The use of Agent Orange, one of the nine Rainbow Herbicides used to destroy forests and farmland during the Vietnam War, is one of the darkest chapters in American history. It wasn't the first time herbicidal warfare had been conducted, but it was the first time such tactics were carried out on an industrial scale. The chemical, supplied by Monsanto (NYSE:MON) and Dow Chemical (NYSE:DOW), was a mixture of two herbicides: 2,4,5-T and 2,4-D. The former was phased-out of field use more than 30 years ago due to toxicity concerns, while the latter has become the most widely used herbicide on the planet.
The fact that 2,4-D is an important tool in modern agricultural may be a surprise to some, especially given the contentious history of Agent Orange. That may also make a recent recommendation by the U.S. Department of Agriculture to allow Enlist corn and soybean varieties created by Dow AgroSciences, that are resistant to the herbicide, to be marketed in the United States. Considering that 60%-70% of processed foods contain ingredients produced from genetically modified organisms, or GMOs, should you be concerned?
Time to panic?
Not so fast. As stated above, the herbicide 2,4-D is not Agent Orange. Nor was it the component that made the most widely used Rainbow Herbicide highly toxic to humans. It was later discovered that the industrial process used to produce 2,4,5-T -- the other half of Agent Orange -- also produced highly carcinogenic compounds called dioxins.
So, to be clear, there is no link between 2,4-D and cancer. In fact, a 2007 review by the U.S. Environmental Protection Agency concluded that "the weight of the evidence does not support a conclusion that (2,4-D compounds) are likely human carcinogens." The chemical has been reviewed numerous times by the EPA, top-ranked environmental academic institutions such as Oregon State University, and other third-party organizations. What's the consensus opinion? The relatively mild herbicide poses no cause for concern.
Consumers should also consider that 2,4-D is already widely used not just in industrial agriculture, but also by everyday households. In fact, you've probably held a container of the herbicide by your side and may have even spilled some on your own hands. That's because the herbicide is the active ingredient in weed killers such as Scotts TurfBuilder. That's hardly a product that merits protests and widespread opposition.
Given the facts, consumers should know that the safety of food ingredients will not change if and when Enlist crop varieties are approved in the United States (they will be planted in Canada this year).
Is there good news to the recommendation?
Actually, yes (sort of). The USDA believes that approving Enlist crops would lead to the adoption of less "aggressive tillage strategies", which release quite a bit of greenhouse gases and can cause water pollution and topsoil erosion, as food writer and author Nathanael Johnson of Grist pointed out.
While the agency admitted that approval would result in "another two fold to six fold increase" in 2,4-D use by 2020, the eventual approval of Enlist crops will give American farmers another tool in managing the spread of resistant weeds -- a responsibility that, similar to managing pests, falls largely on their shoulders. Simply put, the ability to alternate between herbicides, such as 2,4-D from Dow and glyphosate from Monsanto, from one harvest to another will more effectively mitigate the emergence of resistant weeds when compared to a mono-herbicide approach.
The need for products such as Enlist corn and soybean varieties is also good news for shareholders, as they are expected to be a big product for Dow AgroSciences. The company has also developed a new formulation of herbicide called Enlist Duo that compliments the crop varieties and is under review by the EPA. Both products need approval before Enlist can be sold commercially. However, considering how well the Roundup Ready crops and Roundup herbicide pair performed for Monsanto and coupled with the widespread use of 2,4-D already, Enlist has the potential to be a tremendous growth catalyst for Dow. Investors may want to taper their expectations, since Dow AgroSciences is just a piece of The Dow Chemical Company, but considering that the company is one of three that produces 2,4-D globally, there's certainly reason for optimism.
Foolish bottom line
Dow AgroSciences isn't out of the woods yet. The USDA and EPA both need to green-light Enlist products after evaluating the risks under the regulatory eye of each respective agency. Nonetheless, years of safe use of the herbicide 2,4-D in industrial agriculture and households should alleviate fears of consumers worried about the chemical's historic (and unfortunate) association with Agent Orange. While there will undoubtedly be -- and has already been -- fierce opposition to the new biotech crops by anti-GMO groups, investors should expect approval to be followed by a blockbuster launch of Enlist products.