Documents

81 pages
27 views

Monsanto Genetic Engineering

of 81
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Share
Description
tes
Transcript
   January 2005  Monsanto & Genetic Engineering: Risks for Investors  Analysis of company performance on intangible investment risk factors and value drivers Key Issues for Strategic Investors: Significant risks to financial performance remain un-examined in Monsanto’s business plan and are not properly reflected in current stock market valuations: ã   Potential costs of “adventitious presence”, or contamination of conventional seed with biotechnology traits, are not delineated properly for investors by management. ã   Lack of regulatory oversight is not acknowledged as a business risk since liability remains with Monsanto once GE crops are commercialized. ã   Regular appearance of “Extraordinary Charges” on the balance sheet as a result of environmental litigation costs and restructuring charges imply that such costs will likely continue to be burdensome. ã   Ambitious profit targets do not reflect political and economic realities facing GE crops with respect to consumer acceptance and commercialization. ã   Reliance on litigation to “capture value” and fend off competitors is not fully acknowledged in the business plan, or accounted for in SEC filings. ã   Traditional chemical company risks remain a burden despite the shift to Ag biotech. Innovest STRATEGIC VALUE ADVISORS   Uncovering Hidden  Value Potential for Strategic Investors New York: (212) 421-2000 ã London: +44 (0) 20 7743 6162 ã Toronto: (905) 707-0876 ã Paris: +33 (148) 860369  www.innovestgroup.com    This report was prepared by Innovest Strategic Value Advisors with technical and research support from the Polaris Institute Innovest Strategic Value Advisors Marc Brammer Senior Analyst 646-237-0217 mbrammer@innovestgroup.com 4 Times Sq. 3 rd  Fl. New York, NY 10036 Polaris Institute David MacDonald 613-237-1717 david@macdonald.name 312 Cooper St. Ottawa, Canada K2P 0G7 Prepared For: This report was prepared on behalf of the As You Sow Foundation. As You Sow Foundation  Michael Passoff  Associate Director, Corporate Social Responsibility Program 415-391-3212 michael@asyousow.org 311 California St. Suite 510 San Francisco, CA 94104 Funded by: The Center for Food Safety   Andrew Kimbrell Executive Director 202-547-9359 kimbrell@icta.org 660 Pennsylvania Ave., S.E. Suite 302 Washington D.C. 20003 No part of this report may be reproduced in any manner without the written permission of Innovest Strategic Value Advisors, Inc.  The information herein has been obtained from sources which we believe to be reliable, but we do not guarantee its accuracy or completeness. All opinions expressed herein are subject to change without notice. Innovest Strategic Value Advisors, Inc., its affiliated companies, or their respective shareholders, directors, officers and/or employees, may have a position in the securities discussed herein. The securities mentioned in this document may not be eligible for sale in some states or countries, nor suitable for all types of investors; their value and the income they produce may fluctuate and/or be adversely affected by exchange rates. © 2004 Innovest Strategic Value Advisors, Inc. All rights reserved. New York Office:  Four Times Square, 3 rd  Floor, New York, NY 10036 USA (212) 421-2000 Fax (212) 421-9663 Toronto Office:  225 East Beaver Creek Road Suite 300, Richmond Hill Ontario L4B 3P4 CANADA (905) 707-0876 Fax (905) 707-9084 London Office: 4 Royal Mint Court, London, EC3N 4HJ ENGLAND +44 (0)20 7073 0470 Fax: +44 (0)20 7073 0473 Paris Office: 110 Boulevard de Sébastopol 75003 Paris FRANCE +33 (0)1 44 54 04 89 Fax: +33 (0)1 44 54 02 30 Website: www.innovestgroup.com  Table of Contents 1. EXECUTIVE SUMMARY.................................................................................................................6   INNOVEST STRATEGIC VALUE ADVISORS & THIS REPORT.............................................................6   MONSANTO & GENETIC ENGINEERING...........................................................................................6   MONSANTO’S SHARE PRICE (YEAR END 2004) AND LONG TERM VALUE....................................7   LACK OF REGULATORY OVERSIGHT...............................................................................................7   MARKET GROWTH...........................................................................................................................9   MARKET REJECTION.........................................................................................................................9   FOREIGN MARKET REJECTION.......................................................................................................10   DOMESTIC MARKET REJECTION....................................................................................................10   ENVIRONMENTAL AND HUMAN HEALTH RISKS...........................................................................11   INEVITABLE ENVIRONMENTAL CONTAMINATION........................................................................11   HUMAN HEALTH RISKS...................................................................................................................12   HISTORICAL RISK LIABILITIES..........................................................................................................13   CONCLUSION....................................................................................................................................13   2. MONSANTO STOCK PRICE PROJECTIONS..................................................................................15   3. GE CROP DEVELOPMENT & ADOPTION....................................................................................19   4. THE RISKS OF MONSANTO’S GE STRATEGY..............................................................................23   U. S. FEDERAL REGULATORY PROCESS FOR GE CROPS.....................................................24   MARKETING AND GOALS....................................................................................................28   MARKET RISKS FOR GENETICALLY ENGINEERED CROPS...................................................29   Increasing Competition in the Bt Corn Market............................................................29   Affects of Roundup Competition..................................................................................30   Problems with “Value Capture” Outside US.................................................................31   Catastrophic Failure Risks...............................................................................................32   5. ANALYSIS OF THE BENEFITS.......................................................................................................35   Lower Pesticide Use & Increased Yields.........................................................................36   6. GE RISKS AND THE IMPLICATIONS FOR SHAREHOLDERS........................................................39   MARKET RISKS......................................................................................................................39   Consumer Rejection and U.S. Public Opinion...............................................................39   Food Industry Rejection..................................................................................................43   Rejection by Farmers: The GE Wheat Case....................................................................45   International Markets Shifting to Non-GE crops for Food and Animal Feed.............46   INTERNATIONAL REGULATORY RISKS................................................................................48   Regional Regulatory Situation.......................................................................................49   Labeling...........................................................................................................................53   The Biosafety Protocol....................................................................................................54   Politics and Genetically Engineered Foods...................................................................55   Insuring Genetically Engineered Crops.........................................................................57    ENVIRONMENTAL AND HUMAN HEALTH RISKS................................................................58   The Technology...............................................................................................................58   Human Health Risks........................................................................................................58   Environmental Risks........................................................................................................60   7. RISKS BEYOND GENETIC ENGINEERING....................................................................................63   Traditional Chemical Risks and The Solutia Bankruptcy..............................................63   Agent Orange: Overview & the 1984 Settlement........................................................64   Agent Orange: Concerns Beyond U.S. Vietnam Veterans............................................66   8. CONCLUSIONS: WHAT IS THE FUTURE FOR MONSANTO?......................................................69   REFERENCES.....................................................................................................................................71   Table of Figures Figure 1. Wall Street Earnings Estimate for Monsanto........................................................................................................16   Figure 2. Innovest Earnings Estimate (Low Conservative Case)..........................................................................................16   Figure 3. Stock Price & Earnings Per Share Estimates..........................................................................................................17   Figure 4. Earnings Impacted by Regular Appearance of Extraordinary Items...................................................................17   Figure 5. Monsanto's EPS History..........................................................................................................................................18   Figure 6. Potential Financial Fallout from Contamination - the “StarLink” Scenario.......................................................18   Figure 7. Global Commercialized Transgenic Crop Plantings 2002.....................................................................................19   Figure 8. Transgenic Crops by Traits....................................................................................................................................20   Figure 9. Monsanto's Market Share and & Profits by Product Type.................................................................................20   Figure 10. Monsanto Product Pipeline.................................................................................................................................28   Figure 11. Known Glyphosate Resistant Weeds...................................................................................................................36   Figure 12. Difference in Pesticide Use (GE vs. Conventional crops on a “Pounds of Pesticide per Acre” basis)..............37   Figure 13. Flow Chart of Market Rejection of GMOs..........................................................................................................39   Figure 14. Intensity Level of GMO Debate in Five Selected European Countries.............................................................40   Figure 15. U.S. Polling Data on Genetically Engineered Foods (1997-2001).......................................................................43   Figure 16. List of Food Companies with “No GMO” Policies..............................................................................................44   Figure 17.  Canadian Wheat Board – Assessment of Market Acceptance for GE Wheat (2002) ...........................46   Figure 18. Examples of Regulatory Barriers to GMO Commercialization.........................................................................52   Figure 19. Drop in U.S. Approval Ratings World-wide.......................................................................................................56   Figure 20. Toxicity Weighted Emissions for U.S. Facilities..................................................................................................63   Figure 21. 1984 Agent Orange Settlement Allocation........................................................................................................66   Figure 22. U.S. Veterans Affected by Agent Orange Exposure..........................................................................................66   Figure 23. Agent Orange Spraying in Vietnam...................................................................................................................67  
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks