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19

A New Monsanto Growth Initiative Sprouts Up

By Rich Duprey
| More Articles |
Save For Later
July 27, 2013 | Comments
(16)

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Thanks to the Environmental Protection Agency, you can now eat more of
Monsanto's (NYSE: MON  ) herbicide Roundup
in your food.

Because there wasn't anywhere near as much coverage as there was for
President Obama signing into law the so-called "Monsanto Protection Act" --
which prohibits federal courts from halting the sale of genetically modified or
engineered seeds -- the decision by the regulatory agency to increase the
acceptable level of pesticides permitted on food crops went through without much
of a fight (though the EPA received nearly 11,000 public comments opposing the
move).

What it means is that Roundup will become an even larger profit center for
the chemicals giant. Monsanto's agricultural productivity segment generated $1.2
billion last quarter, driven primarily by sales of its glysophate-based
herbicide Roundup to farmers and a smaller portion to consumers, which is
handled by Scotts Miracle-Gro. Sales have risen 24% over the
first nine months of the fiscal year, only a small portion of which is because
of higher prices.

Roundup remains the largest crop protection brand globally, and because
it genetically modifies seeds to survive an application of the herbicide,
Monsanto has oriented the focus of its crop protection business to
support Roundup Ready crops sold to farmers. Buy seeds that can
withstand Roundup, sell more Roundup to spray on crops.

A byproduct of this symbiotic relationship, though, is the creation of
superweeds, weeds that have developed a tolerance to the herbicide and are
spreading across farmland, impervious to man and machine. Because farmers who
grow GM crops typically use 25% more herbicide, not less, than those who grow
traditional seeds, the weeds are developing a thirst for it.

Yet it's not just weeds that are growing resistant. Bugs, too, have become
immune to the chemicals. Monsanto's GM corn, for example, was molecularly
modified to kill pests like rootworm, but they're making a comeback even as GM
corn accounts for 86% of the country's supply. Now we've got superinsects,
too!

Just as Monsanto is enjoying a surge in sales of Roundup, pesticide makers
are witnessing greater sales of pesticides to combat these superbugs. Revenues
at Sygenta (NYSE: SYT  ) rose 1.5% to $4.2
billion, FMC's (NYSE: FMC  ) sales were 5%
higher, and American Vanguard's (NYSE: AVD  ) surged 39% last
quarter. The three companies account for three-quarters of all ground pesticides
sold in the United States.

The greater use of pesticides may also be harming the honeybee population, as
a nexus is being formed between colony
collapse disorder and the role of neonicotinoids made by Syngenta, Bayer,
and Dow Chemical (NYSE: DOW  ) play.

So having the EPA coming in and allowing our fruits and vegetables to contain
even greater amounts of Roundup on them is a big cause for concern. The proposed
rules would permit crops such as sesame, flax, and soybean to have twice as much
glysophate levels than previously permitted, while sweet potatoes and carrots
would see them climb by 15 times and 25 times the previously allowed levels,
respectively.

While Monsanto, of course, says ingesting such amounts of its herbicides is
safe, an MIT study published earlier this year found it causes "insidious"
damage at the cellular level and leads to increased risk of gastrointestinal
disorders, heart disease, autism, cancer, and Alzheimer's disease.

Having to combat superweeds and superbugs requires a lot of herbicides and
pesticides. After passage of the Monsanto Protection Act, perhaps this ought to
be called the Monsanto Growth Rule. The Roundup segment of the chemical giant's
business generates 30% of its revenues and 26% of its operating profits. When
these regulations going into effect, we just might see more profits sprouting
from there, like a genetically modified plant amid a Roundup-sprayed field.

The Motley Fool's chief investment officer has selected his No. 1 stock for
this year and it's not one creating Frankenfoods. Find out which stock it is in
the special free report: "The
Motley Fool's Top Stock for 2013." Just click
here to access the report and find out the name of this under-the-radar
company.

Fool contributor Rich Duprey has no
position in any stocks mentioned. The Motley Fool recommends Scotts Miracle-Gro.
Try any of our Foolish newsletter services free
for 30 days. We Fools don't all hold the same opinions, but we all believe
that considering a diverse range of
insights makes us better investors. The Motley Fool has a disclosure
policy.

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Help us keep this a respectfully Foolish area!
This is a place for our readers to discuss, debate, and learn more about the
Foolish investing topic you read about above. Help us keep it clean and safe. If
you believe a comment is abusive or otherwise violates our Fool's Rules,
please report it via the Report
this Comment icon found on every comment.

Report
this Comment On July 27, 2013, at 7:39 PM, 18RC
wrote:

This is National Public Radio caliber article with all the
sensationalized scare talk about "superweeds", "superbugs" and "collapsing
honeybees" and of Roundup causing "heart disease, autism, cancer, and
Alzheimer's disease". Evidently Motley Fool management and article writers are
targeting the high school educated blue collar investor demographic.

Report
this Comment On July 27, 2013, at 8:56 PM, PoliticoJunky
wrote:

Seriously 18RC, you think that this is only of concern to
the "high school educated blue collar investor demographic?" That is seriously
funny. Putting chemicals in our food is not only wrong but is extremely
hazardous to our health. Monsanto should be banned from our tables and more
people should be trying to push back at them. This has gotten out of hand with
their lobbyists paying off Congress and our President. Why are we protection
these people? I am a college graduate and in law school and I agree with this
article. You should wake up and stop drinking the pesticides.

Report
this Comment On July 27, 2013, at 9:18 PM, horratio
wrote:

A hatched chick grown to a salable bird in 5 weeks, which if
not harvested, continues to grow to point, that it can longer effectively
breathe and dies of pneumonia.

Chemical transmitters between human cells, naturally control
contact inhibition, regulating tissue anatomy. Interferrance with this
mechanism results in unregulated cell growth, commonly referred to as
"cancer".These macromolecules that affect this are measured in parts per
million or billion.Cross reactions from some other chemicals do same. THE
POINT:There are likely unintended & unknown consequences to the chemicals
intentionally placed in food supply.

Report
this Comment On July 27, 2013, at 9:22 PM, cnumb516
wrote:

No way, no how Monsanto ever hears the word "no" from the
EPA, Congress or even the Big Guy. There are more than 30 of Monsanto's
directors, CEOs, VPs, board members, managers, scientists, attorneys and
consultants that hold Federal Positions within the US government.

Someone (( I know what you thinking, who is that someone?...
I just don't know when MON is holding all the cards)) should make our GOVT
aware that EUROPE wants nothing to do with Monsanto and is kicking them out
with their seeds.

WHY DO YOU THAT IS ?????

Report
this Comment On July 27, 2013, at 11:18 PM, JuneSmith
wrote:

I totally support the message in this article. We are
poisoning ourselves and our children. Many of my friends and their children
suffer from health problems which have been kept at bay by eating organic
meals only. Unfortunately, eating healthy food requires more effort. Which one
of us is willing to cook a meal after a long day on the job? And clean-up?
Forget it! Food Inc. has it ready for us on the grocery store shelves and at
drive throughs.

What should we as consumers do? We should be willing to pay
a little more for organic meat, vegetables and fruit. If our budgets are tight
(and even if they are not), we should buy organic and forgo expensive empty
calories delivered in frappuccinos, sodas and chips. And the entire family
should actively participate in preparation/clean-up. Yes, it is hard, but we
should do it in our "victory kitchens."

Report
this Comment On July 28, 2013, at 2:28 AM, getthetruth2
wrote:

Half the roundup in the US comes from China I guess that
doesn't fit into your anti_monsanto rampage that is more suited to a crazies
blog that a serious financial blog

Report
this Comment On July 28, 2013, at 2:32 AM, getthetruth2
wrote:

You are clearly more supporting organic in your previous
blog what do you own or sell to others? Is it based on logic or screwball
crazinomics. Monsanto stock is up from $8 about 10 years ago to $102 now. It
would be bad to bet against Monsanto and 10 years ago when you were in high
school there were even more crazy anti-monsanto bloggers out there

Report
this Comment On July 28, 2013, at 2:33 AM, getthetruth2
wrote:

How goes that WholeFoods company who's organic cheese killed
someone the other day? I guess that doesn't count as worthy

Report
this Comment On July 28, 2013, at 4:42 AM, fishingurl
wrote:

Yum! nothing smells better than a fresh-brewed cup of
roundup in the morning!

Thanks for this article. I have been watching the colony
collapse issue for many years now, and find it alarming. Fortunately, Monsanto
is not welcome in Europe. Unfortunately, our government was for sale the
minute it was formed, and we have a real uphill battle trying to fix 250 years
of corporacracy in this country.

The good news was a little-hailed article that talked about
the city of Detroit as the new birthplace of bee colonies, because the
degradation of the urban/suburban landscape has allowed takeover by a wide
variety of plant species, unaided by pesticides, and the bee populations there
are rebounding. So there is hope.

Report
this Comment On July 28, 2013, at 9:49 AM, thomasbihn
wrote:

18RC, It was more than just speculation with the link
between Glyphosate and Parkinson's disease. http://www.mdpi.com/1099-4300/15/4/1416

Regarding investments, I would say that MON is a good
investment over the next several years because they have so much influence in
Washington that it will take a long time to steer the ship in a different
direction. By that time, it is conceivable that MON will adjust to the
changing tide and continue to be competitive and profitable.

Meanwhile, investment in organics is also a growth industry
because of increasing public awareness.

getthetruth2, While your statement that there was food-borne
illness in one of WFM's products is true, it is also true that there are as
many, if not more cases in non-organic supplies, which nullifies the argument.
The fact of the matter is that illness based on chronic consumption of
chemicals such as glyphosate is being linked to wide-spread serious uncurable
illness. I'll take puking and/or diarrhea for a few days to a week over death
from Parkinson's disease thank you very much.

As a side, it should also be noted that there is little
spraying of glyphosate on non "cash crops", so the imperative to eat organic
for items such as cucumbers, broccoli, and tomatoes is not nearly as high as
for items made with soybean, canola, cotton, and corn. You get many more
phytonutrients by buying from a local farmer because these veggies lose their
nutrients rapidly after being picked. Even if it is sprayed with pesticide, it
is still healthier to buy locally than to buy a major retail chain.

You should always thoroughly clean your fruits and
vegetables, no matter the source (or the claims of already being washed).

Report
this Comment On July 28, 2013, at 11:52 AM, greybuscat
wrote:

I'm all for being circumspect about what we put into our
food, water supplies, and soil, but a lot of people seem to object to Monsanto
PURELY on the grounds of genetic modification, which is an asinine appeal to
nature, at best.

If something is poisonous or harmful, GREAT! Bring back
evidence of it, and I'll grab my pitchfork.

Otherwise, it's all a bunch of fear-mongering and
pseudo-scientific nonsense.

Report
this Comment On July 28, 2013, at 12:01 PM, jonnyappleseeds
wrote:

I know this much, if the Monsanto stuff causes harm to me or
my family there will be no place for them to hide from me or the rest of
humanity, so take very very care Monsanto is the money worth what you will get
for such actions?

Report
this Comment On July 28, 2013, at 1:34 PM, frankbeisel
wrote:

people wear ignorance like armor when they think knowledge
may cost them a little money. If you think a little poison is good for you
then there is no cause for alarm. If you don't want chronic gastro-intestinal
inflammation which may or may not be a pre-curser to cancer try organic
vegetables and don't eat corporate grown food. nothing in this article says
Monsanto is a bad investment, just that there may be unintended consequences
from adding chemicals to the food supply. Notice the name calling is coming
from the less articulate members. Frank Beisel

Report
this Comment On July 28, 2013, at 8:36 PM, SanPasqual
wrote:

Glyphosate is an organic chemical, so heavy use of RoundUp
should be classified as intensive organic farming.

Report
this Comment On July 29, 2013, at 9:23 AM, OtisxOtis
wrote:

So if they use more pesticides on their plants, I assume
there'll be more bees dying from all of it. Which would probably be the
government's plan to begin with since the majority of our earth needs bees to
pollinate almost all our greenery. We're slowly getting screwed and screwed
every day.

Report
this Comment On July 29, 2013, at 11:47 PM, groggy920
wrote:

Some things that were left out of this article:

The petition that was referenced in this article in which
the EPA raised crop residue tolerances for glyphosate is actually an
interesting read for those who want actual facts. It lists all of the tests
that were conducted to establish the risk tolerances. Most were long term
feeding studies on lab animals. In these tests, a LOAEL
(Lowest-observed-adverse-effect-level or in plain English, the rate at which
bad things happened to lab rats) was established at 20,000 parts-per-million
(ppm). The Roundup/glyphosate residue levels that were set by the EPA ranged
between .01 ppm and 100 ppm on the high side for animal forage. Most human
edible crops were between 0.01 ppm and 5 ppm. So a safety factor of greater
than 200x, meaning the residue levels on food you eat are 200 times lower than
any adverse effect observed in long term feeding studies. It's amazing how a
little context can change the tone of an article.

Also, from Monsanto's recent 10Q (sorry to interrupt the
activism with a little investment talk - on an investment website) EBIT from
Seed and Genomics (past 9 months) is $2,980M and Ag Productivity (the segment
that includes Roundup) is $810M. Roundup has been off patent for 13 years and
is currently manufactured by multiply suppliers. It's hard to imagine that a
company with a 22 P/E would rest it's growth strategy on increased sales of a
40 year old post patent product that represents less than 25% of earnings.

Also, pest resistance to control methods has been around as
long as pests. There is nothing specific about biotech crops that make them
more or less susceptible to resistance. Smart farmers use all of the tools at
their disposal, in careful rotations, to manage the problem. Without
glyphosate tolerate crops, farmers resort back to old chemicals like atrazine
which have many more resistant weeds and a less positive environmental
profile. Be careful what you wish for.

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