Genetically Modified Seeds As a Key Growth Driver. Second Argument: Patents On Seeds As Economic Moat

Second Argument: Patents On Seeds As Economic Moat

Through genetic engineering it has been possible to develop plant varieties that did not previously exist. Genetically modifying a plant and thus transforming it into a single specimen grants patent rights. In general, any genetically modified organism is guaranteed intellectual property rights for a period of 20 years. The company therefore maintains a monopoly on the sale of seeds to farmers, who cannot reuse or share the seeds without the prior consent of the company from which the seeds were purchased. In this sense the company is shielded against competition and secures for a certain period of years the sale of a type of seed.
But not only does the patent keep competition out of the game, but also the seeds of first-generation hybrids are the ones that offer the largest and best harvest. It has been seen how farmers who wanted to reuse the seeds did not get the desired results in the first generation. Because of this, attempts to reuse the seeds have been dismissed by the largest number of farmers guided by the yield of the results.
The monopoly from the use of patents on seeds is considered an economic moat according to the terminology introduced by Graham and followed by Buffet and Munger and represents an advantage and characteristic difficult to find among the stocks.