For a barometer reading on Europe's current attitude toward genetically modified (GM) foods, investors might want to check out chemical and health-care products company Bayer AG's (NYSE:BAY) recent experience in the U.K.
According to published reports, after five years of deliberation, the U.K. government agreed early last month to allow Bayer CropScience, the segment of the Germany conglomerate that concentrates on agribusiness, to grow GM forage maize in the U.K. The decision was initially seen as a victory for Bayer CropScience, which accounted for about 20% of Bayer's $29.6 billion in revenue last year. The unit recently announced, however, that it will not proceed with the project because regulatory hurdles make it "economically non-viable."
The "GM" food debate has been raging for years now, as a constant back and forth between the companies that provide such altered species and groups that assert that these so-called "frankenfoods" pose a threat to public health.
In the U.S., the pro-GM camp is clearly winning. Over the years, millions of Americans have consumed GM food without ill effects, and many continue to do so on a daily basis. Admittedly, some concern has sprouted recently over evidence that GM foods are tainting "normal crops" with their altered DNA. Still, crop contamination has hardly blown up as a significant issue.
Europe, however, is a far different story. A study commissioned by the U.K. government before it gave Bayer the green light for the maize cultivation indicated that only 2% of Britons would be happy to eat GM foods. Nor is the wariness limited to the U.K. At least some of the U.K. regulations that frustrated the Bayer planting are common across the European Union. Clearly, GM food companies face an uphill battle ahead of them on the continent.
As W.D. Crotty recently noted, genetically altered foods boostedMonsanto (NYSE:MON) in its recent quarter. But this growth, as well as expansion for other food giants like DuPont (NYSE:DD) and BASF (NYSE:BF), will be stunted if the food giants can't change attitudes across the ocean. Europe offers the most fertile ground for expansion, but at the moment Europeans aren't ready to plant.
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Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.
