Posted on 17-4-2003

Monsanto’s Sinking Ship Has NZ On Board?

Auckland, Thursday 17 April, 2003: On the same day the New Zealand
Government releases its reports on the economic and co-existence issues
relating to genetically engineered (GE) crops here, a new report on the
world’s biggest GE crop producer, Monsanto, shows their financial prospects
are poor ­ due to consumer rejection of GE foods and the potential
liability costs of inevitable contamination from GE crops.

The agrochemical giant Monsanto has received the lowest possible
environmental and strategic management rating of a triple-C from Innovest
Strategic Value Advisors, a global environmental and social investment
research firm. Innovest’s report, “Monsanto and Genetic Engineering: Risks
to Investors,” commissioned by Greenpeace, will be released at a briefing
at the Harvard Club in New York City tomorrow morning.

The report, which comes just days before Monsanto’s annual general meeting,
warns shareholders and potential investors of Monsanto's "above average
risk exposure and less sophisticated management than peers." Innovest
analysts predict that "it [Monsanto] will likely under-perform in the
market over the mid to long-term."

Monsanto suffered $1.7 billion in losses in 2002 and has failed to open new
markets for its controversial GE products. Yet Monsanto continues to pursue
its unsound business strategy of betting on a speedy and widespread global
acceptance of GE foods. Next in the Monsanto pipeline is GE wheat, which is
being boycotted in key markets by farmers and food industry even before its
approval. "While last year's profit losses led to a change in leadership at
the company, they 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," said Frank Dixon, Managing Director at Innovest
Strategic Value Advisors. “The risk of heavy financial losses due to
genetic pollution or technology failure coupled with sustained market
rejection of GE foods makes Monsanto a poor investment.” “New Zealand faces
the same risks as Monsanto if we pursue GE release here,” said Greenpeace
New Zealand GE Campaigner Steve Abel. “The key issues that are making GE a
poor financial prospect for Monsanto are market rejection and the potential
cost of inevitable seed and pollen spread in the agricultural environment,”
said Abel. “These are exactly the issues that the New Zealand Government
is in denial over. We stand to lose our invaluable GE free production
status.”

In its assessment of Monsanto’s key markets, Innovest underscores the lack
of regulatory approval and stiff consumer opposition that continue to block
the company's GE crops. GE products constitute one of the most widely
rejected product groups ever, and major food importers such as China, Japan
and Korea have recently followed the restrictive European approach. In the
US, upwards of 90 per cent of consumers now demand GE food to be labelled
and many would reject GE food if given the choice.

The Innovest analysis of the risks and liabilities associated with
Monsanto's genetic engineering business pays special attention to the
inevitability of GE contamination. Referring to the example of the 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. "Monsanto's cash cow
remains its agrochemical business, but last year's 24% drop in sales of
Round-up and other non-selective herbicides has left the company vulnerable
and increasingly desperate. Monsanto appears to be digging its own grave
with its GE strategy," said Greenpeace global markets specialist Lindsay Keenan.