, befitting the so-called New Economy in which “DOS Capital” has supplanted Das Kapital’.

The Organisation for Economic Cooperation and Development described intangible assets as ‘one of the most important commercial developments in recent decades’. This is especially true as it concerns ‘saviour’ solutions such as patented, genetically modified (GM) seeds.

African countries like Kenya, with mass cases of reported famine, have been packaged as ideal candidates for GM seeds. The Gates Foundation - the philanthropic arm of Microsoft billionaire Bill Gates - has partnered with biotechnology corporations to save Africa.

Yet Kenya’s famines are as much political as they are socio-ecological. In 2009, the year the country exported 450,000 tons of produce, the Kenyan government declared a famine-induced state of emergency.

Export-orientated structural adjustment policies, ordered by the World Bank and endorsed by the government, have evidenced not simply the allocation of the most fertile land for cash crops and game parks, but also destructive land privatisation policies benefiting Kenya’s corrupt elite. From 1998 to 2000, for instance, when food aid constituted 23 per cent of the country’s imports, just 10 per cent of fertile land was productive and used by export-orientated companies.

Unfortunately, the political elite controlling the state also tend to act as Kenya’s largest land-owners, determining the nature of land idleness, landlessness, under-utilisation of fertile land, and tenure insecurity, leading to famine.

Yet the deliberate manipulation of the root causes of Kenya’s famines has been justified by the solution: utilisation of patented seeds. In Kenya about 70 per cent of grants allocated by the Gates Foundation via Agra (Alliance for a Green Revolution in Africa) are directly connected to Monsanto.

This time, patented seeds, that is, privatised seeds branded as the property right of Monsanto, one of the world’s leading agro-chemical and biotechnology companies, have not been deployed for cash crops, but to grab the market for inelastic basic staples: food that the world’s poor cannot live without.

While patented seeds are given at no cost, according to Monsanto, ‘We’re not here because of charity. When you help small farmers today they may not be good customers. But in 10 years time, they may be good customers.’

The anthem of Monsanto’s intellectual property is chiefly to ensure that the IP revolution - and GM solutions - will not be taxed. In 2007, for instance, Monsanto owned 23 per cent of the global ‘proprietary seed market’, controlling 87 per cent (through licensing) of the total world area devoted to genetically engineered seeds.

Monsanto as ‘licensor’, strives its utmost to pay nothing for the privilege of dominating the global agricultural IP market. In 2000 the company merged with Pharmacia corporation, a ‘Delaware’ corporation, based in the US.

A new entity was created for this purpose for Monsanto, from which it entered into an intellectual property transfer agreement with Pharmacia. The scene was Delaware, one of the world’s leading tax havens - better known as secrecy jurisdictions. The location of IP is generally geographically determined by zero taxation and corporate opacity. Delaware is ideal for such purposes.

Usually, on the advice of major accounting and law firms, parent companies would establish new entities in Delaware, converting what would be taxable income in South Africa or even a US state, to nontaxable passive income channelled to the tax haven.

The parent company would thereafter receive stock in the newly created Delaware entity - the latter employing nobody, creating and producing nothing, generally hosting just one shareholder - the parent company, paying a ‘fee’ for the use of IP.

Delaware’s services, particularly the infamous Passive Investment Companies (PIC) have been eagerly used by more than 200,000 multinationals since 2009, including more than 60 per cent of the Fortune 500 corporations. A limited liability company can be established within two working days. Beneficial or ultimate owners are not disclosed, banking secrecy is offered and there is no requirement to file any financial statements unless there exists economic activity within Delaware.

Certainly the Gates Foundation and others have greatly aided in drawing attention to the devastating impact of climate change in Africa. According to the UN Intergovernmental Panel on Climate Change director RK Pachauri, ‘crop net revenues could fall by as much as 90% by 2100’. But in context, when it comes to the hidden gold that constitutes IP, the role of the Gates Foundation, allegedly to save Africa via drought-resistant seeds, is not all that hard to understand.


* This column previously appeared in The New Age (18 January 2011).
* Khadija Sharife is the southern Africa correspondent for The Africa Report magazine and a visiting scholar at the Centre for Civil Society (CCS) based in South Africa.
* Please send comments to [email protected] or comment online at Pambazuka News.