Market power and the development of new cultivars of transgenic and conventional soybean: analysis of the Brazilian experience

Abstract

In recent years , investments in research , development and innovation revolutionized soybean production in Brazil . In biotech , we highlight the development of new cultivars with characteristics adapted to different environmental conditions and , in many cases , transgenic resistant to the herbicide glyphosate . However, if provided to a limited number of companies , which owns the industrial property right on these innovations , market dominance . In this context , the aim of this study was to analyze the existing monopoly power in the development of soybean , transgenic and conventional segment in Brazil . To do so , we calculated the market share and the Herfindahl - Hirschman Index of innovations in biotechnology from property rights to cultivate , consolidated in the database of the National Register of Cultivars . The analysis showed that the concentration is low , with a trend of increased competition , for the segment of conventional seeds . In contrast , the transgenic seeds segment , the concentration levels are high and the tendency is to stay that way , because the entry of new firms in this market requires high technological development and availability of capital . At this juncture , sheltered by barriers to entry , concentration allows dominant firms to increase the price of the seed or the collection of royalties, unilaterally and in proportion as they see fit , which may , in the medium and long term , result in financial loss for soybean farmers .