A report on the prospects for the genetic engineering giant Monsanto, which has 91% of the world’s market in genetically modified (GM) seeds, says the company ”could be another financial disaster waiting to happen”.
Innovest, which specialises in environmental, social and strategic governance issues, says the company may not be able to obtain insurance against risks of contamination of food and other farm products, which might result in big compensation claims.
The report, which was commissioned by Greenpeace, says the company’s prospects for expansion are limited because of increasing rejection of GM. One of its new products, GM wheat, might be a ”costly failure” because of market rejection and could cost the United States large grain exports, the report says.
Monsanto this week dismissed the report and reacted angrily to being given a CCC environmental rating, the lowest score. It said the report coincided with a Bank of America investment assessment suggesting Monsanto stock was under-valued and it was time to buy.
Innovest says the CCC rating implies the firm has above-average risk exposure. As a result, it is likely to underperform in the stock market over the mid- to long-term. The report says Washington appears to have been soft on Monsanto because of its financial contributions to politicians. It also clarifies why the US government continues to reject GM labelling in the face of public support for it.
It adds that if labelling were introduced it would cause a serious loss of market for the company. The report says Monsanto stock has fallen by 50% but may still be overvalued.
In a statement Monsanto said: ”The report issued by Innovest is biased and cherrypicks information about plant biotechnology and Monsanto in order to further a political agenda.
”It’s odd that Innovest spent virtually no time seeking to balance the cherry-picked information through any meaningful discussion with Monsanto about our products and our strategy.”
Marc Brammer, senior analyst on the Innovest report, said although the report had been commissioned by Greenpeace, this had no effect on the assessment. ”We feel our conclusions are logical rather than ideological,” he said. — Â