Will Monsanto Company Ready a Lawsuit As Vermont Signs GMO Labeling Bill Into Law?

Is Vermont Gov. Peter Shumlin just trying to get re-elected? Source: Wikimedia Commons/Community College of Vermont.

Move over, slavery ban and same-sex marriage legalization: The mandatory labeling of food products containing ingredients produced from genetically modified organisms, or GMOs, will be joining the list of firsts for Vermont. While history clearly shows that consumer activism succeeds only when scientists are on the same side as the consumer -- eliminating CFCs, making seatbelts mandatory, restricting use of pharmaceutical compounds, cleaning air and water, removing unnecessary preservatives from consumer products, and the like -- which is not the case when it comes to genetic modification of the food supply, anti-GMO activists are already calling the legislation a major win in what is characterized as the "battle against GMOs." The cheers will only get louder when Gov. Peter Shumlin officially signs the bill that the state House passed 114-to-30 into law.

Before you pop the champagne, however, you may want to consider the likelihood that Monsanto Company (NYSE: MON  ) , other trait companies, and food producers will protest the legislation, which won't go into effect until July 1, 2016. In fact, the bill not only mandates the labeling of GMO foods, but also establishes a fund of up to $1.5 million to help pay for the state's defense for an expected lawsuit. More worrisome to the chances of success for Vermont is the estimated range for legal costs in a pending lawsuit: $5 million at the low end of the range and $8 million at the high end. Can tiny Vermont really succeed against the entire food industry, including food producers and trait developers? Could negative public perception from a lawsuit actually damage Monsanto and its peers?

Why Vermont has no chance
For starters, Vermont ranks 49th in the Union with only 626,630 citizens. Food producers have steadfastly opposed labeling laws proposed in California, the most populous state with 38.3 million citizens, and Washington, ranked 13th with almost 7 million inhabitants. Why would food producers make separate labels for less than 1 million Vermont residents if they wouldn't do so for California? Does anyone believe Vermont can really survive a lawsuit against one of the country's most important industries in terms of employment?

There are additional wrenches being thrown into the bill's chances of going into effect in 2016. First, supporters should consider that Gov. Shumlin's strong support of the bill is occurring during an election year. Second, the bill was passed under the guise of several questionable claims championed by Vermont Right to Know GMOs, such as stating that there would be no additional cost to consumers or food producers and presenting unpopular scientific views as a consensus among the scientific community. The bill could be doomed if those holes are exposed.

Why Vermont may have a chance
It's difficult to imagine Monsanto damaging its public image any further, but the company should realize that the stakes are higher this time around. Currently, I would suspect that most people who oppose Monsanto are those who are firmly against GMOs. Those aren't the people who will come into play for a lawsuit that will undoubtedly garner national attention. If the media has a field day with the potential court case, as would be expected, then the debate about GMOs and a consumer's "right to know" could bust into the living rooms of people who haven't given it much thought before or are undecided. Are swing voters going to side with the fearmongering performed by the opposition and tiny little Vermont, or Big Ag and the "evil empire" of Monsanto?

It's not just about Vermont, either. Several other Northeastern states have proposed mandatory labeling that is contingent on having laws passed in nearby states with minimum population requirements. With the first bill passed, heightened rhetoric in Vermont could spill over into nearby states with larger populations. In fact, attempting to educate neighboring states could be the best -- and cheapest -- long-term decision Vermont makes. Unfortunately, I can see things turning out pretty badly for Monsanto and the consortium of food producers in a worst-case scenario.

Foolish bottom line
If mandatory labeling becomes the norm across the country, then food producers would have no choice but to stamp labels on most of their food products. However, labeling food may not have such a detrimental effect on sales or margins, as is currently feared. As Nathanael Johnson notes, a label could assert that risk is inherent, which becomes less feared than an unknown risk. It is still far too early to determine the outcome or next steps in the process, but investors shouldn't fear legislation having a noticeable effect on Monsanto's growth any time soon.  

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Read/Post Comments (11) | Recommend This Article (2)

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  • Report this Comment On April 27, 2014, at 1:35 PM, OriginofTruth wrote:

    This is NOT just about GMO's, but the excessive amounts of pesticide, that carry through to the product. Labeling is the only way the public can avoid the exposure , since USDA does not require "pesticide free"!

  • Report this Comment On April 27, 2014, at 2:02 PM, u4iadestiny wrote:

    There is NO scientific consensus on the safety of GMOs. Also, Vermont is not up against the 'entire' food industry, only that portion which insists on using GM ingredients. The very wording of this article suggests a scenario that industrial agriculture would like us to believe, but which simply isn't true.

  • Report this Comment On April 27, 2014, at 2:51 PM, VermontNative wrote:

    The odd thing about this is the if they aren't already GMOs are going to be in virtually every food item you buy at the grocery store or restaurant in a few years. The only things that won't contain GMOs will be organic foods grown in isolation away from any fields containing GMOs to prevent cross pollination. Monsanto and the other seed stock companies shouldn't fight these laws they should just tell the food processors to put it on the label. Those few consumers who choose and can afford organic already are. For the rest of us it is just one more piece of information to ignore on the label.

  • Report this Comment On April 27, 2014, at 6:18 PM, solunas wrote:

    Science DOES support a growing concern for GMOs effects on human health.

    Roundup - the pesticide used in abundance on GMO crops, disrupts the bacterial balance of our gut linings by killing off beneficial bacteria and sparing pathogenic bacteria (like e. coli & family).

    Turns out we're made up of only 10% human cells and 90% microbial cells (mostly bacteria) the bulk of which line our digestive pathways.

    http://www.greenmedinfo.com/blog/roundup-herbicide-linked-ov...

  • Report this Comment On April 27, 2014, at 8:52 PM, immoveable wrote:

    South Africa recently pulled Monsanto's ads from public view because they were deemed "misleading" about the benefits, safety and efficacy of GMOs, among other things. Russia just banned the import of GMOs. Many other countries have severe restrictions on the cultivation and import of GMOs. It's about time this country saw through the misinformation propagated about GMOs and resisted the pressure brought to bear against responsible scientists and citizens who criticize the safety of the cultivation of GMOs.

  • Report this Comment On April 27, 2014, at 8:53 PM, TMFBlacknGold wrote:

    @solunas,

    The study you linked to was performed in vitro, which means it was performed in a petri dish or cell culture, not in an actual living organism's gastrointestinal tract. Numerous environmental conditions change when comparing a petri dish and a complex living thing. That's why the study cited "could cause". It was also published in a journal that is not ranked in the top 50 in the microbiology field, which could mean more prestigious journals rejected it. And, the article linked above uses C. botulinum and C. tetani to speak about all bacteria in the genus Clostridium. I'm pretty certain neither of those actually inhabit the human microbiome.

    Could glyphosate disrupt the human microbiome? Perhaps, but so far no significant link has been found.

    Maxxwell

  • Report this Comment On April 27, 2014, at 8:59 PM, TMFBlacknGold wrote:

    @immoveable

    Countries that ban the cultivation or import of genetically modified crops do so out of fear and irrationality, not because they know something the United States does not or because the United States is tricked by propaganda. Those countries will pay heavily for their views economically in the next decade for erecting such stiff and unnecessary roadblocks for all industries that could benefit from designer organisms. The United States will continue to take the lead and reap the economic benefits.

    Maxxwell

  • Report this Comment On April 27, 2014, at 10:58 PM, mountaine wrote:

    I have food allergies. I NEED to know what is in my food. So now that it won't be labled.....who do I sue !?!?!?

    What is wrong with these twitts !?!?

  • Report this Comment On April 28, 2014, at 1:21 AM, Weitzhuis wrote:

    @mountaine

    Unlike any other breeding technique, including those used in organic farming, GMO's are checked for any allergens.

    @Saluna

    e-coli are the major bacteria in our intestines.

    @u4...

    yes there is scientific consensus on the safety of GMO's.. Consensus does not mean unanimous.

    @VermontNative; Anti-Gmoers have made no bones over their plans to use labeling for scarlet lettering, blacklisting and even standing in front of stores carrying GMO foods to, "warn", customers away, like brownshirts in front of Jewish shops in 1930's, Germany.

    Will Monsanto, and other sue, most likely. My question is, will the ACLU also sue over this breach in the First Amendment?

  • Report this Comment On April 29, 2014, at 6:36 PM, andrewassur wrote:
  • Report this Comment On April 30, 2014, at 9:24 AM, TMFBlacknGold wrote:

    @andrewassur,

    First...

    "The initial testing that has been completed at Microbe Inotech Labs, St. Louis, Missouri, is not meant to be a full scientific study."

    Second...

    "The levels [of glyphosate] found in the breast milk testing of 76 ug/l to 166 ug/l " <<This could have been from any number of environmental sources. Besides, it's far from toxic.

    Third...

    "The EPA has set a legally enforceable maximum contaminant level (MCL) for glyphosate of 700 ug/l in drinking water."

    Fourth...

    "The initial testing was done using ELISA tests" <<Probably not the correct assay to use for this test.

    Fifth...

    The "initial test" did not find statistically significant differences. Therefore, the headline is just more fear mongering.

    Maxxwell

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