European bank warns against investing in GMOs

The Guardian newspaper, a UK daily, has run a front page story about two Industry Updates from Deutsche Bank (DB) Research recommending that investors avoid GMOs. The updates were written by a DB analyst, Timothy Ramey, based in America and were published in May.

“I don’t know quite why the Guardian bothered because it’s old news,” a DB spokesperson in London told edie.

The two reports advise investors that GMOs are becoming a liability and that shares in biotechnology companies should be avoided. The second report, GMOs are dead, recommends that investors sell GMO shares: “Today the term GMO has become a liability. We predict that GMOs, once perceived as the driver of the bull case for this sector, will now be perceived as a pariah. We are reducing our rating on Pioneer Hi-Bred to SELL, and we would broadly recommend a sale of the seed sector.”

Going further, GMOS are dead asks whether American and European farmers would benefit in the short term from GM crops. “GMOs increase productivity in a world that is presently drowning in too much grain. … a fair bit of the European resistance to GMO stems from their desire to keep European agriculture as people-intensive as it currently is. Thus, GMOs are a threat to their agrarian lifestyle. In the US, low crop prices have farmers asking Congress for $6-$8 billion in aid, just a day after the House of Representatives approved a $574 million farm bailout. GMOS with their better yields will only further depress prices this year.”

The report’s author believes that GMOs represent good science, but pr liability. “Are GMOs safe, good for the environment, and necessary to support the inevitable growth in population of the World?” it asks. “Yes, but the same arguments can be made for advancing nuclear power.”

The Guardian’s 25 August article alleges that the DB reports on GMOs have had a negative effect on biotechnology companies’ share prices: “Since the report was circulated to investors, shares in companies named have fallen against a rising trend in stock markets generally and the frenzy to take over seed companies has stopped. In the six months to yesterday Monsanto’s stocks had fallen 11% and Delta & Pine, a seed company that owns the terminator gene, which Monsanto is taking over, has lost 18% of its value.”

The companies named in GMOs are dead and the earlier report, The trouble with GMOs, include (not all of the companies produce GM seed – some are involved in other areas of grain production, processing or distribution) :

  • AgriBioTech
  • Archer Daniels Midland
  • ConAgra
  • Corn Products International
  • Monsanto
  • Pioneer Hi-Bred
  • Novartis
  • Zeneca
  • Cargill
  • Continental Grain
  • Delta & Pine Land
  • DuPont

According to GMOs are dead, America has approved more than 34 biotech products, Canada more than 30 and Japan more than 20. The EU has approved nine biotech products, Argentina and Mexico each have approved three while Australia, Brazil and South Africa have each approved one.

With GMOs an investment liability the DB reports question whether GM acreage will continue to increase at the forecasted rates: “Expectations for total GMO acreage for 1999 is about 84 million acres, up from just 14 million acres in 1997,” states GMOs are dead. “If our concerns about GMOs are valid, the expectation of more than 140 million acres in 2001 is clearly at risk.”

The report provides figures for GM acreage for America, Canada and Argentina. They are:

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