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.
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