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GloTell as Case Study in Private Security

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Tags Entrepreneurship

11/04/2004

A relatively new product, GloTell, is now available to farmers and chemical plants, whose anhydrous ammonia tanks are sometimes raided by theives.

The clear liquid product is added in small quantities to an anhydrous ammonia tank. Upon exposure to air, the product turns bright pink, and stains anything it touches for days, being visible under ultraviolet light for even longer. The theives are usually motivated to steal ammonia to use in methamphetamine "ice" production in so-called "meth labs". Most mainstream sources spin the story as a victorious step forward for the war on drugs, and so one might expect the federal government to soon subsidize its use.

What is missed by commentators is an understanding of why this product came to market and why its use is economical. In fact, a commenter at this blog says, "the fact that this solution came about from private individuals, with no financial help from the government, is almost unbelievable".

Farmers are most prone to the thefts, since their security is virtually non-existent compared to chemical plants, although plants also have been hit. Chemical plants usually have security fences and 24/7 patrol staffing. Farmers use cheaper means such as locks and lights to deter thefts, but they often lose product anyway. It is worth pointing out that meth cooks steal as their only means of acquiring anhydrous ammonia, since the government outlaws sales to non-licensed users.

The amount of anhydrous ammonia that a batch of meth ice requires would cost about $20 on the market, easily borne as a cost of production of a product that sells quite dearly on the street, so it is clear that meth cooks resort to theft of ammonia as their last resort. Thus, these thefts are a cost of the war on drugs that is imposed on farmers.

Although the price of GloTell can add about $9/ton to the ammonia they store, the use of the product can save farmers in hundreds of dollars of lost ammonia, damaged equipment and other property; and the annoyance, grief, and injustice of enduring trespass. As a side benefit, leaks are easily detected, too.

As is typical, improvements in security march on in the private sector incrementally, and such developments are not broadly covered in the press. GloTell also represents an interesting case regarding intellectual property. The chemical formulation is a trade secret, so its producer, Royster-Clark, must rely on nondisclosure agreements to preserve its status as sole seller in what is likely to be a very good Spring 2005 season for them.

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