An Industry in Trouble
After four years of stupendous growth, farmers
are expected to reduce their planting of genetically engineered seeds
by as much as 25 percent in 2000. With a growing number of food
manufacturers and grocery chains in Europe taking products containing
genetically engineered food off the shelves, the market for these crops
has been shrinking. American exports of soybeans to the European Union
plummeted from 11 million tons in 1998 to 6 million tons last year,
while American corn shipped to Europe dropped from 2 million tons in
1998 to 137,000 tons last year: a combined loss of nearly $1 billion in
sales for US agriculture.
Most major food companies have already announced that they will avoid genetically engineered ingredients in their products for the European market. But recent surveys indicate that consumer tastes are souring on the other side of the Atlantic as well. Gerber, Frito-Lay, and natural food retailers Wild Oats and Whole Foods have said that they will avoid genetically engineered ingredients in their products sold in the US.
Top commodity handlers, such as Archer Daniels Midland and A.E. Staley, have begun to discount genetically engineered crops because of the greater financial risk. Commodity traders have followed suit fearing the loss of export markets as Japan, South Korea, Australia, Mexico, members of the European Union, and others draft laws requiring mandatory labeling of foods containing genetically engineered ingredients.
Investors have reacted harshly to the growing consumer rejection of genetically engineered food. In May of 1999, Europe's largest bank, Deutsche Bank, recommended that investors sell all holdings in companies involved in genetic engineering, declaring that “GMO's [genetically modified organisms] are dead.”
Share prices for biotech seed companies that were Wall Street's darlings a few years ago are sinking towards all-time lows. Investors in Monsanto have watched the corporation's share price lose nearly one-third of its value in the last year. Brokerage houses have been advising major players in the biotech industry to spin off their ailing agricultural divisions. Novartis and AstraZeneca both followed this advice in December of 1999. And struggling to recoup nearly $8 billion in seed company and agricultural biotechnology investments, Monsanto merged with pharmaceutical and chemical giant Pharmacia Upjohn at the end of 1999. The new firm quickly decided to turn Monsanto's agricultural unit into a separate company.
In December, a group of high-profile lawyers filed a class-action lawsuit against Monsanto on behalf of American soy farmers, charging that the company had not conducted adequate safety testing of engineered crops prior to release and that the company has tried to monopolize the American seed industry.
Further complicating the financial picture are concerns about uninsured liabilities for farmers and agribusiness companies. In November 1999, 30 farm groups, including the National Family Farm Coalition and the American Corn Growers Association, warned American farmers that “inadequate testing of gene-altered seeds could make farmers vulnerable to ‘massive liability' from damage caused by genetic drift – the spreading of biologically modified pollens – and other environmental effects.”
Brian Halweil is a researcher with the Worldwatch Institute. Web: http://www.worldwatch.org
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