Monsanto cultivates GE-crop bonanza despite critics

This is the first in a series of features written to coincide with the first meeting of parties to the United Nations Cartagena Protocol on Biosafety, from February 23 to 27. The legal agreement is intended to regulate international trade in genetically modified organisms.

ST. LOUIS - When shareholders at Monsanto's annual meeting earlier this month requested evidence the company's growing stable of genetically engineered (GE) crops is safe, Chairman Hugh Grant was quick to reject their plea.

"We believe all of our products ... can be safely used," Grant told the shareholders gathered at the company's headquarters in St. Louis. He said there was no need to fear the company's GE corn, soybean, canola and other seeds because they were "well tested and well regulated."

Officials at Monsanto, the world's leading producer of genetic engineering in corn and soybean seeds, say the technology can safely fight world hunger, make farmers wealthier and reduce the damage agriculture does to the environment.

A diverse community of critics disagrees. They express concern that Monsanto is manipulating the world's food supply, which could cause health problems and irreversible harm to the environment. Meanwhile, farmers chafe at the idea of paying ongoing royalties for seeds that use the patented technology.

But Monsanto is managing to shake off the critics and starting to reap a GE bonanza. Acreage planted with GE crops is on the rise in countries around the world, and the company is projecting gross profit from the business at US$1.2 billion this year.

"It appears that our bet on ag biotech was a good one," Monsanto Vice President Jerry Steiner said in a recent interview.

The company is banking on biotech crops because its former bread-and-butter product -- Roundup herbicide -- is rapidly losing market share and profitability to competitors.

Monsanto was once heavily involved in the chemical business, including manufacturing the Agent Orange herbicide blamed for widespread health problems during its use by the military in Vietnam. The company also made polychlorinated biphenyls, or PCBs, which were banned in the 1970s after being linked to a range of health problems.

Monsanto has exited industrial chemicals businesses as well as a pharmaceutical business line and now focuses solely on agriculture, including developing technology for genetically modified corn, wheat, cotton and other crops.

This strategy has gained approval from investors, who have sent the company's stock surging, as well as support from the US government, which is expected to offer its first round of approval for Monsanto's GE wheat -- the world's first -- any day.

Indeed, the Bush Administration as well as Monsanto is pushing wary foreign governments to eliminate barriers to GE crops.

The successes frustrate and outrage opponents, who say Monsanto has used its power and money to unfairly influence regulators and set up a system that could give it control over much of the world's food supply.

"In the same way that Monsanto claimed that Agent Orange and PCBs were safe despite overwhelming evidence to the contrary, they claim their genetically engineered foods are safe," said Jeffrey Smith, author of a new book that examines testing on GE crops.

"They have suppressed reports about the dangers of GM foods," Smith said. "And the handful of studies used by Monsanto as a basis for their safety claims appear rigged to avoid finding problems."

Smith will be among the speakers at meetings this month in Kuala Lumpur, Malaysia, where representatives to the Cartagena Protocol on Biosafety will discuss international trade, liability concerns and other issues surrounding engineered crops.

Monsanto says the criticisms are unfounded.

"Biotech foods have been in development and testing for more two decades," Steiner said. "The vigour and validity of the safety testing process has been proven time and again."

Monsanto researchers are working on genetically engineering crops that have higher yields, tolerate drought and insects, and are healthier to eat.

But the company's current products, aimed mostly at helping farmers fight weeds and insects, have little direct appeal to consumers or food companies. This, along with Monsanto's reputation for being overbearing and heavy-handed, has caused resistance in the United States and abroad.

"They have had amazing arrogance," said R.T Jones Equities analyst Juli Niemann. "Acceptance (of engineered crops) could have come a lot earlier had they managed it well. But now it looks like things are moving on their side."

- REUTERS