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Monsanto investors face catastrophic risk

(Friday, April 18, 2003 -- CropChoice news) -- The following is from a news release.

The agrochemical giant Monsanto has received the lowest possible environmental and strategic management rating of a triple-C from Innovest Strategic Value Advisors, a global environmental and social investment research firm. Innovest's report, "Monsanto and Genetic Engineering: Risks to Investors," commissioned by Greenpeace, was released at a briefing at the Harvard Club in New York City this morning.

The report, which comes just days before Monsanto's annual general meeting, warns shareholders and potential investors of Monsanto's "above average risk exposure and less sophisticated management than peers." Innovest analysts predict that "it [Monsanto] will likely under-perform in the market over the mid to long-term."

Monsanto suffered $1.7 billion in losses in 2002 and has failed to open new markets for its controversial genetic engineered (GE) products. Yet Monsanto continues to pursue its unsound business strategy of betting on a speedy and widespread global acceptance of GE foods. Next in the Monsanto pipeline is GE wheat, which is being boycotted in key markets by farmers and food industry even before its approval.

"While last year's profit losses led to a change in leadership at the company, they did not lead to a change in strategy. If Monsanto does not take steps to mitigate its substantial market risks, further investor losses are likely," said Frank Dixon, Managing Director at Innovest Strategic Value Advisors. "The risk of heavy financial losses due to genetic pollution or technology failure coupled with sustained market rejection of GE foods makes Monsanto a poor investment."

In its assessment of Monsanto's key markets, Innovest underscores the lack of regulatory approval and stiff consumer opposition that continue to block the company's GE crops. GE products constitute one of the most widely rejected product groups ever, and major food importers such as China, Japan and Korea have recently followed the restrictive European approach. In the US, upwards of 90% of consumers now demand GE food to be labeled and many would reject GE food if given the choice.

The Innovest analysis of the risks and liabilities associated with Monsanto's genetic engineering (GE) business pays special attention to the inevitability of GE contamination. Referring to the example of the StarLink corn contamination scandal in 2000, in which the company Aventis lost $1 billion, Innovest estimated Monsanto's potential financial fallout from a "StarLink scenario" to be $3.83 liability per share.

"Monsanto's cash cow remains its agrochemical business, but last year's 24% drop in sales of Round-up and other non-selective herbicides has left the company vulnerable and increasingly desperate. Monsanto appears to be digging its own grave with its GE strategy," said global markets specialist with Greenpeace, Lindsay Keenan.