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Published on October 17th, 2010 | by Jeremy Bloom

26

Be Nice to Monsanto, They’re Having a Very Bad Year

Last year, Forbes magazine named Monsanto company of the year.

Last year, Monsanto made more than $4 billion in profits.

That was last year. This year, Monsanto is tanking. Here’s what Forbes has to say this year:

Forbes made Monsanto the company of the year last year inThe Planet Versus Monsanto.  I know because I wrote the article. Since then everything that could have gone wrong for the genetically engineered seed company….has gone wrong. Super-weeds that are resistant to its RoundUp weed killer are emerging, even as weed killer sales are being hit by cheap Chinese generics. An expensive new bioengineered corn seed with eight new genes does not look impressive in its first harvest. And the Justice Department is invesigating over antitrust issues. All this has led to massive share declines. Other publications are making fun of our cover story.

How did things go so wrong?

Monsanto had the Greatest Business Model EVER!

Here’s how it works:

  • Monsanto sells an herbicide called Roundup. It kills plants.
  • Monsanto used genetic engineering to insert a gene into a soybean plant that keeps Roundup from killing it.
  • Farmers plant the Roundup Ready Soybeans TM, and then douse the fields with Roundup. All the weeds are killed with hardly any work for the farmers.

As you can see, Monsanto gets you every which way. The farmers have to buy Monsanto’s seeds and ONLY Monsanto’s seeds, they buy Monsanto’s weedkiller, and they have to keep buying from Monsanto year after year.

Intellectual property

For 10,000 years farmers made a living by planting seeds, tending the plants, and in the autumn eating and selling most of their crop, but keeping a percentage as seed stock to plant the next year. Monsanto put a stop to that; it’s theft of their intellectual property!

What to you and me look like, you know, genes, the building blocks of life developed by mother nature over billions of years, Monsanto has patented, locked down, and made exclusive.

If you grow Monsanto soybeans, you sell the whole crop. You don’t save some for seed. For next year’s crop, you have to go back to Monsanto and pay them for seeds again. Every year. Or they take you to court.

Just to make sure, Monsanto has been buying up companies that perform the essential agricultural task of seed sorting. And shutting them down.

But you can’t avoid paying Monsanto just by, you know, not being a Monsanto customer. Monsanto has taken farmers to court when the wind happened to blow pollen containing Monsanto patented genes into their fields. That, too, is theft of intellectual property.

Superweeds

For a while this worked great. Farmers that didn’t mind spraying their fields with toxins made money, Monsanto made money, and if nobody really liked them and their take-you-to-court bullying ways, at least everyone was profiting off their intellectual property.

But did you notice a hole in their business plan? There are a couple.

The first one is: THERE IS A GENE FOR RESISTANCE TO ROUNDUP.

Oh, yeah. If soybeans can be made resistant to Roundup, so can other stuff. Over the past 15 years, so-called “superweeds” have emerged that have developed resistance, just as superbacteria have emerged with resistance to penicillin and other antibiotics.

For a while, that was okay by Monsanto – if you dump more and more Roundup on the fields, you’ll still kill most of the weeds. According to Friends of the Earth (via Sourcewatch),

the emergence of glyphosate-resistant weeds has driven a more than 15-fold increase in the use of glyphosate on major field crops from 1994 to 2005″

Cheap knock-offs

Which leads us to business plan problem #2: glyphosates.

The Roundup Ready gene is intellectual property.

But Roundup… is just a basic weedkiller, based on a family of chemicals called glyphosates.

Last year, Bloomberg was able to report:

“Farmers are willing to pay for good technology to increase yield,” Mark Demos, a portfolio manager at Fifth Third Asset Management, said today from Minneapolis. “The economics of buying Monsanto seed, even at higher prices, are pretty good.”

Enter the Chinese. They started dumping a cheap Roundup knock-offs for 50 percent less than Monsanto charges for Roundup. Monsanto never even saw this coming, they’re cutting prices like crazy, and it’s taken a $400 million hit out of Monsanto’s bottom line. Ouch!

The clock is running out

Monsanto wants to rush out a Roundup Ready sugar beet, but the courts have blocked a rollout without first doing the proper testing. That could take two more years.

Their GMO SmartStax Corn has been a high-priced bust.

Their patents on Roundup Ready Soybeans run out in a couple of years.

They’re getting hit for hiring a division of the old Blackwater Security firm to dig up dirt on anti-GMO activists.

And now a medical study has raised concerns linking Roundup and glyphosates to birth defects.

Where does that leave Monsanto? Here’s Robert Langreth’s conclusion over at Forbes:

Forbes senior editor Matt Herper (co-author on the orginal story) and I argue over whether Monsanto stock has a shot at making a comeback. Matt argues that if the company opens up its research, and comes up with some new hits that appeal to consumers (not just farmers)  it has a chance at making a comeback. It is working on a new soybean seed for example that has naturally high levels of omega-3 fatty acids. That could appeal to health-conscious consumers.

But I’m worried that the situation is more like the one when Forbes made Pfizer company of the year in 1998.  The company had just introduced Viagra to worldwide acclaim and it seemed like nothing could go wrong. Then everything did. Since then it has been all downhill… Like Pfizer in its field, Monsanto is destined to remain the dominant bioengineered seed company for some time to come. But unless it comes up with a hot new product, its growth years could all be behind it.

And wouldn’t that be sad?

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About the Author

Jeremy Bloom is the Editor of RedGreenAndBlue. He just moved to Los Angeles, and continues trying to change the world in positive ways.



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  • http://www.facebook.com/pauloone paulo_one

    Monsanto! We make food that glows!

  • http://appliedmythology.blogspot.com Steve Savage

    Jeremy,
    do you have any interest in knowing which of the things you have written here are wrong and which are highly misleading? It would take me a good couple of hours to go through this post and explain where it is giving misinformation. I don’t work for them, but I know a great deal about their business and technology.

    As you said so well in your post about how the blackwater story went wrong, falsehoods take on a life of their own on the internet. You have filled this post with more of those.

    Monsanto had a really good run over the past several years and farmers have really appreciated the technologies. Patents do run out and much of what they offer has or will soon become generic. If they are able to offer farmers other valuable traits in the future (drought tolerance, nitrogen use-efficiency…) they will once again have growing sales. They have lots of competitors who have been making similar investments in the future of agriculture.

    Its very easy to be critical of Monsanto, particularly if you accept the mythological version of what they are. Its a little harder to find the ways to both feed the world and protect the environment in the processs. As someone who works every day with the scientists, business people and farmers who are doing that, I look at these harder times for Monsanto as evidence that the omnipotence falsely ascribed to them by their critics is also just part of the mythology.

    • http://Web Fiora

      Steve, I don’t know what experience you have with Monsanto, but I have indirect experience with them from my birth in 1962 until 1965 when my father left his engineering job with Monsanto in St. Louis. I had been to the plant, of course, a number of times.

      He didn’t tell me the story of why he left until I was 27 and leaving my own corporate engineering job with GE after they thought they’d do me a huge favor and give me a big promotion–to lead the new development team on control systems for mountaintop removal mining, but that’s another story.

      Monsanto, from my father’s story, had him working with the team of development engineers for a “great” new oil that would revolutionize the high power transformers that are used to keep our cities, neighborhoods, etc, online and with the lights on. It was called “PCB” oil, and the engineers working on developing uses for it and testing transformers with it were told it was “perfectly safe”, “inert”, and of course it did have excellent cooling and conductive properties for transformer use. But they were never given any safety warnings, safety equipment, or any reason whatsoever not to go to lunch without washing the stuff off their hands for that matter.

      My father came across a “confidential” paper one day when he was in his supervisor’s office. Supervisor was out of the room for a moment–using the bathroom or something–and dad saw the report on his desk. He noticed it because it was about the stuff he was working with, and being the ever interested high level engineer he was and is, he immediately picked it up with interest–not noticing at first that it was marked “confidential”, or maybe, being in his late 20’s at the time, not caring since it was his project.
      He read how Monsanto scientists and management not only were fully aware of the carcinogenic properties of PCB oils, but were doing all they could to cover it up since it these oils represented a major investment to the company and were now being sold to power transformer builders–GE and Westinghouse. They specifically had written in the report that the engineering team that was developing it’s use–including my father–were NOT to be told of the hazards in an attempt to avoid anything getting out.

      He quit the next day.

      Monsanto is absolutely the epitome of the “evil corporate empire” in my book, and nothing they are doing now shows that they have gone in a better direction. Most of what Jeremy has written is common knowledge.

      • http://appliedmythology.blogspot.com Steve Savage

        Fiora,

        If you look back into the past history of many companies you can find things like this. Sometimes it is only hind sight that makes it easy to condemn. Sometimes corporations with ugly things in their history become highly focused on making sure that does not happen again.

        Corporations are living entities that evolve with the people that work for them. Monsanto is involved in entirely different businesses than it was when your father worked there. New people come in, the business changes, there are new ideas.

        I have consulted for Monsanto (at least 8 years ago now). I know some of the outstanding scientists there. I interact with Monsanto folks in various settings.

        I think that Monsanto has made some mistakes along the way in the biotech area. They are not the mistakes most people think of, but they were real. As their past CEO admitted, they were guilty of arrogance at certain points. Still, at the end of the day, we are going to be better prepared to meet the looming world food challenge than we would have been without the technology revolution they propelled.

        Corporations are like any organization. They are only as good as the people that are there today. Nestle had a bad history of convincing third world mothers to use formula instead of breast milk. Today they are leaders in sustainability and small-holder agriculture life improvement. DuPont had a terrible safety record when it was in the gun powder business. They became fanatical about worker safety.

        It is people that make the difference. Don’t under-estimate the power of people to change a corporate culture

        • http://www.zacharyshahan.com Zach

          Steve, when Monsanto stops trying to own life, and create a monopoly on food, I think people may have more faith that Monsanto isn’t an evil corp.

          I know there are many well-intentioned people in Monsanto, and in your field in general, but that doesn’t make Monsanto’s overall efforts any less evil..

        • http://Web Al

          Oh really Steve and what prompts such a rare transformation of a corporations culture from Evil to half-decent profit seeking venture?

          Typically it’s sustained international bad-press citing leaked information about the malevolence of it’s directors and executive staff or a massive class action that doesn’t bite financially but spooks the shareholders enough to be taken seriously.

          Don’t mistake well meaning enthusiasm to apply their expensive post-grad training and positive inductivism around technological ‘progress’ on the part of scientist and technocrats for well balanced, mindful judgement either.

          Monsanto has enough form to fill volumes but if you want to be their apologist go ahead there’s a place for that. Probably a lucrative one and a go or two in the revolving door one day when you grow up.

          • http://Web sam

            corporate conglomerates, those’s who’s main concern is profits at all cost that want to possibly destroy with technology are not what we need as a nation or world wide!! The world does not need better grain or better fish or meat or poultry, it needs “sain” thinking and nothing is more sain than providing everyone with natural grain and all else to grow thier own foods.

            We need not government, rulers, or others to know that those who raise their own foods will be ok no matter what comes, this holds true for water and other god given necessities that are entitlements for basic life for mankind!!

            We need not better seeds or fertilizers, nor interference from scientist or higher technology, we need the basics to be distributed and those who have no idea how to plant and raise and harvest trained to be self sufficient as much as possible!! Everyone should be allowed to grow their own food world wide and all else they need to survive, thats what will stop mammoth companies world wide from dominating and ruling farming and all else!!

        • Dupont

          Steve,
          As a former DuPont engineer I can tell you I hope you don’t use Teflon and get the Teflon flu. As an engineer for DuPont i would never use the stuff. One drop of the stuff it’s made with will kill 20 people in a room. DuPont had many spills and accidents while I was at the various plants almost killing entire communities. I was told by DuPont that it was crazy to worry about toxins in parts per thousand much less parts per million. Today every scientist would laugh at you for saying something like that. I was the only one back then. Recently they want to do a study on the effects of exposure to chemicals that brought you the Bic lighter and carbon fibers and Teflon. They knew they were bad back then but they don’t care about the workers or anyone else. I was told that I was the last white guy they would hire for three years and you guessed it I was. They said they get around the law by discriminating one division at a time instead of the whole company. It all worked out for the best though, I have a much better life now working for myself at about 4 times as much money. But the company is evil to it’s core and not one of the bosses don’t know what is going on, from the CEO to the directors to the power investors . I know because I sat in the same room as they did at our meetings. Steve you are misled or evil or uncaring. Any way it is pitiful that you are “consulting” to kill people and take over the food supply. There is more than enough food to go around. The best way to fight them is to sue the farmers who use their evil products and put them out of business. Without customers the vine dies. And justice is served. Another great way to beat them is to have food mandatory labels for GMOs. The only thing the Europeans seem to do right.

  • http://Web Mark Shapiro
  • http://www.lenaldis.co.uk Len Aldis

    Steve,
    Do you know who manufactured Agent Orange and on what country was sprayed 80 million litres?
    Suggest you ask the over three million Vietnamese who are still today suffering from its effects. You should also ask the many thousands of American Vietnam Veterans also affected by Agent Orange.

    Its all on record. the products of Monsanto and the other companies should banned until they pay compensation to the victims.

    • http://appliedmythology.blogspot.com Steve Savage

      Len,
      The problem with Agent Orange was a contaminant (dioxin) in the herbicide. This very unfortunate problem was present in the batches from all the companies the military bought. The health effects were discovered later and the real responsibility is spread over many players. We obviously know a lot more today. You might think that we would also know better than to get involved in “dumb wars” (which we obviously don’t)

      By the way, Monsanto is mostly out of the chemical manufacturing business with the exception of glyphosate and their share of that is declining.

      • Jeremy Bloom

        From Vietnam Veterans of America, quoting attorney Gerson Smoger, who represents veterans battling for recognition of Agent Orange toxicity:

        1. There is absolutely no question that the chemical companies used defective manufacturing processes. They were aware that since the 1950s the German company Boehringer used a process that produced no detectable dioxin. However, that process was slower than the American companies wanted, because the American chemical companies were aware that faster production meant greater profits. Whereas the Germans slowly cooked their 2,4,5-T (the chemical which contained the dioxin contaminant) for 13 hours, the American companies, like Dow, used extremely high temperatures to cook it in as few as twenty minutes.

        “However, the higher the temperature, the more dioxin that was produced. Because of this, the chemical manufacturers secretly tested their chemicals for dioxin. They did not tell the government how they made it (calling it proprietary). They did not tell the government dioxin was even in the chemicals. They did not tell the government that they secretly tested their product for levels of dioxin contamination. They did not tell the government that hundreds of their production workers were sick due to dioxin contamination. In fact, 76 of the chemical companies’ employees have been deposed and not one testified that he told the government about the dioxin contamination.

        “2. A myth has been created by the chemical companies that the U.S. government somehow designed Agent Orange and that this was a special, unique chemical. This is not true. 2,4,5-T was not chosen for use in Vietnam because it was newly discovered. It was chosen because every year 50 million tons of 2,4,5-T were being sprayed on farms, along railroad tracks, and on the sides of roads. In fact, the U.S. government wanted a chemical that was already being made, because that was the only way they could get enough produced for their needs in Vietnam.

        “3. What we have found out, to the best of our ability, is that U.S. government officials believed that the chemicals being sprayed were safe. Many people do not know that more than one hundred government personnel have been deposed during the course of this litigation. Not a single one has ever testified to knowing that 2,4,5-T was contaminated with dioxin when it was sold to the government.

        “What we absolutely do know is that the government—unlike the companies—did not even have the means to test for dioxin contamination in 2,4,5-T. And most importantly, the companies lied to the government. Even though hundreds of their workers suffered various diseases and they knew that dioxin was the most toxic chemical they had ever encountered, they certified to the U.S. government that not a single worker had ever suffered from a health problem while manufacturing 2,4,5-T.

  • http://www.zacharyshahan.com Zach

    Great, quality piece, Jeremy. Farmers bought the bull that Monsanto and GMOs would save them money for awhile. They’re waking up to the fact that they don’t, as they have to spend more and more money on Monsanto products as the costs of those products steeply rise (once you are trapped in the system) and on pesticides to kill increasingly resistant weeds (and pest soon perhaps?), but as I said above, they are now essentially trapped in the GMO system they bought into.

    It is a very sad state.

  • http://Web russ

    Hi Jeremy Bloom – Reporting lite?

    Forbes scrapping the bottom of the barrel for articles or to fill a green quota?

    What have you done that is positive for the world – hint – writing green attack stories that bend the truth does not count.

    • http://Web edd

      and while were on the subject of who has done what russ what exactly have you done? more than likely from the looks of your post you probably either work for monsanto or are invested in this evil empire who runs around suing poor dirt farmers after their frankenstein genetics have polluted generations of work and natural breeding and selection that the farmers and their forefathers have worked on for many years..if neither of the above applies to you then i suggest you get your self educated on the facts as to how this so called corporation conducts itself

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  • http://Web Farm girl

    Yeah…Monsanto is great! Its really fantastic that they budget millions and millions of dollars to go after unaffiliated seed producers (small farmers) and sue them for “possessing” their genes. Those silly farmers should have known which way the wind blows and NOT planted their NON-GMO seed crops in the way of Monsanto’s POLLEN. Those farmers will get their due because their fancy organic or Non-GMO crops will be worth almost nothing as they are now contaminated with GMO’s and they’ll lose asses and their cenntennial farms trying to fight the behemoth in court. Yeah America! Bring on the GMO alfalfa and Sugar…Super-weeds for Everyone!

    Just so you know I am a farmer and my family has used Monsanto’s products. That stuff about superweeds is no JOKE. There are ton’s of weeds that used to die when you sprayed them with Round-up which is actually as chemicals go pretty harmless (though certainly not cheap). Let me just say that it now takes 2-4D to kill many of those due to the “technological” overuse. Monocultures will never be sustainable, and you can write it in stone. I do not deny that we need to “Feed the World” but doing it at the cost of the world is no answer. It’s a shame that we human beings are so greedy and shortsighted, its one of the reasons I’m not having children. This Genetically Modified Organism is leaving no genes behind.

  • http://Web gnby

    DESTROY MONSANTO THEY ARE TERRORIST.

    YOU DESTROY MONSANTO YOU WILL SAVE THE AMERICAN PEOPLE, OUR ECONOMY AND WORLD HUNGER.

  • http://unlimitedharmony.blogspot.com/ Trico Tomas

    Capitalism at its worst.
    Monsanto! We hide poison in your food.

  • nick quinlan

    Monsanto is the most hated corporation on earth, and for very good reason. Their GMO products should have NEVER been put on the market. They know it is garbage or they would not be spending millions and millions every year fighting labeling of the frankenfoods they sell. And they FORCE these toxic products on countries that do not want GMO crops. They have ex lawyers in government, on the Supreme Court, and even Hillary Clinton worked for them. They are practically the agriculture wing of the US government. The conflict of interests between Monsanto and the government is disgusting, and deeply corrupt.
    Monsanto cares only for profit, and even infant formulas contain GMO soy, infants are very susceptible to toxins, Monsanto could care less.

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