By Randall Osborne

Editor

Like the proliferating bugs new crops are designed to withstand, opinion against genetically modified organisms (GMOs) in ag biotech has infected the U.S., spreading across the ocean from Europe and into politics on this side of the pond.

And it's getting worse.

At least, anti-GMO sentiment is growing stronger. Whether that's a good thing or bad thing depends upon whom you ask.

If you ask ag biotech giant Monsanto Corp., or its investors and collaborators, the answer is plain.

The latest thunder came when the Clinton administration picked a former Monsanto lobbyist to occupy a seat on the 20-member Biotechnology Consultative Forum, designed to find compromises with Europe regarding GMO products' labels and safeguards.

A trade war seems likely. The bickering over GMOs bollixed up World Trade Organization talks last year in Seattle, and Clinton, hoping to discover middle ground by way of the panel, asked anti-GMO factions in the U.S. for a candidate who'd promote their concerns.

Their choice was Michael Hansen, a scientist with Consumers Union. But, instead of Hansen, the feds went with Carol Tucker Foreman ­ who, as a lobbyist, helped Monsanto win approval for its much-debated bovine growth hormone (BGH), a milk production booster.

Oops.

Suspicion long has lingered around BGH. Dairy outfits from Ben & Jerry's Ice Cream all the way down to local "Ma and Pa" cow farms have been quick to assert they don't use the hormone.

Not only that, but the two largest natural food store chains in the U.S., Whole Foods and Wild Oats Markets, said late last year they would not use BGH or any other genetically altered ingredients in their private label products.

With more than 200 stores and about 1,300 products under their brand names, the stores were not impressed by reports in support of GMOs by the National Research Council (NRC) and the House Science Committee's Subcommittee on Basic Research.

Monsanto has larger problems these days than BGH, and Foreman is not around to help. Having abandoned lobbying after 18 years, she works on food issues for the Consumer Federation of America. But activists' memories are long, and the GMO war rages on ­ despite Monsanto's efforts to prove the value of its technology.

Earlier this month, the St. Louis-based company said, as other proponents have, that GMO-based crops could feed the world. The firm said it would give away licenses to its "golden rice" technology, which allows for the growing of rice with beta carotene (vitamin A) in the endosperm (the milled grain's edible part).

Malnourished children in developing countries could benefit greatly from the enriched rice's vitamin A, lack of which causes blindness and infectious diseases.

Objectors to the "Frankenfoods" methodology want to know what scourge golden rice itself, and other GMO inventions, might cause. And they say scientists simply don't understand enough about them. Not enough, anyway, to unleash GMOs on humans and the natural world.

"This [GMO battle] is now a multi-headed monster," said Sano Shimoda, analyst, investment banker and president of BioScience Securities Inc., in Orinda, Calif., founded in 1993 to focus on ag biotech.

"If you stand back and look at it, the GMO issue started three or four years ago, and was largely a European concern for the environment," he said. The focus then shifted to food safety. With the Foreman imbroglio and others like it around the world, attention has moved yet again.

"What's troubling now is that the focus is in trade and politics, and if there's one area you do not want to get immersed in, it's trade and politics," Shimoda said.

For investors, this means a period of darkness ­ but not a long one, he said.

Coming out of the harvest season last year, there was pandemonium in the U.S., he said. "I was floating around in the Midwest, and there was concern it would cut their use of genetically produced seed way back. All the final numbers aren't in, but the falloff on usage in the U.S. was not that bad. We've already said we'd go through two or three years of flat usage, or minus, and -- depending on how these issues sort out ­ I think next year will be flat. 2001 is the bottom, and 2002 we start to crawl back."

The stock market, he added, will do what it always does.

"Wall Street can turn on a dime, and you can bet your bottom dollar that's going to happen here," Shimoda said. "Wall Street has counted this area out. The glass is half-empty, not half-full. Could it be one event [that changes the picture]? I don't think so. It's going to be a combination of events that reduces the negative and starts to turn a positive."

Ag biotech investors tend to think "Monsanto" the way soft-drink buyers at a hamburger stand think "Coke," but Shimoda said he'd put his cash elsewhere.

"It's a mistake to count Monsanto out," he conceded. "I call Monsanto the street fighter. They had the vision early on, more than any other company. In the early 1990s, they focused, put the battle plan together and marched. They had no idea about this GMO thing. They've been straight-jacketed."

DuPont Transitioning Into Biotech

Others in a handful of firms are international ag biotech leaders, and their names are well known. Shimoda said he would put his chips on the sizeable slot occupied by a familiar, if downplayed, name in global industry ­ a company that's "transitioning between technology cycles, something it does about every 50 years," he said.

That company is E.I. DuPont de Nemours, which merged last year with Pioneer Hi-Bred International Inc.

"For the last 50 years, [DuPont] has been driven by developments in polymer chemicals, plastics," Shimoda said. The new emphasis is on biotech, a movement away from petrochemicals to biological, renewable resources, along with e-commerce and information technology.

"The whole investor community is looking through the rear-view mirror," Shimoda told Financial Watch. "[DuPont's] management knows they have to perform, and they're going to make it happen over this year and next year," perfectly positioned to ride the upturn Shimoda said is coming ­ even if the firm's performance has been "mediocre at best, in recent years."

DuPont's top executives "have their eyes on the ball like a laser beam," Shimoda said, predicting stock prices five to eight years in the future. "It's $46, $47 now," he said. "We like to say, 'On a clear day, you can see $200 a share.' The stock could easily double in the next 12 to 18 months."

Shimoda's larger view, for ag biotech, includes more struggle, with the bottom line winning the day in most of the world.

"The holdout will be Europe, and it will be fundamentally isolated," he said, because of its cultural taboo against GMO food. "Economic self-interest will ultimately make the light bulb go on [in the rest of the world]," he added.

"Countries know that if they can put a product, a 'golden rice,' on the dinner table, and populations see it's creating social value that people can recognize, and they can touch it and feel it, this will have a tremendous impact," Shimoda said. *