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Home Causes Monsanto Reports Lower Earnings, Profits Amid Pressure From Consumers, Vermont GMO Label...

Monsanto Reports Lower Earnings, Profits Amid Pressure From Consumers, Vermont GMO Label Law

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Biotechnology firm Monsanto Company reported in a statement Wednesday that its quarterly earnings declined to about $4.5 billion compared to the same period in 2015. The reported earnings were slightly below the market’s average estimates.

Monsanto is the world’s largest seed company, with most of those being genetically modified organisms (GMO), which the company claims offers added benefits to farmers. Monsanto Company is also a leader in the pesticide industry as the maker of glyphosate based Roundup.

Monsanto’s net sales for the 2016 fiscal year second quarter decreased from over $5 billion in 2015. Gross profit for the quarter was also lower from the prior year period, falling to approximately $2.6 billion, from $3 billion in 2015’s second quarter. The company also reported a decline in both sales and profits for the first six months of fiscal year 2016 with sales at $6.8 billion and profits of about $3.5 billion, compared to about $8 billion and $4.5 billion respectively.

Global prices for corn and soybeans have posted declines over the last three years as the world’s economic recovery has become increasingly weaker, according to Bloomberg. The same report also noted farm income in the U.S. “will probably decline for a third straight year to $54.8 billion, the lowest level since 2002,” according to the Department of Agriculture. The market conditions causing low prices for crops have driven down seed prices and are seen as hurting demand for “everything from tractors and fertilizer to weedkiller”, according to Bloomberg.

Another effect of the challenging business environment is consolidation among companies. Monsanto attempted to acquire Syngenta AG, the world’s largest pesticide maker, however the deal fell apart in August 2015. China National Chemical Corp. announced in February that it reached a deal to buy Syngenta. Dow Chemical and DuPont announced a merger in December which would see the new company breaking into three separate entities, including a “Monsanto-size” agriculture company.

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Monsanto’s latest earnings report comes amid a wave of companies announcing plans to label genetically modified ingredients to comply with Vermont’s law which takes effect July 2016. Large food corporations have been losing profits as the growing presence of organic and non-GMO food options reduces their sales. The trend is due in large part to activists spreading awareness about the benefits of avoiding GMO crops grown with heavy pesticide use.

Monsanto also has been the target of new lawsuits in India and Burkina Faso, both related to its BT Cotton. The company is also being sued by 7 major US cities including Portland, OR, Seattle and San Diego, CA.

These changes comes at a time when GMO policy is in focus for the 2016 election season as Vermont’s 2016 law is the first in the nation to require labels for GMO ingredients. In March, the U.S. Senate voted 48-49 against SB 2609, a bill that would have blocked states from making their own GMO labeling laws. Senate Bill 2609, the Biotech Labeling Solutions Act has been called the DARK Act, an acronym for Deny Americans the Right to Know.

Recent reports from companies planning to label all products with GMO ingredients include MARS, maker of M&M’s and SNICKERS, fruit company Del Monte, and other large food conglomerates like Kellogg’s, General Mills, and ConAgra Foods.

The biotech industry has worked with processed food companies to fund multiple initiatives in response to Vermont’s law including the Coalition for Safe Affordable Food (CFSAF) which is in support of the bill in Congress to ban state GMO labeling laws. CFSAF has been lobbying for a “common-sense proposal immediately that creates a uniform, national food labeling standard”, but seeks policy in favor of voluntary GMO labeling while excluding state laws.

CFSAF has been running video commercials on YouTube and website ads featuring farmers and Senators calling for more favorable GMO policy. The ads often claim that farmers and families would be hurt by mandatory GMO label laws. CFSAF’s website states that families may end up paying more than $1000 extra annually for food because of state GMO labeling laws.

Another processed food industry group lobbying for similar legislation is the Grocery Manufacturers’ Association, which has challenged Vermont’s law in federal court.

In 2012, California voters could not pass Prop 37, a ballot measure that would have required labels for GMO. The measure failed by a vote of 51.4% to 48.6%, with a difference of less than 400,000 votes. Monsanto and other major food companies spent almost $45 million to defeat the initiative.




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