Taking A Look At Monsanto's Social Responsibility

Social Responsibility and Monsanto
Agricultural company Monsanto finds itself amidst controversy as it maintains and raises high prices for corn and soybean seeds, despite each crop’s falling value. As a result, the company’s decision to maintain these high and rising prices calls social responsibility regarding consumer relations and relations with stockholders into question.
“A critical issue in business today is business’s responsibility to customers”, which includes providing safe, reliable products at a fair price for customers, regarding consumer relations (BACW, p. 56). Monsanto continues to raise the prices of their products, despite falling prices of corn and soybeans, shaking the relationship between the company and consumers. Typically,

Due to the 13.8 percent drop in farm income, farmers will be less likely to pay extraordinary prices for seeds. In this way, Monsanto’s decision to maintain or hike already high prices will tamper their relationship with farmers. The company, though, claims to support high seed prices based on tangible and intangible factors (Monsanto). Tangible factors include “the money farmers save on inputs…(like chemicals, labor, equipment, and fuel) and the additional income from increased yield” while intangible factors include “convenience, reduction in financial risk, and reduced exposure to chemicals” according to Monsanto (Monsanto). This makes sense; a farmer would choose to buy seeds from Monsanto to save valuable time and resources, while increasing their crop yield. However, the surplus of crops –like corn and soybeans–due to the large amount of farms buying seeds from Monsanto is driving down the value of corn and soybeans. Additionally, Monsanto requires farmers to sign agreements with them, specifying that farmers will “buy new seeds from the company each year, rather than using the products of the plants’ reproduction” for future crops (Murphy, 2013). This agreement takes away the farmer’s right to save seeds –a practice

55). Thus, keeping a good relationship with investors is important because investors help fund the company. Recently, Monsanto told investors they “hope to double their earnings per share by 2019”, a questionable revelation for a company that “spent $6.1 billion repurchasing about 50 million shares” last quarter (Blue Pacific Partners, 2014). This buyback is a result of Monsanto raising soybean prices “nearly 75% from 2006 to 2014, for a compound annual growth rate of 7.2%” (Blue Pacific Partners, 2014). While initially a good move for gaining and retaining investors, the recent surplus in corn and soybean crop has driven corn and soybean prices down. This is unfavorable for Monsanto because farmers will be less likely to purchase expensive seeds next season, as their profit from the last season was lower. In 2016, corn and soybean seed prices are expected to fall “8% and 5% respectively” and in 2017, fall “10% and 10% respectively” as a result of the surplus crop (Blue Pacific Partners, 2014). Monsanto, however, must increase seed prices in order to keep their market value high and shareholders happy. Typically, “a company with strong pricing power can grow its gross margins over time”, but because Monsanto “achieved real volume growth in corn seeds”, it has no pricing