Monsanto Roundup Ready soybean crop

On Wednesday April 16th 2003, a new report by independent investment analysts Innovest Strategic Value Advisors is launched [1]. It gives the business strategy of the agrochemical giant Monsanto the lowest possible rating of a triple-C. The report comes days before Monsanto's Annual General Meeting on April 24.

Launched in New York at 8 a.m. local time on Wednesday April 16th, Innovest's report warned shareholders and possible investors of Monsanto's "above average risk exposure and less sophisticated management than peers", predicting that "it [Monsanto] will likely under-perform in the market over the mid to long-term".[2]

Frank Dixon, Managing Director at Innovest Strategic Value Advisors said,

"While last year's profit losses lead to a change in leadership at the company, it did not lead to a change in strategy. If Monsanto does not take steps to mitigate its substantial market risks, further investor losses are likely. Coupled with the risk of heavy financial losses due to genetic pollution or technology failure, the sustained market rejection of GE [Genetically Engineered] foods makes Monsanto a poor investment,"[3]

The report analysed risks and liabilities associated with Monsanto's Geneticially Modified (GM) crop business. Referring to the example of StarLink corn contamination scandal in 2000, in which the company Aventis lost $1 billion, Innovest estimated Monsanto's potential financial fallout from a "StarLink Scenario" to be $3.83 liability per share.

The report also looked at trends in key markets for Monsanto, noting the lack of regulatory approval and stiff consumer opposition that continue to block the company's GM crops. Seven years after the introduction of Monsanto's first commercial GM crop, the vast majority of GM crops are still grown in just three countries: USA, Canada and Argentina. Even in the US upwards of 90% of consumers now demand GM food to be labelled and a third would reject GM food if given the choice.

Frank Dixon, Managing Director at Innovest Strategic Value Advisors added,

"GE products is one of the most widely rejected product groups ever. Many have been removed from the market or developed but not commercialised due to market rejection,"

"Major food importers such as China, Japan and Korea have recently followed the restrictive European approach, and more than 35 countries have enacted or announced laws that restrict GE imports and/or require labelling of foods containing GE ingredients. This market rejection is steadily moving upward in the food supply chain from consumers to retailers to producers to farmers".

That situation looks bleak even as Monsanto continues to prosecute lawsuits against farmers in a number of countries, an action that does not exactly increase trust among its own potential clients. In addition farmers are now suing the company for financial losses incurred by contamination of their fields from neighbouring GM canola fields. Next in the Monsanto pipeline is GM wheat, which is being boycotted in key markets by farmers and food industry even before its approval. By all indicators, GM bread and GM pasta are threatening to be a commercial disaster.

Charlie Kronick, UK Greenpeace GM campaigner said,

"In spite of being bought, re-floated, re-branded and re-invented, Monsanto hasn't really changed: it's a hugely unprofitable chemical company feigning interest in the environment, while in fact betting the farm on future profits and control of the global seed and food market".

"Monsanto didn't fool anyone five years ago when it claimed it just wanted to feed the world with GM crops, and they're not fooling anyone now. Any kind of investor - smart, ethical and hopefully both - will drop them like a hot potato"
 

Editors Notes

[1] Innovest Strategic Value Advisors is an internationally recognised investment research and advisory firm specialising in analysing companies' performance on environmental, social, and strategic governance issues, with a particular focus on their impact on competitiveness, profitability, and share price performance.

Founded in 1995 with the mission of identifying non-traditional sources of risk and value potential for investors, the firm currently has over US $1 billion under direct sub-advisory mandates with partners including ABN-AMRO, Mellon Capital, Brown Brothers Harriman, T. Rowe Price, and Credit Lyonnais. Innovest also provides custom portfolio analysis and research to leading fund managers including Schroders, State Street Global Advisors, and Rockefeller & Co. Innovest's institutional clients include two of the largest pension funds in the world - CalPERS (USA) and ABP (Netherlands). In addition, the firm provides research and strategic advice to senior executives of Global Fortune 500 industrial companies.

For more information about Innovest see visit their website at http://www.innovestgroup.com

[2] Monsanto suffered $ 1.7 billion in losses last year and has failed to open new markets for its controversial genetic modified products. Yet, Monsanto continues to pursue its failing business strategy of betting on a speedy acceptance of GM foods.

[3] Monsanto accounted, directly or indirectly, for 91% of all GM plants grown in 2002, a majority of them engineered to withstand spraying with the company's weed killer Round-up (glyphosate). After loss of patent in 2000, Round-up is under increasing pressure from competition, and at the same time resistance to Round-up is found to be developing in many of the weeds it is meant to control.

A crop of GM maize

On Monday 30th July 2001, Greenpeace erected a large concrete sculpture of Brazil's federal constitution in front the of the Ministry of Agriculture in Brasilia to remind Minister Marcus Vinicius Pratini de Moraes that he is not legally authorised to approve the commercial growing of Monsanto's genetically modified (GM) Roundup-Ready soybeans. The Minister had announced last week that he would issue a permit for such growing in due time before Brazil's planting season in September 2001.

The president of the Brazilian Association of Federal Judges, Judge Flavio Dino, echoed Greenpeace's warning to the Agriculture Minister saying, "If he does this, the minister will certainly be breaking the law and be subject to face legal penalties. It is a crime". The Judge continued "We are alerting the government to avoid a confrontational situation between the Federal Justice and the Ministry. We hope that the General Advocacy of the Union and the Ministry of the Environment will examine this situation better".

Greenpeace GM campaigner Mariana Paoli in Brazil said:

"This is not the first time that Minister Pratini de Moraes has promised to approve Monsanto's genetically engineered crops; but even Ministers have to respect the Constitution of this country."

She continued:

"Brazil does not need and it does not want Monsanto's Roundup Ready soybeans with their environmental risks and uncertainties".

The Regional Federal Court, in response to legal action by Greenpeace and the consumer organisation IDEC, had clearly determined, that the Brazilian Constitution required a full environmental impact assessment as well as coherent labelling laws, before any releases of GM crops could be approved. Following the judgement, any public or private agent who breaks the decision will be subject to a fine of $10,000 per day, and face other legal penalties.

While the Brazilian government had issued some labelling legislation earlier this month in the form of a preliminary decree, there still are no valid terms of reference for the environmental impact assessment required. Subsequently no such assessment has been undertaken on Monsanto's Roundup Ready, nor any other GM crops.

Greg Muttit, GM campaigner in London, said:

"Brazil is the principal supplier of non GM soya for Britain and the rest of Europe. They have safeguarded consumer choice and gained commercial advantage by providing a product which consumers want".

Further information:
Contact:
Greenpeace press office on: 020 7865 8255

A Greenpeace investigation, 'Smuggling GM in through the back door' has revealed a trail of GM contamination which leads from Monsanto's US laboratories to British consumers of McDonald's chicken McNuggets. The investigation also undermines the claims by many supermarkets, producers and fast food chains to be 'GM-free'.

The trail of GM contamination starts when Monsanto's GM soya, grown in the US is transported to the UK via US company Cargill, the world's largest grain carrier. GM contaminated feed is then fed to chickens by Sun Valley, the UK's largest poultry producer, also owned by Cargill. Sun Valley's largest customer is McDonald's.

"A few big players in the food industry are keeping alive a market for GM contaminated food despite widespread consumer rejection," said Greenpeace food campaigner Jim Thomas. " People who have said 'No' to GM food sending ripples across the industry may find themselves unwittingly tucking into an egg or portion of chicken McNuggets contaminated by GMOs."

"What Greenpeace has uncovered is merely one chain of supply. This trail of contamination is repeated time and time again with our pork, fish, eggs and milk," Thomas added.

Soya is the largest US export crop. Thirty million hectares of soya was planted in 1999, mainly in the states of Illinois, Iowa and Ohio. Of this, 57% was a GM variety of soya produced by Monsanto. Monsanto sells the GM soya via seed companies like Cargill. In the US, GM soya is mixed together with conventional soya, either at the harvest or in the grain elevators. Cargill's US soya is shipped from New Orleans in ocean going grain carriers to European ports such as Rotterdam, Hamburg, Barcelona and Liverpool.

At Liverpool, Cargill operates the UK's only soya crushing mill at Gladstone dock. After the material is processed, the oil is sold for human consumption and the remaining GM material is sold to farms and feed mills to provide the staple diet for cows, pigs, chickens and fish. In the UK 60% of all soya used for animal feed is fed to poultry.

The UK's largest poultry producer in the UK is Sun Valley, which has plants in Herefordshire, North Wales and Wolverhampton. Sun Valley is wholly owned by Cargill and through Sun Valley's own branded chicken products, Cargill's control of GM food from seed to supermarket shelf is complete.

Sun Valley is well known for its processed and coated chicken products, such as Sun Valley's Garlic Butter Chicken Kiev, which it claims, is 'The Nations favourite Kiev'. However, Sun Valley's biggest customer is McDonald's, the world's largest and best-known food company, for whom Sun Valley produces chicken McNuggets and sandwich patties. One third of Sun Valley's Balliol plant in Wolverhampton is given over to producing food for McDonald's.

Despite McDonald's claims that they aim to go 'GM-free', when pressed on the issue of GM animal feed, McDonald's is less keen, blaming feed suppliers for the lack of non GM-feed. (1)

"Consumers don't want excuses, they want food free of GM contamination. Other food retailers are already taking action. McDonald's has the same opportunity," said Thomas.

The investigation into animal feed follows on from the launch of a major campaign by Greenpeace to stop GMOs contaminating the food chain and the environment through the 'back door' as animal feed. The 'True Feed campaign' began with a national newspaper advertising campaign featuring chickens fed on GM animal feed.

Greenpeace has also demonstrated internationally against US exports of GM animal feed. Today (Wednesday) in Hamburg, Greenpeace volunteers positioned themselves in the water in front of freighter Unison bringing in corn gluten feed from the US. On Tuesday Greenpeace volunteers blocked a railroad from Veracruz harbour in Mexico to prevent a train loaded with GE maize from leaving the port. During the past week the organisation has also demonstrated in the US and France against GM exports.

"Greenpeace is opposed to the pollution of our food chain and environment by GM crops. GM animal feed is another step along the contamination trail. It's time to stop the planting and export of these crops and insist that the animals that provide our meat and dairy products, are reared on a GM-free diet," said Thomas.

Notes to Editors:
(1) In a letter to Greenpeace 05.11.99, Mike Love, Director of Communications for McDonalds wrote: "There are difficulties of segregation within the animal feed supply chain industry-wide and therefore we currently don't make a specification regarding GM ingredients in animal feed."

Further information:
Contact:
Greenpeace press office on: 020 7865 8255