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Whose lawyers are smarter?

by Robert Schubert
CropChoice editor

(July 17, 2002 -- CropChoice commentary) -- Half a million bucks sounds like a lot of money, but just how far would it go in dealing with a load of genetically contaminated wheat? Grain traders I've talked with are fairly certain that Monsanto's lawyers know the answer better than those representing Spring Wheat Bakers.

A couple of weeks ago, this cooperative of nearly 3,000 wheat growers in Montana, the Dakotas, and Minnesota announced a pact with Monsanto. The plan is for the cooperative to use that $500,000 to develop a closed system of growing, harvesting and processing Roundup Ready wheat, genetically engineered to resist the Roundup herbicide. Monsanto wants to commercialize it in the next couple of years.

Spring Wheat Bakers had an identity preservation system, designed to ship various specialty spring wheat varieties to Europe. It flopped. The cooperative canned the initiative almost two years ago because the Europeans were unwilling to pay the associated premiums. Todd Leake, a co-op member, says that when he pressed Gary Lee about the issue at a meeting in the spring of 2001, the former chief executive of the cooperative told him that the "looming introduction" of genetically modified wheat was a factor in the Europeans' decision.

Now the idea is to resurrect this segregation system, but not to ensure the integrity of high value spring wheat. The idea is to contain and market Roundup Ready wheat and any other types that come along in the future, such as wheat engineered to contain a range of vitamins and drugs.

Some considerations are in order.

One, the Europeans, Japan, South Korea and other major customers for U.S. wheat don't want genetically modified varieties. For that matter, neither Monsanto nor Spring Wheat Bakers (and the farmers it represents) have any customers for the Roundup Ready wheat.

Number two, containing this or any other transgenic wheat would be nearly impossible. Speaking at last week's meeting of the North Dakota Interim Agriculture Committee, University of Manitoba geneticist and wheat breeder Anita Brule-Babel told the assembled state legislators that if Roundup Ready wheat were planted widely, it could very well spread beyond control within 5 years. She has first hand experience with Roundup-resistant canola in Canada, where growers of conventional and organic canola have had to give up on the crop because of genetic contamination.

Number three, Monsanto assumes none of the liability, as a quick reading of a grower agreement will show, says Sarah Vogel, a Bismarck lawyer and former state commissioner of agriculture.

"Any farmer that grows Roundup Ready wheat has signed a deal with Monsanto," Vogel says. "In its contracts, Monsanto disclaims every oral representation that it makes about these products, including their merchantability."

Despite the potential market disaster this wheat could wreak, legislators appear unwilling to place a moratorium on it. That suits Monsanto just fine. The biotech behemoth needs a new product and quick. Its stock is in the tank. Plus, Pfizer wants to buy its parent company, Pharmacia. Consequently, the pressure undoubtedly is on for Monsanto to spin off more quickly than it had planned.

With all that in mind, one might wonder whether Monsanto is trying to shift some future liability to Spring Wheat Bakers, whose essence is those 3,000 farmers.

Let's say samples of a 30,000-ton shipment of conventional wheat, worth about $4 million, going to Europe test positive for the Roundup Ready genes. Would that mean that Spring Wheat Bakers accepted $500, 000 to take on a $4 million liability?

Someone would lose money. The grain trade certainly wouldn't take the hit. The industry has been down this road before with biotech soybeans and, of course, StarLink corn. No, it'd simply reject the wheat.

That would leave all the farmers who lost the value of their crop to go banging on Monsanto's door. Its lawyers' answer: "Hey, the agreement was with Spring Wheat Bakers."

Where to next? The insurance companies would have high-tailed it long before. Would the management of the cooperative take out a $3.5 million loan to cover the costs? Bankruptcy? A taxpayer bailout courtesy of the government?

Probably none of the above. More than likely, the farmers would be left holding the bag.

"I don't understand why people in government, state or federal, would even entertain the concept of GMO," Vogel says. "It is so bad for everybody but Monsanto."