The biotech people love to hate may generate even more antipathy by pushing ahead with chemically treated seeds that don't help farmers increase yields -- and may kill bees and birds. Photo: Flickr via Donna Cleveland.
Biotech giant Monsanto (MON) has a serious public relations image problem, one that's increasing over time. And because it intends to keep selling seed that offers no benefit to crop yields -- but has been treated with chemicals linked to the destruction of the honeybee population -- its reputation will be further sullied.
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A Harris Poll from Nielsen earlier this year found Monsanto's reputation ranked third worst among 60 high-profile companies, behind only BP, which was responsible for the worst oil spill in U.S. history, and Bank of America, which played a leading role in the financial market meltdown.
That's some ignominious company to keep, but Monsanto's reputation might sink further: it remains steadfastly committed to selling soybean seeds treated with neonicotinoids, the nerve agents used to treat about one-third of the U.S.'s planted crops, which are thought to be a leading cause of honeybee colony collapse disorder, or CCD. This even though the Environmental Protection Agency just said that neonicotinoids do not improve crop yields.
According to the EPA, "in most cases there is no difference in soybean yield when soybean seed was treated with neonicotinoids versus not receiving any insect control treatment." Moreover, the agency says there are foliar treatments -- i.e., insecticide treatments sprayed on a plant's leaves -- that are at least as effective as treated seeds and typically cost farmers less to apply.
A witch's brew
There are three main neonicotinoids used for insect control: imidacloprid, thiamethoxam, and clothianidin. The first two are the primary agents used in soybean seed production, while the latter one has been registered but is rarely used.
Monsanto, though, doesn't make the chemicals. Rather Bayer (BAYR.Y 0.61%), Dow Chemical (DOW), and Syngenta (NYSE: SYT) are the primary manufacturers, with global conglomerates like Sumitomo, Mitsui, and Nippon Soda adding to their wider distribution.
And there is heated debate over whether their use actually causes CCD. While the European Food Safety Authority finds them to be an "unacceptable" danger to bee populations, the U.S. Agriculture Dept. does not, and calls into question the studies that have linked the pesticides to the harm the honeybees have suffered.
Honeybee populations have suffered significant declines, which studies indicate are a result of pesticide use. Photo: Flickr via Bob Peterson.
A calamity in the making
Colony collapse disorder is the lack of adult honeybees present in a hive, even one with a live queen. No dead honeybee bodies are found around such a hive, there's still honey in the hive, and immature bees are present. Essentially, the bees just vanish.
The latest report from Agriculture shows that while honeybee losses have been less dramatic the past few years than they were between 2007 and 2008, when there was a 36% mortality rate in the managed bee population, the winter of 2012 to 2013 (the latest data available) still showed a 23% decline, well above the near-19% average that beekeepers believe is the threshold for economic viability.
With losses ranging from the mid-20% to mid-30% range every year since at least 2006, CCD remains a cataclysmic event that has apocalyptic ramifications, despite what skeptics say.
Why? Honeybees are the primary vehicle by which crops are pollinated, accounting for the pollination of 80% of all flowering plants and three-quarters of the country's fruits, nuts, and vegetables.
Equally problematic is the report appearing in the prestigious journal Nature this past August that said that Bayer's imidacloprid, the most widely used insecticide, is also behind collapsing bird populations.
Considering the threat to birds and bees, and that there is little to no benefit to farmers, why would Monsanto, Dow, and Dupont (DD) all continue selling soybeans treated with these chemicals? Profit.
A bumper crop of profits
In Monsanto's full fiscal year earnings report, issued earlier this month, the biotech recorded record results in its soybean seed business, notching a 27% gain over 2013 as sales hit $2.1 billion. Indeed, soybean revenues were up more than 125% in the fourth quarter alone -- no other individual crop even came close. In fact, its largest division, corn seed, suffered a 3% decline in sales.
The U.S. is the leading producer and exporter soybeans, which comprise about 90% of the country's oilseed production. Photo: Flickr via United Soybean Board.
At the same time, gross profits in soybeans soared 44% year over year, and Monsanto anticipates seeing double-digit growth in its seed business next year, with corn and soybeans accounting for three-quarters of the opportunity.
Where soybeans were responsible for 16% of Monsanto's revenues in 2013, they account for almost 20% this year. And they've grown from 15% of gross profits a year ago to almost 21% of the total in 2014.
Similarly, Dow experienced record third quarter results in its seed business due primarily to soybeans and sunflowers, while Dupont was able to partially offset an 11% decline in its agriculture division earnings on the strength of higher soybean volumes.
In short, it's just too profitable for the biotechs to give up on their soybean business.
It may be that the EPA's pronouncement causes farmers to stop using the seed on their own as they realize they're gaining no advantage from paying higher prices. But by not being proactive in halting their sale, Monsanto won't be doing anything to help salvage its reputation.
