Investors should be wary of multinational company Monsanto because of the market and financial risks it runs by staking much of its future on genetically engineered crops and compatible chemicals, warns an international market analyst firm.
“Investors should be very concerned about the medium to long-term prospects for the company’s genetically engineered crops business,” Innovest Strategic Value Advisors said in report published in New York and London April 16.
“At the same time, the company should be more forthright with investors about the increasing risks of products in the GE pipeline.”
Read Also
Agriculture ministers agree to AgriStability changes
federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
The report said the company is at risk from market resistance and potential financial losses because of GE contamination of non-GE foods or crops.
Greenpeace commissioned the report and used it to continue its campaign against biotech crops.
“Monsanto’s cash cow remains its agrochemical business, but last year’s 24 percent drop in sales of Roundup and other non-selective herbicides has left the company vulnerable and increasingly desperate,” said Washington-based Greenpeace activist Lindsay Keenan. “Monsanto appears to be digging its own grave with its GE strategy.”
The company essentially dismissed the report as a biased study aimed at promoting the Greenpeace political agenda.
“While it’s not surprising to us that a report commissioned by an environmental group would mimic that group’s positions, it’s odd that Innovest spent virtually no time seeking to balance the cherry-picked information through any meaningful discussion with Monsanto about our products and our strategy,” Monsanto said in a statement issued from headquarters in St. Louis.
It didn’t deal with specific conclusions raised by the Innovest analysts.
The report suggested that continued consumer resistance to GE is a problem and it “shows no apparent abatement.”
Meanwhile, skepticism from processors, foreign buyers and domestic consumers suggest “GE wheat is likely to be a costly failure.”
One potential big problem is what Innovest considers the inevitable unwanted spread of GE material into fields of conventional seed or non-GM food products.
In 2000, the discovery that some corn products for human consumption had traces of the GE animal feed corn Starlink led to recalls and cost the company Aventis close to $1 billion.
“Contamination costs could put Monsanto and other firms into bankruptcy, leaving society to deal with GE contamination problems,” said the report.
And it will become more of an issue when crop varieties are engineered to have medicinal properties. Cross-pollination of pharmaceuticals into conventional varieties will cause even more public angst.
“As Monsanto develops GE pharma crops, it is not saying contamination is inevitable, but it is,” said Innovest analysts. “Since contamination is inevitable, companies developing GE pharma crops are likely to face large contamination costs.”
Greenpeace says proof that Monsanto accepts the inevitability of inadvertent mixing of GE and non-GE crops is that it is fighting to set standards listing products with up to five percent GE content as GE-free.
“Contamination of food products by Monsanto’s GE pharma crops could bankrupt the firm and cause substantial investor losses,” said the Innovest report.
Monsanto noted a disclaimer in the report that accuracy and completeness could not be guaranteed and “all opinions expressed herein are subject to change without notice.”
