Monsanto (NYSE:MON) just won the right to ruin Australia's farming industry and further control the world's food supply. Even though an organic farmer's livelihood hangs in the balance, a judge Down Under said it doesn't matter: There will be no accountability for genetically modified crops contaminating a neighboring farmer's fields.
Imagine an industrial manufacturer whose regular methods of operation include allowing pollutants to spill onto surrounding properties, contaminating them. Now picture a judge ruling that because the products it manufactured were lawful, there was nothing inherently wrong with their manufacture. And because its disposal systems were standard industry practice, the fact that it was polluting its neighbors' property didn't matter, so the manufacturer couldn't be held responsible for the outcome. That's the equivalent of what that Australian judge just decided.
Steve Marsh is an organic farmer in Australia whose neighbor Michael Baxter began planting Monsanto's genetically modified Roundup Ready canola seed soon after Western Australia authorized their use in 2010. Baxter planted the seed in plots adjacent to Marsh's organic fields that were separated only by a dirt lane.
In his lawsuit against Baxter that was filed after Marsh lost organic certification of 70% of his fields (costing him over $78,000), the organic farmer contended the GM seed blew across the road and contaminated his organic canola.
According to the Australian Oilseeds Federation, GM canola accounted for approximately 15% to 20% of Australia's canola crop in the 2012 to 2013 growing season. Here in North America, where GM canola accounts for 90% of the total, it's nearly universal.
Monsanto, DuPont (NYSE:DD), and Syngenta (NYSE:SYT) control 53% of the world's seed production with their GM variants. With at least 85% of all soybeans, corn, and sugar beets grown from genetically modified seed it's a good bet if you see any of those listed as ingredients on a label, there's a good chance it's been modified on a genetic level. It's estimated 60% to 70% of all food on supermarket shelves is GMO.
Although Monsanto has said it would never go after a farmer for violating its patents in instances where just trace levels of its transgenic genes were present, in actuality it has proven all too willing to bring the full weight of its vast financial resources against farmers who've claimed their were crops were contaminated in a fashion similar to what happened with Marsh. Since 1997, Monsanto has filed 145 lawsuits against farmers who've improperly reused its patented seeds -- or about one lawsuit every three weeks for 16 straight years. And it's never lost.
The judge in his ruling further said he thought the decision by the organic authority to strip Marsh of his certification was a "gross overreaction," that since only a small portion of the canola was contaminated, it could easily have been removed. But that's beside the point as it suggests farmers using GM-tainted seeds can ride roughshod over the rights of other farmers, and that organic farmers have to accommodate them.
The ruling stands the concept of property rights on its head. A farmer should have the right grow GMO crops so long as they stay on his property. He ought to be required to take pains to ensure they don't contaminate his neighbors crops. Like polluters, once the seed crosses over that boundary, he is then infringing on his neighbor and should be held accountable.
Unlike the U.S. and elsewhere where the probability of cross-contamination is acknowledged and trace amounts of GMOs are permitted in crops that are otherwise labeled "organic," Australia doesn't have that distinction. Organic means 100% organic with no trace GMOs permitted. It was thought that if Marsh was successful in defending his property rights that Australia might be forced to relax its standards. Now, though, having lost the decision, it's possible Australia might do so anyway.
Because Monsanto requires farmers to sign nonliability clauses when they purchase seeds from it, the biotech was not at risk financially in the event of a loss (it hedged when asked if it was financially defending Baxter in the case). So it was a win-win situation regardless, because no matter how it fell out, if Australia changes its strict anti-GMO policies, it will be able to sell more GM seed.
While I thought this case was the best chance proponents of organic farming had of denting Monsanto's armor, in the end it proved it's as invincible as it's always been.
Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. 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.