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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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