GM Seed Industry under Pressure
By
Volker Lehmann
| Keywords: |
Genetic engineering; Private industry; Public acceptance. |
| Correct citation: |
Lehmann, V. (1999), "GM Seed Industry under Pressure."
Biotechnology and Development Monitor, No. 39, p. 16. |
The world’s biggest agro-biotechnology companies, engaged in the production
of genetically modified (GM) seeds, have recently faced a series
of setbacks.
In August 1999, public attention was drawn to two studies carried out
for the Germany-based Deutsche Bank, one of the largest banks in
the world. In the reports, which were sent to large institutional investors,
"growing negative sentiment" was felt to cause future problems for
leading seed companies. The analysts question whether the economic performance
of seed companies engaged in the development of GM seeds should still be
assessed under the presumption that they will be able to sell increasing
numbers of GM seeds at significant premiums. Although genetically modified
organisms (GMOs) might be based on good science, it is bad politics
to ignore consumer concerns that are, especially in the case of Europe,
"very real and not merely a political trade barrier."
In Europe, public rejection of products that contain GMOs is reflected
by the decision of large food processing companies, such as Unilever
(UK/the Netherlands) and Nestlé (Switzerland), to ban the
use of GMO products in their food formulations. As a consequence, grain
retailers in the USA, such as Archer Daniels Midland (ADM), have
refused to buy GMO varieties that are not approved in Europe. Instead,
ADM offers farmers a premium for GMO-free soybean.
According to the Deutsche Bank analysts, it is likely that this trend
will continue, leading to a two-tier market for soybean and corn, in which
GM crops will be sold at a discount to non-GM grains. Inevitably, this
will backfire on the large seed companies that have heavily invested in
biotechnology for the development of improved seeds. The analysts of the
Deutsche Bank therefore advised the sale of shares in leading companies
engaged in the development of genetically modified organisms, such as Monsanto
(USA), PioneerHiBred/DuPont (USA) and Novartis (Switzerland).
Furthermore, in September 1999, the leading agro-biotechnology companies
were confronted with the announcement of a lawsuit by a coalition of Non-Governmental
Organizations (NGOs) such as the US-based Foundation on Economic
Trends, the National Family Farm Coalition and a number of individual
farmers in the Americas, Asia and Europe. This unprecedented lawsuit is
worth several billion US$ and will be launched in up to 30 countries later
in the year. It is based on the claim that the leading companies are exploiting
modern biotechnologies to gain monopolist control over agricultural production.
The companies would take out patents on GM seeds to lease them to farmers
to be used for one season only, rather than selling them. The plaintiffs
contend that Monsanto, Novartis, AstraZeneca (UK/Sweden), Aventis
(Germany/France) and PioneerHiBred/DuPont control virtually the entire
market for GM seeds, which will eventually lead to their "control over
the entire agricultural foundation for every society." For the same
anti-trust reasons, the coalition contends the use and development of technologies
to produce sterile seeds (see also Monitor No. 35).
GM seed producers, such as PioneerHiBred rebutted the claims of market
control on which the proposed lawsuit appears to be based on and pointed
out the ongoing competition amongst these companies. The companies are
expected to vigorously fight this lawsuit, which is likely to become one
of the biggest antitrust suits ever brought to court.
Volker Lehmann
Editor Biotechnology and Development Monitor
Sources
Brown, P. and Vidal, J. (1999), "GM investors told to sell their shares."
The Guardian, August 25, 1999.
Eaglesham, J. (1999), "Life science groups face lawsuits." Financial
Times, September 13, 1999.
Mitsch, F.J. and Mitchell, J.S. (1999), AgBiotech: Thanks, but no
thanks? Deutsche Banc Alex. Brown.
http://www.biotech-info.net/Deutsche.pdf
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