The campus of the FDA's Center for Food Safety and Applied Nutrition is under siege today, and it has everything to do with Monsanto . Members of the Occupy Monsanto movement are staging an all-day "eat-in" to label food products that contain genetically engineered (GE) ingredients. They're easy to dismiss, like an especially curmudgeonly Facebook commenter who described them as "hordes of crazed, anti-Monsanto, vegetarian hippies" did. That may well be true, but they are part of a broader movement that could pose a challenge to ag biotech's comfortable dominion over our food supply.
There is a growing movement among grassroots activists, NGOs, and natural and organic food companies to require labeling of food products containing GE ingredients. Whole Foods , the leading natural foods grocer, recently committed to labeling all of its products voluntarily within five years. Big Food companies spent heavily on campaigns against a proposition in California that would have mandated labeling and successfully torpedoed the bill. But there's more where that came from. Vermont, Connecticut, and Iowa all have some form of labeling requirement making its way through the legislative process.
The New York Times recently reported that 20 major companies, including PepsiCo, ConAgra, and Wal-Mart, met in Washington, D.C., to lobby the FDA for a federal GE-labeling law. The idea is that companies prefer one federal law to a proliferation of state laws that would add to their compliance burden. Implicit in that notion is that a labeling requirement is inevitable.
All three branches of government?
The Supreme Court heard arguments on Feb. 21 in the case of Bowman v. Monsanto Co. The central question is whether farmers who buy Monsanto's Roundup Ready soybean seeds are free to do as they wish with the seeds harvested from those plantings. The justices seemed almost unanimously opposed to the farmers' arguments, and they appear poised to rule in Monsanto's favor. In a highly unusual move, the U.S. government not only filed an amicus brief supporting Monsanto but also sent a government attorney to argue on the company's behalf, highlighting the Obama administration's support for several elements of Monsanto's argument.
In March, Congress passed and President Obama signed H.R. 933, a law that anti-GE advocates have dubbed the "Monsanto Protection Act." Section 735 strips federal courts of the authority to halt the sale and propagation of genetically modified seeds and crops if concerns about health risks arise during safety tests. Did you catch that? Let's pretend we're talking about cribs instead of seeds. The corollary law would then say that if little babies' fingers kept getting chopped off in crib safety testing, the courts couldn't get involved. Disgraceful.
Senator Roy Blunt (R-Mo.), one of section 735's biggest supporters, worked with Monsanto to craft the language in the bill. Section 735 is attached to a continuing resolution that only holds for the next six months, so it is not yet a part of permanent federal law. Monsanto euphemistically calls section 735 the "Farmer Assurance Provision." As with the Supreme Court case, this legislation could have broad implications for agricultural biotechnology companies, especially if it becomes part of permanent federal law.
Effectively, Monsanto may have all three branches of government in its hot little hands. You might be inclined to admire this, especially if you're just focused on stock price. Indeed, if you'd bought shares on this day 10 years ago, you'd have enjoyed a nifty 31% annualized return. Not too shabby.
Many activists are concerned about the extent to which a small number of corporations control the majority of the world's food production capacity. The Center for Food Safety points out (link opens a PDF) that three companies -- Monsanto, DuPont , and Syngenta -- control 53% of global commercial seed production. They do this on the strength of GE technology.
Activist shareholders are pushing back. According to the Sustainable Investments Institute, shareholders have filed GE-related resolutions with Monsanto, DuPont, and Kraft . These resolutions aren't yet enough to alter fundamental business strategies. The resolution filed with Monsanto this year only garnered 7.6% of the vote, up from 5.7% in 2012. DuPont's annual meeting is forthcoming, but the 2011 resolution won just 6.3% of votes. Kraft has a GE-related proposal on its proxy statement for the first time, scheduled for vote at its annual meeting on May 22. But the number of these resolutions is on the rise, and it's becoming harder for companies to ignore them.