Grain Traders Rejecting New Soybeans Developed by Monsanto -- Update
May 02 2016 - 3:59PM
Dow Jones News
By Jacob Bunge
U.S. grain companies plan to reject Monsanto Co.'s new
genetically modified soybeans, over concerns that they could
disrupt international trade without a key regulatory approval from
the European Union.
Trade groups representing Cargill Inc., Archer Daniels Midland
Co., Bunge Ltd. and other grain companies blasted the biotech seed
company's decision to sell the seeds before first securing an
approval required to ship the crops to the EU, according to a
letter reviewed by The Wall Street Journal. They are pressuring
Monsanto to detail how it plans to keep the new soybeans from
entering export channels.
The grain companies' stance is a potential blow to a product
that Monsanto has touted as a blockbuster for U.S. farm fields. The
St. Louis company this spring aimed to sell to U.S. farmers about 3
million acres' worth of the new soybean seeds called "Roundup Ready
2 Xtend." Grain traders could decide to accept the soybeans if EU
officials approve them for import before U.S. farmers begin harvest
this fall. Monsanto expects approval in the near future, a company
spokeswoman said. Representatives for the EU didn't respond to
requests for comment Monday.
"Monsanto's actions with respect to RR2X soybeans are an
unacceptable and very troubling development, and we urge that it
not be repeated," wrote the heads of the National Grain and Feed
Association, the North American Export Grain Association, and the
National Oilseed Processors Association in the letter.
The private dispute reflects commodity traders' growing concerns
over seed companies' efforts to market new genetically engineered
crops. Agribusiness groups estimated that grain traders lost
hundreds of millions of dollars after Chinese authorities in late
2013 began rejecting shipments of U.S. corn that contained
unapproved genetics developed by Swiss seed firm Syngenta AG, which
led to lawsuits by traders and farmers.
The latest Monsanto seeds contain new genetic technology that
allows soybean plants to withstand a new and more powerful
herbicide, as farmers battle weeds that have evolved to resist
Monsanto's signature Roundup spray. Monsanto projected that by 2019
two-thirds of all U.S. soybean fields will be planted with seeds
containing the new genes.
Soybeans are the second most widely-grown crop in the U.S. after
corn, and the EU is the second-largest foreign market for the
oilseed, accounting for about 9.8% of all 2015 exports, the USDA
estimates.
The letter comes after global grain merchants Bunge Ltd., Archer
Daniels Midland Co. and Louis Dreyfus Co. in recent weeks notified
farmers that their U.S. facilities wouldn't purchase soybeans grown
from seeds that contain Monsanto's new crop genes, sending out
letters and hanging up signs at grain elevators. U.S. farmers have
officially kicked off soybean planting, sowing about 3% of this
year's anticipated crop as of April 25, according to the USDA.
A Monsanto spokeswoman said the company has "regularly and
transparently communicated" with farmers and grain companies about
the soybeans' regulatory status, and will respond to the grain
groups' concerns "as appropriate." The company continues to expect
EU approval for the soybeans in the near future, she said.
Monsanto and DuPont Co., which has licensed the new
herbicide-resistance genes from Monsanto for DuPont's own soybeans,
began marketing the new seeds to farmers this year under the
assumption that the EU would have approved them by now. Both
companies now are offering to replace the new soybean seeds with
other versions that already are approved by global import
authorities, according to their spokeswomen.
Hugh Grant, Monsanto's chief executive, told investors last
month on a conference call that the European Union's review
continued to drag on despite EU food safety authorities signing off
on the soybeans last June. Soybeans are Monsanto's second-biggest
source of seed sales, generating about 15% of the company's revenue
in 2015.
"For that [EU] administrative process to follow on behind that
would normally be months," Mr. Grant said. "We're sitting here in
the spring of a new year still waiting, so an unusually slow delay
even for Europe and very frustrating."
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
May 02, 2016 15:44 ET (19:44 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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