Europe's Largest Bank Warns World's Top Investors to Sell Shares
Monsanto Investing News web page.
GUARDIAN (London) Wednesday August 25, 1999
GM investors told to sell their shares
Paul Brown and John Vidal
Europe's biggest bank has advised the world's largest investors to sell
their shares in leading companies involved in the development of
genetically modified organisms because consumers do not want to buy their
In a report sent to several thousand of the world's large institutional
investors, including British pension funds, Deutsche Bank says that
"growing negative sentiment" is creating problems for the leading
companies, including Monsanto and Novartis.
"We note that Monsanto has spent more than $1.5m (#1m) to persuade English
consumers of the rectitude of their position, but alas, to no avail.
Monsanto is little match for Prince Charles, an anti-GMO advocate, when it
comes to sensitivity for the English people's desires," says the report.
"More broadly speaking, it appears the food companies, retailers, grain
processors, and governments are sending a signal to the seed producers
that 'we are not ready for GMOs'."
Since the report was circulated to investors, shares in companies named
have fallen against a rising trend in stock markets generally and the
frenzy to takeover seed companies has stopped. In the six months to
yesterday Monsanto's stocks had fallen 11%, and Delta & Pine, a seed
company that owns the terminator gene, which Monsanto is taking over, has
lost 18% of its value.
The Deutsche Bank's Washington analysts, Frank Mitsch and Jennifer
Mitchell, say it is nine months since they first voiced their concerns
that the biotech industry was "going the way of the nuclear industry in
this country, but we count ourselves surprised at how rapidly this
forecast appears to be playing out.
"Domestic concerns regarding ag-biotechnology are clearly on the rise. For
the most part, though, it has not gotten the attention of the ordinary US
citizen, but when it does - look out."
Deutsche Bank's first research report, dated May 21 and entitled GMOs Are
Dead, said: "We predict that GMOs, once perceived as a bull case for this
sector, will now be perceived as a pariah.
"The message is a scary one - increasingly, GMOs are, or in our opinion,
becoming a liability to farmers," it adds. Non-GMO grains were already
gaining a premium price which would, if the trend continued, far outweigh
any economic benefit in growing GMOs.
The latest report, published last month under the heading Ag Biotech:
Thanks, But No Thanks, says: "GMOs are being demonised by their opponents.
What food manufacturer will 'take a bullet' for GMO corn in the face of
GM grains would have to be sold at a discount. "Farmers who planted
(Monsanto's) Roundup Ready soya could end up regretting it."
It could become an "earnings nightmare" for Pioneer Hi-Bred (a company due
to be taken over by the chemicals giant DuPont) and for Monsanto which is
buying Delta & Pine, a stock, the bank says, not worth holding on to.
The concerns of European consumers are real, concludes the report.
"European consumers have recently been through the mad cow crisis, the
French Aids-tainted blood crisis, the Dutch pig plague crisis, the Belgium
chicken dioxin crisis, the Belgian Coca-Cola crisis, etc. Therefore
hearing from unsophisticated Americans that their fears are unfounded may
not be the best way of proceeding."
The report is a serious embarrassment to the Labour party because its
pension fund has large investments in two leading GM companies,
AstraZeneca and Novartis, both of which are reportedly considering selling
their GM divisions after years of heavy investments but few returns.
Following European uproar over the crops, there has been a significant
official cooling in the US. The US government and the biotech industry are
preparing for a consumer and media backlash and the agriculture secretary,
Dan Glickman, has told companies not to take consumers for granted.
The report coincides with growing official unease about claims made for GM
crops. With the market for GM in Europe contracting as food processors
turn their back on the products, Mr Glickman warned farmers they could be
left with unwanted crops, and that small farmers could become "serfs on
Recent US government research has shown that GM crops of maize, soya and
cotton do not automatically produce greater yields or lower use of
Sue Mayer of Genewatch said: "This shows the global impact of the concerns
of pressure groups on this issue."