HOME / moneybox: Daily commentary about business and finance.

Jeremy Rifkin's Spurious Suit Against Monsanto

James SurowieckiPosted Monday, Dec. 20, 1999, at 7:03 PM ET

At this point, shareholders in life-sciences giant Monsanto have to be wondering what else can go wrong. Last year, the company's prospective merger with American Home Products unraveled in acrimony over leadership and strategy questions. The company's agribusiness unit, which it had once planned to make the center of its operations, became the target of serious opposition in Europe to genetically modified seeds and crops. Even as the major stock indices continued to rise briskly, Monsanto's shares have languished. And this past week has seen bad news on two different fronts. Last Tuesday, a class-action lawsuit orchestrated by environmental gadfly Jeremy Rifkin was filed against the company, while today investors reacted to news of Monsanto's planned merger with Pharmacia & Upjohn by sending the company's shares down 12 percent.

RSS

I've written enough here about the vices of mergers, and those vices are well-documented enough, to make any extended comment on the Monsanto/Pharmacia deal superfluous. There's no good reason to think that this deal will work, and it smacks of a move made--by both Monsanto and Pharmacia--to preempt other, perhaps hostile, suitors. So the Street's reaction to the deal was sensible. The one interesting element of that reaction, though, was that investors were frustrated that, as part of the deal, Monsanto will be spinning off just 19 percent of its agribusiness unit. That unit is now generally acknowledged to be a drain on the company's stock price, and so Monsanto shareholders have been hoping for a full spin-off. But in the wake of this deal, tax considerations make anything more than a 19 percent spinoff next to impossible to pull off.

In the long run, that may actually be a good thing. Given the ongoing uproar over genetically modified crops, an uproar that has played an important role in the opposition to the World Trade Organization and that has become a key trade issue between the United States and Europe, agribusiness certainly seems to be a short-term loser. But half of all the soybean crops and a third of all the corn in the United States are already genetically modified varieties, and the possibilities of using genetic modification to increase crop yields and protect against pesticides, to say nothing of creating vitamin-enhanced crops, are so wide-ranging that it seems difficult to imagine they will be dismissed out of hand.

Of course, that's exactly what Jeremy Rifkin would like to do. The lawsuit filed last week on behalf of a small group of American farmers and a French organic farmer was a haphazard and scattershot collection of charges that might have been designed to demonstrate the excesses to which the U.S. legal system can be driven. The lawsuit accuses Monsanto of introducing products without testing them sufficiently for safety, misleading farmers about these products, and monopolizing the patents and sale of these unsafe products. In other words, it's a class-action unsafe-product, fraud, antitrust lawsuit. The damages being asked for are "unspecified," but Rifkin has said they could amount to hundreds of millions of dollars. How he reached that figure remains unclear.

The suit is exactly what it appears to be: a publicity stunt. To begin with, Monsanto hasn't violated any law by selling genetically modified seeds, and in fact its products have been certified by the FDA (which, needless to say, does not certify "normal" seeds). And the company can't be accused of selling unsafe products because there's no evidence that the products are unsafe. That's why the suit just says they should have tested more. The fraud charge seems equally spurious, since Monsanto has been straightforward about its testing procedures. And as for the antitrust charge, the fact that Novartis, DuPont, Dow, and AstraZeneca are all named in the suit as "co-conspirators" (though not actual defendants) makes the monopoly charge a bit hard to believe. Perhaps we could next sue Ford, GM, DaimlerChrysler, Toyota, and Volkswagen for monopolizing the auto market.

Obviously, there are important issues about genetically-modified agriculture that have yet to be resolved. And just as obviously, the major agribusiness companies have hurt themselves by obstinately opposing things like labeling of genetically modified crops (which is now required in Japan, the E.U., and South Korea). But class-action lawsuits are not useful ways of determining public policy. (Perhaps the most ridiculous aspect of this whole farce is Rifkin's use of the word "populist" to describe the suit.) They are, though, very useful ways of fomenting ill-considered controversies. And in that sense, I suppose, the suit is already a great success.

E-MAIL

RECOMMEND... Get Slate RSS Feeds

James Surowiecki writes the financial column at The New Yorker.

COMMENTS

Highlights from the Fray:

You should read the way in which the debate on genetically modified (GM) foods is reported in the UK press and you will understand that it is going to take a mammoth effort by Monsanto and other GM producers to persuade Europeans that GM foods are safe.

The arguments put forward that GM foods offer such advantages over existing crops also fail to take account of the fact that a huge proportion (I believe close to 50%) of the European Union budget is spent on the Common Agricultural Policy. This is a system which supports agriculture against market forces by subsidizing crops and even paying some farmers not to grow crops at all! Do we really need to increase the yields and productivity of these people still further?

Finally, James' point about the mishandling of the p.r. of the issue is key. The attitude of the GM producers that has been portrayed in the UK media is one of arrogance.

--Richard Parkin

(To reply, click here.)

1. Yes, the FDA approved of the genetically modified seeds, based primarily on Monsanto's own testing, rather than the kind of impartial evaluations most of us assume FDA approval implies. The test occurred over a (necessarily) limited amount of time, in favorable labratory conditions.

2. Aside from genetic modifications to include BT into plants, Monsanto modifies crops to be Roundup-tolerant. That's convenient, since Monsanto also manufactures Roundup, and locks up a market for their pesticide as well as their seeds. Roundup, however, isn't the environmentally benign substance it's made out to be, especially in the large quantities used in industrial farming. It breaks down for the most part, though not entirely, and can be found in trace quantities in the resulting foods.

3. The problem of insect-resistance and Roundup resistance migrating from crops to weeds is real. Gene-jumping between species does occur in nature. Monsanto has avoided in testing by closely controlling its test fields, but how much can we depend on factory farms doing the same.

--Tom Breit

(To reply, click here.)

There's a very good reason why reporters go to Jeremy Rifkin--he speaks up in absolutes.

The culture of science, on the other hand, constrains scientists from asserting anything more than what they know. When a reporter asks a scientist, "Is this food safe?" and the scientist replies, "I can say, with 95% certainty, that the food is safe," the reporter hears, "There's a 5% chance that the food is unsafe." Of course, the reporter's interpretation isn't true: the scientist is simply acknowledging that his means of knowing are imperfect. Far from being people of absolutes, scientists are champions at navigating ambiguity; it's the rest of us who need the world presented to us in black and white.

For instance, take the much-ballyhooed study by a Cornell scientist that indicated some Monarch butterfly caterpillars were harmed (44% died) as a result of consuming high doses of corn pollen genetically modified to repel the European corn borer. (This was one of the experiments that prompted all those WTO protesters to dress up in Monarch butterfly outfits). The results reported in Nature on May 20, 1999, were only preliminary findings obtained from one assay, and yet they've been taken as gospel. Some of the researcher's own colleagues at Cornell have disavowed the methods and conclusions. The possible toxicity of Bt modified corn on Monarch larvae has been known in the laboratory since 1986, and USDA has been active in developing mitigation programs. Even so, no one has ever shown that Monarch larvae are harmed by Bt modified corn pollen outside the laboratory; scientists theorize this may have something to do with the particular way that pollen is distributed around a corn field. The limited utility of indoor laboratory experiments, in this case, is striking.

As one of the other Cornell scientists put it, "If I went to a movie and bought a hundred pounds of salted popcorn, because I like salted popcorn, and then I ate the salted popcorn all at once, I'd probably die. Eating that much salted popcorn simply is not a real-world situation, but if I died it may be reported that salted popcorn was lethal."

We have the Rifkins of the world to thank for that.

--Duncan Murrell

(To reply, click here.)

Jeremy Rifkin is merely exploiting the epistemological impossibility of proving anything in an absolute sense. It is analogous to the hypothetical situation of a mad man confronting you with the bizarre assertion: "At 3:00 P.M. everyone in the world will turn purple!" I am utterly incapable of absolutely disproving this wild prediction! Logical argumentation limits me to merely informing the lunatic that this phenomenon has never occurred in the past, and the evidence suggest that at 3:00 PM our skin color will remain unchanged. The insane person unfortunately retains the abstract right to claim that his prediction cannot be absolutely disproved until 3:00 PM

--David Thompson

(To reply, click here.)

(12/22)

What did you think of this article?

Join The Fray: Our Reader Discussion Forum

POST A MESSAGE | READ MESSAGES