MONSANTO INVESTORS FACE CATASTROPHIC RISK - REPORT
Government GE Strategy Mimics Monsanto’s Failing One
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.
The Innovest report can be downloaded from www.greenpeace.org from 12.00am midnight Thursday 17 April NZ time.
For more information, please contact:
* Frank Dixon, Managing Director, Innovest Strategic Value Advisors, Tel +1 646 237 0220 or +1 212 421 2000, ext. 200
* Lindsay Keenan, Greenpeace global markets specialist, Mob: +1 202 550 3845
* Teresa Merilainen, Greenpeace International Press Office, Tel: +31 205 236 637
* Steve Abel, Greenpeace NZ GE Campaigner: 021 565 175
* Dean Baigent-Mercer, Greenpeace NZ Communications Officer: 021 790 817.
A comprehensive video on GE wheat market rejection, “Slice of Life”, is available from Greenpeace New Zealand.