Why the Supreme Court Was the Least of Monsanto's Concerns Yesterday

If your company ever has to stand before the Supreme Court, it's a big deal. Winning your case – an even bigger deal. Winning your case with a unanimous verdict – that's downright huge.

That was the news for Monsanto (NYSE: MON  ) yesterday, and it probably wasn't even the most important revelation of the day for the company.

An open and shut case
For some time now, Monsanto has been catching a lot of negative press for its genetically modified seeds. But yesterday's win had nothing to do with the safety or morality of genetically modified organisms, or GMOs, and everything to do with a farmer trying to circumnavigate the law.

Indiana farmer Vernon Bowman signed an agreement in 1999 that he wouldn't collect the seeds after harvesting his crop of Roundup-resistant soybeans provided by Monsanto. In an attempt to save money, Bowman bought commodity grain from a grain elevator. Such grain is usually used as feed for animals; but Bowman planted it, knowing that some may contain Monsanto seeds.

After using the Roundup herbicide and harvesting the plot, it turned out there were resistant seeds in Bowman's purchase. He continued to use these seeds for eight years without paying Monsanto.

Though the Supreme Court ruled unanimously in Monsanto's favor, Justice Kagan made it clear this wasn't as far reaching a ruling as some may have you believe: "Our holding today is limited," Kagan said, "addressing the situation before us, rather than every one involving a self-replicating product." 

Government responds to public outcry
But no sooner had the court verdict been read than Monsanto, as well as fellow GMO-producer Dow Chemical (NYSE: DOW  ) , were dealt a blow by the U.S. Department of Agriculture.

Dow was hoping to gain approval for crops that will tolerate the 2,4-D pesticide/herbicide, while Monsanto was seeking approval for crops that would survive the application of dicamba – an herbicide.

The news came as a surprise to both companies, but the Department of Agriculture said it was inundated with requests from the public to continue investigating the GMOs before granting approval.

The USDA said it received 8,200 comments and petitions signed by 400,000 people to stop Dow's petition to deregulate 2,4-D; it received 500 comments and 31,000 form letters from individuals concerning Monsanto's request. 

Dow said that herbicide-resistant weeds were growing rapidly in the United States, and approval was needed to meet this potential crisis.

A long-term solution?
Showing my colors a little, it's hard for me to sympathize with either company. As chemicals are used, nature usually figures out a way to engineer organisms (weeds) that are resistant. The only way to combat these new resistant strains is by using stronger chemicals.

It doesn't take much brain power to see what, over time, this leads to: the use of stronger and stronger chemicals that not only pose a threat to wildlife and the balance of nature, but human health as well.

As people become more and more knowledgeable about the topic – and long-term studies are performed on the effects of GMOs – both to humans and wildlife – I could easily see this pubic outcry being just the tip of the iceberg.

A controversial French study, released late last year, said that rats fed a steady diet of Monsanto corn or exposed to allowable amounts of Roundup developed more tumors and died earlier than a control group.  

A 30-year study conducted by the Rodale Institute in Pennsylvania also confirmed that organic farming yields just as much as conventional farming (better during droughts, too) with a lower ecological footprint.

Source: Rodale Institute 

It's important to note, however, that GMO seeds were used for only the last three years of the study, as they weren't readily available when the study began.

Of course, time will tell if I am right or not, but I think there are better choices for your investment dollars.

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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 Report this Comment icon found on every comment.

  • Report this Comment On May 14, 2013, at 12:55 PM, eyeknonothing wrote:

    Let's hope the USDA does something to stop the insanity of GMO's. 2,4-D for those who don't know, is the main ingredient of (as Monsanto said, "safe") Agent Orange! As you pointed out, nature will find a way around man's devices. There is an epidemic of Round Up resistant weeds all over the US. Likewise, insects have become resistant to Bt Corn and Bt Cotton.

    I had many shares of Vanguard Cap Op. I sold them when I found out that Vanguard is a major investor in Monsanto and advise everyone to do the same.

    These companies claim that GMO's will solve world hunger but that's just the hype. The "controversial" study you reference was done by Professor Seralini. Monsanto claimed it was rife with faults, but Seralini used the same rats Monsanto used in their 90 day testing. Seralini tested those rats for 2 years. Organ damage, sterility, gigantic tumors in the breast area and a host of other ailments from being fed GMO's for the entire life of the rats.

    Join GMO Free USA on Facebook for some real information about the dangers of GMO's.

    The Supreme Court is stacked in favor of Monsanto. Clarence Thomas used to be one of their lawyers, and has ruled in their favor twice now. Shouldn't he have recused himself in the interest of Justice?

  • Report this Comment On May 14, 2013, at 3:40 PM, Rat11 wrote:

    I thought MF was an investment advisor not a hack purveyor of leftist hysteria. Citing that totally discredited french feeding study is completely irresponsible. In addition, the implication that GMO's are somehow causing "stronger chemicals" to be used with dire environmental consequences completely fails to take into account that farmers have used mixed MOA's (modes of activity) for decades to reduce weed resistance. Besides whats so sinister about 2,4-D, which you can buy by the gallon at any corner hardware store? if your goal is to disparage and malign these great companies, then get your facts straight. Otherwise stick to he stockmarket. Yes, FOOLS indeed.

  • Report this Comment On May 14, 2013, at 4:17 PM, Catday wrote:

    Well said "eyeknonothing". Appreciate your comments. Glad someone knows what they are talking about unlike the following commentor.

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