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Monsanto investors face catastrophic risk (Friday, April 18, 2003 -- CropChoice news) -- The following is from a news release.
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, was released at a briefing at the
Harvard Club in New York City this 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 genetic engineered (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."
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% of consumers now demand GE food to be labeled and many
would reject GE food if given the choice.
The Innovest analysis of the risks and liabilities associated with
Monsanto's genetic engineering (GE) 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 global markets specialist
with Greenpeace, Lindsay Keenan.
http://www.greenpeaceusa.org/media/press_releases/2003/04162003text.htm
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