Investors drove down the price of Monsanto shares by 4 percent on Friday as South Korea joined Japan in suspending imports of U.S. wheat after an unapproved strain of genetically modified wheat was discovered in a field in eastern Oregon.
The strain of wheat, designed to resist harmful effects from Monsanto’s Roundup weedkiller, was never commercially developed by the St. Louis-based agriculture giant in large part because wheat growers did not want to risk retaliation from their biggest export markets.
Fields used to test new crop varieties are burned and checked for surviving crops. So the mysterious appearance of the Monsanto wheat has raised questions about how the strain traveled there and whether it is lurking in the commercial wheat crop.
As a precaution, South Korea, which last year bought about half of its wheat imports from the United States, said it would halt purchases while it runs tests this weekend on wheat and flour that it has already imported. The European Union is also testing supplies.
“This is an embarrassment for Monsanto, not as much with the public as it is with food companies, ” said Gene Grabowski, executive vice president of Levick, a communications and public relations firm. Grabowski, a former senior executive at the Grocery Manufacturers Association, said cereal and other food product firms selling in Japan or Europe haven’t wanted to go to the expense of making sure their wheat sources were free of genetic engineering.
“I was in board meetings where I remember food company CEOs who were very concerned about the idea that Monsanto was pushing for approval for biotech wheat,” he said. “They didn’t want it because they already had their hands full dealing with repercussions of biotech corn and soy.”
But Monsanto, which is still testing strains of gene-altered wheat in Hawaii and North Dakota, relies heavily on genetically modified (GM) seeds that make up anywhere from 80 percent to more than 90 percent of U.S. corn, soybean and cotton crops.
“GM technology is extremely important for Monsanto,” said Frank Mitsch, an analyst with Wells Fargo. “Fully three-quarters of company profits are coming from those three crops driven in large part by the GM technology.”
In addition to their widespread adoption in the United States, genetically modified corn and soy seeds are spreading in Latin America, especially in Brazil and Argentina, Mitsch said.
Though there have been widespread protests about genetically modified foods, many lawmakers in Congress support alteration of crops. Sen. Debbie Stabenow (D-Mich.), chairman of the Senate Agriculture Committee, in 2011 hailed the Agriculture Department’s decision to deregulate genetically modified alfalfa.
“Alfalfa was one of nearly two dozen genetically modified crops awaiting USDA evaluation and approval — a bottlenecked process that hinders growth and progress,” she said in a statement. (Stabenow received $570,515 from agribusiness political action committees in 2012; her spokesman did not return calls on Thursday or Friday.)
Some farmers are attracted to the genetically modified seeds because they boost yields and withstand herbicides that kill pests. In marketing material, Monsanto says that southern U.S. farmers “are seeing dramatic evidence of corn earworm protection” from “technology [that] combines global, exclusive genetics with the industry’s most advanced insect protection.”
Mitsch said there would be no financial impact of this week’s flap on Monsanto because it isn’t selling any genetically modified wheat, but a prolonged suspension of wheat purchases by major trade partners could prompt farmers and trading firms to seek restitution from Monsanto.
This isn’t the first time that rogue varieties of seeds have spread to restricted products or regions, causing damages.
Aventis created a strain of corn, Starlink Corn, that carries its own natural pesticide. Although it was approved only for livestock feed because of concerns that it might contain a human allergen, in 2000 Starlink Corn was found to have contaminated corn intended for human consumption. Farmers lost as much as $288 million because of the recall of contaminated corn products, the Government Accountability Office said. In 2006, Bayer’s Liberty Link rice, also not approved for commercial use, was discovered in the U.S. rice supply and cost growers hundreds of millions of dollars in lost rice exports.
Even as food safety, environmental and industry groups battle over regulation and restrictions, a parallel fight is being waged over the negative effects, if any, of genetically modified crops.
A French study by molecular biologist Gilles-Eric Séralini of the University of Caen linking genetically modified corn and weedkiller produced by Monsanto with cancer was sharply criticized by six leading French academies.
In the case of the Oregon wheat, the Agriculture Department said that “this wheat variety does not pose a food safety concern.” It cited a “consultation” in 2004 by the Food and Drug Administration. But the FDA relied on information provided by Monsanto without conducting its own study. The FDA did not ask further questions, which the Agriculture Department said meant “that this variety is as safe as non-GE wheat currently on the market.”
“We’ve been arguing for years that that is inadequate,” said Greg Jaffe, a lawyer and director of biotechnology at the Center for Science and the Public Interest. He backs a stronger regulatory role for the FDA. “Right now anyone can market a product and the FDA has to show that it’s adulterated to get it off the market.”
Grabowski said, however, that whether Monsanto’s wheat variety is safe isn’t the point.
“Irrespective of whether you think it’s safe or not, from a regulatory standpoint it’s a violation. It will only create concerns and questions in the minds of consumers, and because of that food companies become extraordinarily nervous over this,” he said.