Debt-Ridden Puerto Rico a 'Corporate Welfare Paradise' for GMO Companies

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Debt-Ridden Puerto Rico a 'Corporate Welfare Paradise' for GMO Companies

During decade-long debt crisis, U.S. colonial territory funneled over $500 million in public funds to Monsanto and other biotech multinationals

"We have moved from foreign manufacturing enterprises to petrochemical industries, from the petrochemical industries to the pharmaceutical industries, from the pharmaceutical to biotechnology," observed an economics professor at the University of Puerto Rico. (Photo: Jorge Quinteros/flickr/cc)

An investigation by local journalist Eliván Martínez Mercado reveals that Puerto Rico has handed over hundreds of millions of dollars in public funds to multinational biotech corporations, such as Monsanto and Pioneer Hi Bred (now Dupont), even as the colonial territory's decade-long debt crisis forced the closure of public schools.

"It is the philosophy that we have to give our soul away. It is a model of dependency."
—Argeo Quiñones, University of Puerto Rico

"Monsanto and Pioneer Hi Bred[...] received benefits from the bankrupted U.S. colonial territory in the Caribbean while their headquarters made billionaire profits worldwide," Mercado reports. "Monsanto reported a global net profit of $2.3 billion only in 2015, while Pioneer Hi Bred reported $2 billion last year, according to their respective reports for investors."

As Common Dreams has reported, Puerto Rico is faced with a staggering debt worth $72 billion—largely as a result of Wall Street speculation—and federal legislation passed last month put the island's population under the auspices of what critics have decried as a "colonial control board," which is poised to enforce austerity policies.

Yet Mercado's investigation revealed that despite the debt crisis, multinational GMO corporations—condemned by environmental advocates as a "corporate cabal"—have benefited handsomely from the island's corporate welfare policies.

The article originally published earlier this month in Spanish by the Centro de Periodismo Investigativo (CPI), or the Center for Investigative Journalism, notes that under the island's three most recent governors, the territory gave biotech giants "preferential tax rates, tax exemptions, industrial incentives and wage subsidies."

Mercado continues:

Those wage subsidies come from the General Fund which is the money collected directly from Puerto Rican taxpayers. They also allowed Monsanto and Pioneer, for example, to receive 238 million gallons of free water from an underground water reserve in the south of the Island, between Salinas, Guayama, Juana Díaz and Santa Isabel.

"And so it was that 11 agricultural biotechnology enterprises found an oasis of easy money in Puerto Rico throughout 10 years of fiscal crisis," Mercado writes.

An examination of public records showed that the biotech giants received $477.5 million in wage subsidies "because the Department of Agriculture considers them bona fide farmers." The wage subsidy law is intended to allow farmers to pay farmhands a higher wage, to assist an industry that has historically struggled to retain workers.

"But agricultural biotechnology enterprises are not really the same thing as farmers," Mercado argues:

They are dedicated to research and development, a scientific and corporate activity that for the last 10 years in Puerto Rico can be summed up in the following equation: over 1,694 experiments to develop genetically modified corn (55%) and soybean (37%) seeds, according to an analysis of the testing licenses granted by the U.S. Department of Agriculture.

Moreover, the government of Puerto Rico allows Monsanto and other GMO giants to use far more land than other foreign "farmers"—and that's because the government, paradoxically, also does not consider these corporations to be farmers.

Mercado writes that on this point the government relies on "Secretary of Justice Guillermo Somoza Colombani, who had decreed that these enterprises could rent more than 500 acres because biotechnology could not be considered an agricultural activity. 'It is rather an activity primarily scientific in nature, whose results are not available for immediate consumption,' explained Somoza in an opinion issued in 2012 after an inquiry from the Puerto Rico Industrial Development Company."

But the Puerto Rican government continues to treat biotechnology corporations as both farmers and non-farmers:

As a matter of fact, Monsanto Puerto Rico received $9.7 million in wage subsidies over the last 10 years, according to the Administration for the Development of Agricultural Enterprises (ADEA, for its Spanish acronym), while Monsanto Caribe rented the 768 acres of public land. They are different legal entities in Puerto Rico's Registry of Corporations, although they work under the same economic strategy in their headquarters in Missouri.

A graphic illustrates the enormous amount of funds funneled to these multinational companies over the past ten years:

Image: Center for Investigative Journalism/Laura Moscoso

The corporations are additionally benefiting from industrial incentives for building infrastructure and purchasing agricultural equipment, as well as receiving municipal and property tax exemptions.

And because they are considered farmers, the biotech behemoths are allowed to withdraw as much water as they want—for free—from public sources.

"Out of the six corporations who have franchises to extract water from the southern water sources," Mercado writes, "Monsanto Caribe and Pioneer Hi Bred extracted 238 million gallons in the last 10 years, according to reports from the Department of Natural and Environmental Resources. If they hadn't been considered bona fide agriculturists, they would have had to pay $476,389, which is the industrial cost for this amount of consumption. The water sources in the south have been in trouble because of 'over-extraction' and lack of rain."

Those in favor of the enormous tax breaks and subsidies argue that the biotechnology sector is a major employer in the impoverished colonial territory.

Puerto Rican economist Ramón Cao "differs from this appraisal," Mercado writes.

"It's an important amount, but at what cost? Each employment represented an annual fiscal cost of $15,354 which is approximately the minimum yearly wage for an employee," Cao told Mercado. "At that fiscal cost, they could have hired about 2,000 teachers a year, including employee benefits."

Such massive corporate welfare benefits have contributed to Puerto Rico's devastating crisis, observers argue. As Isaiah J. Poole of Campaign for America's Future wrote earlier this month:

Add an obsession with giving tax breaks to the wealthy with the addictive drug of tax-free Wall Street debt, mix in the mysterious change that stripped from Puerto Rico the ability to declare a Chapter 9 bankruptcy, and you get the shame we see today—working-class American citizens stripped of economic opportunity, democratic rights and basic dignity, and told they have to bear with the 'imperfect' while the fat cats finish their feasting. At least for them, this crisis has not been a waste at all.

Argeo Quiñones, professor in the Department of Economics of the University of Puerto Rico, lamented the territory's fondness for corporate tax breaks: "We have moved from foreign manufacturing enterprises to petrochemical industries, from the petrochemical industries to the pharmaceutical industries, from the pharmaceutical to biotechnology."

"And that does not translate into a sustainable large-scale activity that could be identified as growth and development for Puerto Rico," Quiñones said to Mercado. "It is the philosophy that we have to give our soul away. It is a model of dependency."

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