Monsanto: Winner or Sinner?

This article is part of our Rising Stars Portfolio series.

Is Monsanto (NYSE: MON  ) a winner or a sinner? Many people love to hate the agribusiness behemoth.

A poll of Natural News readers recently voted Monsanto "Most Evil," soundly beating other corporate contenders such as Halliburton (NYSE: HAL  ) and BP (NYSE: BP  ) . Monsanto also beat out BP and Chevron (NYSE: CVX  ) to receive Corporate Accountability International's Corporate Hall of Shame award for 2010.

On the surface, this stock doesn't belong anywhere close to a socially responsible portfolio. But for fairness's sake, let's take a closer look.

Bearish on Monsanto
Several years ago, few investors considered Monsanto monstrous. Its genetically modified seeds fostered heady growth in sales and profits, not to mention its stock price. Monsanto looked like a winner to those who didn't really care about what kind of practices might be feeding its profits.

But last year, even investors primarily focused on short-term profitability and stock appreciation began to doubt Monsanto. Its share price faltered as its growth slowed; the company faced problems with some of its genetically modified products, and began losing market share to DuPont's (NYSE: DD  ) Pioneer Hi-Bred unit. Nonetheless, the market's tempered bullishness on Monsanto doesn't make it an automatic buy.

On the corporate governance front, Monsanto happens to be one of the first companies to hold a say-on-pay vote this year. It recommended that shareholders approve a plan to hold votes only once every three years. Monsanto shareholders rejected that concept, instead voting for an annual say-on-pay vote. (Even though the vote was non-binding, Monsanto has indicated that it will comply with shareholder wishes.)

Monsanto had already hit the radar of corporate governance watchers like GovernanceMetrics International for being "high risk," combining an outsized CEO pay package with lackluster financial performance.

A litany of less-than-angelic conduct
Monsanto genetically engineers corn, soybeans, and other agricultural products in order to foster higher yields and greater resistance to pests. But many critics contend that the company's tinkering presents dangers to human health and natural ecosystems.

A recent study from the International Journal of Biological Sciences linked genetically modified (GM) corn to organ failure in rats. Although some have questioned those findings (and pointed out that the researchers themselves cited "signs of toxicity rather than proofs of toxicity"), the study was apparently the result of a second look at some of Monsanto's own data, which the researchers sued Monsanto to obtain.

There are also concerns that weeds that mutate from the use of the GM technology could harm non-GM crops.

The USDA's recent decision to deregulate alfalfa has caused an uproar in the organic community, since alfalfa is prone to cross-pollination. Therefore, it could become more difficult for organic alfalfa farmers to keep their crops pristine and GM-free. Whole Foods Market (Nasdaq: WFMI  ) , a big name in the organic marketplace with plenty of customers who shun GM foods, opposed the alfalfa deregulation.  

As it stands, Monsanto has quite a reputation for being a bully in agriculture. A Vanity Fair article from 2008 headlined Monsanto's "Harvest of Fear," citing not only its "ruthless legal battles against small farmers" but also a "decades-long history of contamination."

Monsanto also has a dark past that's difficult to shrug off. Monsanto, Dow Chemical (NYSE: DOW  ) , and several other chemical companies manufactured Agent Orange. The highly toxic herbicide, used in the Vietnam War, has saddled its makers with a bad reputation and numerous lawsuits related to the illnesses and horrific birth defects to which it has been linked.

Monsanto's also known to have "friends in high places," so to speak. Recent Wikileaks cables revealed U.S. diplomats angling for a trade war with Europe over genetically modified products, which are notoriously distrusted there. The U.S. allegedly also tried to pressure the Vatican to drop its moral opposition to genetic engineering.

An SRI no-go stock
There are many reasons why Monsanto simply won't show up in my Rising Stars portfolio, which focuses on socially responsible investing. Monsanto seems too often a negative influence in the world, and a good example of how big can be bad. Its outsized executive pay bothers me on the corporate governance front, too.

Monsanto's public relations team, employees, and shareholders would surely have some counterarguments to my contention. I already know that some folks counter that Monsanto's products help to achieve one very positive outcome in the world: increasing the amount of food available for burgeoning populations.

Even if some of the bullishness over Monsanto has come to an end in recent days, I doubt this stock would ever be "cheap" enough for me to buy, given everything else going on with it. There are too many "winner" stocks with far more socially responsible attributes to choose from.

Socially responsible investing is often in the eye of the beholder, of course, and I'm sure there will be plenty of rebuttals to my take on Monsanto. Is the company a winner or a sinner? Let us know in the comments box below.

This article is part of our Rising Star Portfolios series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. See all of our Rising Star analysts (and their portfolios).

Whole Foods Market is a Motley Fool Stock Advisor pick. Chevron is a Motley Fool Income Investor selection. Motley Fool Options has recommended a synthetic long position on Monsanto. Try any of our Foolish newsletter services free for 30 days.

Alyce Lomax owns shares of Whole Foods Market. We Fools may not 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.


Read/Post Comments (19) | Recommend This Article (15)

Comments from our Foolish Readers

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 Report this Comment icon found on every comment.

  • Report this Comment On February 01, 2011, at 9:07 AM, funfundvierzig wrote:

    Investors should realise that many of these critics smearing Monsanto have been covertly bankrolled by DuPont's unethical Management! See the published letter of Monsanto Chief, Hugh Grant, to then DuPont Chairman Chad Holliday, Aug. 17, 2009 calling for an investigation by independent DuPont Directors into DuPont's deployment of "masked third parties" to lead attacks against Monsanto's business. If there is an "evil" culture in the seed business, it's the corrupt culture of the number two seed company, DuPont, not number one Monsanto nor number three Syngenta.

    ...funfun..

  • Report this Comment On February 01, 2011, at 8:18 PM, Bansheerising wrote:

    Sorry funfun it can't always be about DuPont. A check of Natural News shows them to hardly be fans of DuPont so I sincerly doubt they are a "masked third party" bankrolled by DuPont, furthmore head to Anniston, Alabama and tell the folks there it isn't really about Monsanto but in fact it is DuPont's fault and they will laugh you out of town. So lets assume that DuPont is the devil, well then Monsanto can't be much better. Don't ask Hugh Grant, ask the victims of Agent Orange!

  • Report this Comment On February 01, 2011, at 9:02 PM, funfundvierzig wrote:

    Bansheering, your defence of DuPont is specious. Agent Orange? You're referring to the old Monsanto chemical company of 45 years ago, which hasn't been around for years and years. It's not in existence. We're talking about the Monsanto seed company vis-a-vis the disreputable DuPont and its captive Pioneer seed house today, in the 21st century.

    ...funfun..

  • Report this Comment On February 01, 2011, at 10:25 PM, Bansheerising wrote:

    Monsanto the chemical company based in St Louis as opposed to the Monsanto Seed company based in St Louis? Now who is being specious? I'm not defending DuPont in this thread because the article is (stay with me now) about Monsanto. You of course want to make it just about the seeds but if you do just little bit of research you will find that Monsanto has a horrible record of environmental stewardship. DuPont may be worse than Hitler, Stalin and Pol Pot all wrapped into one but that doesn't change the fact that the "new" Monsanto can't hide from its' history. Saying the "old" Monsanto doesn't exist anymore doesn't hold water with the residents of Anniston. From Monsantos' web site "Monsanto is a relatively new company. While we share the name and history of a company that was founded in 1901..." Please, that is just scum-bucket legalize for a company trying to avoid any culpability for its' past actions.

  • Report this Comment On February 02, 2011, at 12:24 PM, funfundvierzig wrote:

    Bansheerising, your attempts to smear the Monsanto Company of today with the ancient history, 45 years old, of the Monsanto Chemical Co, which no longer exists, hasn't for years, is simply disingenuous, if not dishonestly deceptive. What relevance does Agent Orange have with the global seed business of 2011, Monsanto's only business?

    The undeniable reality is superior-managed Monsanto remains the leader in innovation in the seed industry, and the largest seed company in the world. Fans of DuPont Management hate that fact. ...funfun..

  • Report this Comment On February 02, 2011, at 8:11 PM, Bansheerising wrote:

    Funfun, I don’t have to smear the Monsanto Company, the facts speak for themselves. 45 years ago is not ancient history, so again who is being dishonest? You can callously dismiss Agent Orange as ancient history but to the victims and family members who have lost loved ones their grief and suffering still affect them to this day. What about the community of Anniston, Alabama who still has to deal with the after effects of the PCB’s that Monsanto left them with? You can buy into the legal shell game that Monsanto Chemical Co (Based in St Louis just the same as Monsanto Seed Company) played in a pathetic attempt to try and weasel out of its’ corporate responsibilities but the rest of us who reside in reality can see it for what it is. More recently Monsanto had to pay 1 million to the U.S. Dept of Justice and 500K to the SEC in 2002 because they were trying to bribe Indonesian officials in a sad attempt to circumvent their environmental laws. 2002 is hardly ancient history. So go ahead funfun bury your head in the sand but the facts speak loudly.

    http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&am...

    http://www.vanityfair.com/politics/features/2008/05/monsanto...

    http://news.bbc.co.uk/2/hi/business/4153635.stm

  • Report this Comment On February 03, 2011, at 11:15 AM, funfundvierzig wrote:

    Folks, we stand by our position in our first post: Beware of the fact DuPont Management has bankrolled front organisations and covert operatives to smear and defame Monsanto's seed business. It's telling to note that neither Mr. Holliday or DuPont Senior Management publicly replied to Hugh Grant's letter of Aug. 17, 2009 calling for an independent investigation of DuPont's unethical practices.

    ...funfun..

  • Report this Comment On February 03, 2011, at 9:02 PM, Bansheerising wrote:

    Try to stay on topic FunFun, the article is about Monsato and their business practices. As much as you would like to make it about DuPont doesn't change the fact that Monsato has a lot to answer for. In the above link I provided Monsato was found responsible by the U.S. Government of unethical business practices. Are to have us believe that it was all the result of vast conspiracy by DuPont? If so why did Monsato accept full responsibility for its' actions?

    http://news.bbc.co.uk/2/hi/business/4153635.stm

    Furthermore, you would have us believe that the "new" Monsanto has nothing to do with the "old" Monsanto and it's spin off Solutia also based in St Louis. If so then why did the "new" Monsanto agree to pay $390 million in damages for the actions of the "old" Monsanto in the PCB's contamination suit by the residents of Anniston, Alabama?

    http://www.nytimes.com/2003/08/21/business/700-million-settl...

    Even Monsantos' own website acknowledges that is the same company with the same shared history:

    http://www.monsanto.com/whoweare/Pages/monsanto-history.aspx

    Monsanto winner or sinner? Sinner!!!

  • Report this Comment On February 04, 2011, at 4:19 PM, funfundvierzig wrote:

    Folks, with such tortured logic and desperation do these advocates and perfervid supporters of DuPont Management continue to dig up ancient and irrelevant history to smear the Monsanto seed business of the 21st century!

    The Monsanto Chemical Company is no more in existence in the year 2011 than Bethlehem Steel or Penn Central.

    These rabid fans of DuPont can't get over the undeniable fact that a small upstart from St. Louis took big risks, did brilliant genetic engineering and quickly grew to the world's largest and most innovative seed enterprise. Superior-managed Monsanto left Pioneer and its hyper-controlling, cost-slashing parent, DuPont, in the dust!

    Merely the viewpoint of one individual investor...funfun..

  • Report this Comment On February 04, 2011, at 8:18 PM, Bansheerising wrote:

    So are we to assume that the Monsanto Chemical Company (founded in 1901 in St Louis) has no connection to the Current Monsanto Co (based in St Louis and according to THEIR own website has a history that goes back to 1901)? If so then why did Monsanto agree to pay out $390 million in damages in 2003?

    "If you have the facts on your side, hammer the facts. If you have the law on your side, hammer the law. If you have neither the facts nor the law, hammer the table.”

    Funfun, you hammer the table, I will hammer the facts.

  • Report this Comment On February 05, 2011, at 10:01 AM, funfundvierzig wrote:

    Folks, the entire and exclusive focus of this well articulated article by Alyce Lomax is on the agribusiness and Monsanto. It has nothing to do with the ancient Monsanto Chemical Company of 1901, or of the Vietnam War era nearly a half century ago.

    Really now, how desperate and petulant are these advocates and apologists for the Management of DuPont, the lagging number two seed company, to defame and smear the Monsanto of today, February 5, 2011?!

    We've seen this systematic defamation conducted at other investor internet sites.

    No one has to hammer this well-known fact: Monsanto is the undeniable leader in genetic engineering and innovation, as well as the largest in the seed business, a FACT that obviously pains its lumbering number two rival, DuPont/Pioneer.

    ...funfun..

  • Report this Comment On February 06, 2011, at 10:59 AM, Bansheerising wrote:

    Hey we agree on something, Monsanto makes great seeds and Roundup is a great defoliant. I hope the irony isn't lost on even you funfun, Monsanto still makes a darn good defoliant. Are you saying that because Monsanto makes great products today that all is forgiven for the sins of the past?

    Ok, you want to talk Feb 2011? In an interesting article from Vietnam Veterans Association titled appropriately enough - The Legacy Continues. A direct quote from that article:

    " Some 2.8 million Americans served in the Vietnam theater of operations. Three-to-six percent of Vietnam veterans’ children are born with some kind of birth defect (Emory University School of Medicine reports a 3-4 percent birth-defect rate among the general population). An impressive body of scientific evidence points to increases in birth defects and developmental problems in the children of Vietnam veterans and others exposed to dioxin-like chemicals"

    You can view the article in its' entirety here:

    http://www.vva.org/veteran/1207/agent_orange_feature.html

    What do the citizens of Anniston, AL have to look forward to thanks to the Legacy of Monsanto? Higher mortality rates due to cancer that is what.

    http://www.gmfoodnews.com/cb101102.html

    Again a direct quote from the above link:

    "The problem is polychlorinated biphenyls, PCBs, one of the most pervasive and profitable industrial chemicals of the 20th century. They were used as insulators in electric transformers and mixed into everything from paint to newsprint. They were invented in Anniston in 1929 and manufactured here by Monsanto for almost 40 years, a source of wealth and jobs until the 1970s, when it became clear that PCBs were doing more harm to the environment than good for industry. They were banned in 1979, but the people here are still living with the legacy."

    So Yesterday, Today and Tomorrow Monsanto's legacy will continue despite your attempts funfun to sweep our Veterans and the citizens of Anniston under the carpet.

    What, you say that company no longer exist? Wrong! You never even attempted to answer my question - Why does the Monsanto of today settle out of court with the citizens of Anniston to the tune of 390 Million dollars for the actions of the "old" Monsanto. The answer is quite simple, Monsanto knew no jury would buy their Corporate shell game. The "original" Monsanto spins itself into two companies, one good and one bad. The bad company, Solutia (love that ironic name) tries to absorb all the liability for the evils of the "old" Monsanto and files bankruptcy thereby stiffing the American Tax Payer with all kinds of debt for the cleanup of a multitude of "Superfund" sites around the U.S. So we have the "new" Monsanto with the same headquarters, same executive staff and same name as the old Monsanto but you want us to believe that "POOF" a brand new company with no connection the past one now exist? PLEASE! Monsanto didn't have the guts to have their attorneys look a jury of 12 in the eye and try and feed them that line of malarkey.

  • Report this Comment On February 06, 2011, at 11:14 PM, funfundvierzig wrote:

    wow, folks, the assiduous and organised smearing of Monsanto by its enemies goes on and on. Sounding like greedy plaintiffs' attorneys, they believe investors must factor in the history of a long-dead Monsanto Chemical Company from a half-century ago to decide about the value of the Monsanto agribusiness of today, February, 6, 2011? Monsanto's only business, the seed business?

    Really now, THE MOTLEY FOOL is here to educate investors; it's not a Law Review for the litigation bar.

    ...funfun..

  • Report this Comment On February 07, 2011, at 8:26 AM, Bansheerising wrote:

    Speaking of the Motley Fool, YOU said:

    "Folks, the entire and exclusive focus of this well articulated article by Alyce Lomax is on the agribusiness and Monsanto. It has nothing to do with the ancient Monsanto Chemical Company of 1901, or of the Vietnam War era nearly a half century ago."

    If you would have actually read the above "well articulated article" by Alyce Lomax you would have seen this:

    "Monsanto also has a dark past that's difficult to shrug off. Monsanto, Dow Chemical (NYSE: DOW), and several other chemical companies manufactured Agent Orange. The highly toxic herbicide, used in the Vietnam War, has saddled its makers with a bad reputation and numerous lawsuits related to the illnesses and horrific birth defects to which it has been linked."

    So you were saying about the entire and exclusive focus of the article..........

  • Report this Comment On February 07, 2011, at 4:37 PM, funfundvierzig wrote:

    Bansheerising,

    If you want to blow up a tangential comment by the author to a full-fledged multi-footnoted and annotated law review article prosecuting Monsanto for alleged sins of a half-century ago, that's fine with us. No objections. That's your right.

    Given the extraordinary upward action in Monsanto's shares over the past seven years, obviously investors aren't making the connection with the distant past of a remotely different and now extinct Monsanto Chemical Company!

    Carry on...funfun..

  • Report this Comment On April 11, 2011, at 3:09 AM, RCotner wrote:

    Monsanto is straight-up evil. They've manipulated their way to patent LIFE - with the lions share of the industrialized population as guinea pigs.

    You may say GMO's are safe to eat now, but what about when you perpetually need stronger herbicides to defeat the crops that will, eventually, resist them?

    Not too mention their biggest clients are of the industrialized food system - namely, fast food - which, again has manipulated their way for YOUR taxpayer dollars AND mine to subsidize their monolith crops to eventually make $$ menu burgers some how cheaper than fruits or veggies.

    Add in the backside taxpayer dollars for the health care of an alarming number of high-calorie fatties in the U.S. - of which Monsanto certainly doesn't pay it's fair share, and you end up with this:

    A company that is ripping off the American taxpayer, globally - 'testing' without knowing the endgame - it's product on humans, compromising farmers' ability to be independent and competitive - a serious advantage in 2nd/3rd world countries where the farmer's margin can compete.

    I wouldn't be surprised to see a correlation between GMO's/Autisim. The meteoric rise in both per capita over the past 15 years..... That's a dark place, but worth investigating.....

    Listen, Americans should have the right to make a buck, but not at the expense of practically EVERY other American. I've almost given up on politics completely after Obama hired some of these Monsanto goons, again, in their somehow bipartisan revolving door.

    Buy organic, and write your congressperson to have these life patents revoked.

  • Report this Comment On June 05, 2011, at 7:28 PM, sandwerm wrote:

    I would just like to point out to anyone who reads this article, that if you look up funfun, its obvious the account is being used (probably hired by Monsanto or another food company) to smear DuPont, and thus should be ignored. literally all the comments the account has made on anything have been smears against DuPont. Basically funfun is either not an actual user and is in fact a company, or is extremely biased against DuPont. Though I have a feeling it's the former, based on the defense it presents for a clearly evil company, who forces small farmers that refuse to use their grain out of business, and not through sheer competition, but through lawsuits. They sue small competitors into submission. Don't tell me thats not evil.

  • Report this Comment On January 04, 2012, at 7:58 PM, ershler wrote:

    sandwermr,

    Monsanto doesn't produce grain, they produce seed. That being said, I would love it if you would show me any evidence that Monsanto has sued a farmer (large or small) because they didn't use Monsanto seed. They have sued lots of people because they used seeds with traits patented by Monsanto without Monsanto's approval.

    RConter,

    The seeds and chemicals Monsanto produces are sold to farmers so I have trouble seeing how their biggest clients are the industrialized food system or how they are in anyway responsible for the end use of the grains their seeds produce unless they have added traits to those seeds to make them more desirable that use.

    Also, weeds become resistant to herbicide. It has been happening since people started using pesticide.

    funfun,

    Monsanto still has a large chemical manufacturing facilities producing Round-up and other agricultural chemicals; you might see them if you ever visit Luling Louisiana, Muscatine Iowa or Soda Springs, Idaho sometime.

    Disclosure: I worked for Monsanto and I currently work Halliburton; still haven't got around to clubbing baby seals or cutting down old-growth forest yet. Also missed my opportunity to work for Blackwater back in 2004.

  • Report this Comment On October 15, 2013, at 2:34 PM, Mac00005 wrote:

    I watched a few documentaries which discussed Monsanto’s practices which gave eye witness accounts from farmers. And when you watch the movie you know you are getting the real stories 1st hand; some things cannot be faked. One of these movies was called Food Inc., but there are several of them out there now. The practice they use / used against small time American farmers was plain disgusting! These types of actions are not something a company looses over time, they remain. The management from old hired the current management, and like attracts to like. One of the great faults of the greedy man is that he will constantly lie to cover his true intentions. Greed is such a quality that always goes on increasing, one never becomes satisfied, if he earns a million, he will next want 10 million, “Beware the greedy man and always keep a distance from him” & “The greedy man is friend to no one”.

    And by the way many of the newer documentary movies are going to be real game changers in health for our society moving into the future, I would highly recommend several of them: Food Matters, Forks Over Knives, Healing Cancer From the Inside Out, etc..

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1432917, ~/Articles/ArticleHandler.aspx, 9/20/2014 12:26:16 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement