JULY/AUGUST 1990 - VOLUME 11 - NUMBERS 7 & 8
C O R P O R A T E P R O F I L E
by A.V. Krebs
The corporation which conceived the slogan "Without chemicals, life itself would be impossible," has a new focus. Currently, the St. Louis-based Monsanto Company is aglow with the wonders of biotechnology. Now the company asserts that it "is developing a way to use Mother Nature to modify organisms to serve us better."
Started in 1901, Monsanto grew through most of this century as a commodity chemical manufacturer, selling chemicals to other companies, which used them to make other products such as detergents. By the beginning of the 1980s, however, Monsanto executives decided that contracting markets, rising prices for petroleum (a prime component of many chemicals) and competition from oil companies made Monsanto uncompetitive in the industry. 'Between 1980 and 1987," company Chairman and Chief Executive Officer Richard Mahoney states, "we sold or shut down $4 billion worth of businesses, ranging from basic oil and gas exploration operations with most of their derivative chemicals, to businesses involving other products like polystyrene plastics, where our market position was inadequate." The percentage of company assets tied up in commodity petrochemical businesses fell from 30 percent to approximately 2 percent.
The company's current principal industry segments are in crop chemicals, animal sciences, chemicals, capital equipment, NutraSweet and pharmaceuticals.
Monsanto does business all over the world and aspires to become a genuine "global company," according to Mahoney. "In time, if we do our job right, we estimate that Monsanto's total business will be split roughly 50-50 between the United States and international markets," " he says. The company's production facilities are already widely dispersed. In addition to its main offices and research laboratories in the St. Louis area, Monsanto has research and production facilities in 19 states. Abroad, it has facilities in Argentina, Australia, Brazil, Belgium, Canada, France, Japan, Mexico, Norway, Puerto Rico and the United Kingdom. It employs 42,000 people worldwide.
In reorienting its operations, Monsanto has thrown its resources into research and development, hoping to take the lead in the emerging biotechnology field. "Research and development isn't part of the strategy. Research and development is the strategy," Mahoney emphasizes.
Monsanto executives believe enormous potential exists to exploit the new tools of the biological sciences. "Two years from now every crop in the world will be easily manipulated," declares Robert T. Farley, who is in charge of the company's plant molecular biology group. "Ten years from now, in some plants we'll know every gene, every protein, every function. The door is wide open. There are no longer any technical restraints."
Monsanto's scientists are predicting the first of its genetically engineered plants will be on the market by 1994 or 1995. Already the company has developed a variety of crops � tomatoes, potatoes, alfalfa, tobacco and cucumbers � that are resistant to viral infections. In addition, they have altered cotton, tomatoes and potatoes with bacterial genes that produce proteins fatal to budworms, boil worms and other pests.
Monsanto's emphasis on biotechnology comes in the face of the imminent expiration of two of its most important patents � a lucrative herbicide sold under the ROUNDUP label and the aspartame low-calorie sweetener, NutraSweet. The company has already begun funneling over $1 billion of its corporate capital into biotechnology.
Topping Monsanto's research and marketing agenda is Bovine Growth Hormone (BGH), a genetically engineered bacteria, which, when injected into cows twice a month, purportedly increases milk yields from 10 to 25 percent (see "The Chemical Jungle," Multinational Monitor, May 1989). Also on the corporation's menu of new products is Simplesse, a blend of milk and egg-white protein used in the company's fat-free "Simple Pleasure" ice cream.
Sales of these two new products have been forecast at $100 million to $200 million yearly for BGH and $300 to $500 million for Simplesse.
Monsanto sees the sales of these two products supplementing and possibly eventually replacing ROUNDUP, which had sales of $1 billion in 1989, and aspartame, which, under the labels of NutraSweet and Equal, generated sales of $869 million last year. In 1989, these two products and the anti-hypertension drug Calan SR ac-counted for 20 percent of Monsanto's sales and approximately 40 percent of its profits, according to the Wall Street Journal. While Monsanto's 1989 sales rose only 4.7 percent to $6.68 billion, company profits nearly tripled, going up some 15 percent to $679 million.
The company's gamble on biotechnology is not without risks, however. Just as the chemical industry earned plaudits from financial analysts but harsh criticisms from environmentalists, so too is biotechnology being subjected to searing attacks by public interest advocates. But unlike the case of the chemical industry, social critics of biotechnology are emerging at the birth of the new industry, and may exert significant influence over its future.
The expanding movement to ban the use of BGH by spotlighting its dire economic and health effects on dairy farmers and consumers, for example, makes the product's future uncertain.
Uncertainty surrounding BGH, in fact, reflects the indeterminate state of the entire industry. "I've con-tended for some time," states Paul T. Leming of Morgan Stanley & Co.'s Equity Research Department, "that BST [BGH] is the litmus test of biotechnology products getting into the human food chain."
Public health experts such as Dr. Samuel Epstein, University of Illinois professor of environment and occupational medicine and one of the first critics of BGH-produced milk, have argued strenuously against the introduction of BGH. Epstein warns that "cell-stimulating growth factors" such as BGH could induce premature growth and breast stimulation in infants and possibly promote breast cancer.
Wisconsin Secretary of State Doug LaFollete, in an Au-gust 1989 letter to the FDA's Frank Young, complained that "a few chemical companies are willing to endanger the health of millions of Americans who take for granted the safe, wholesome quality of our milk supply."
Family farm advocates denouce BGH as well, claiming it is a threat to the family farm and a boon to corporate agribusiness. "Studies indicate synthetic BGH will favor bigger and bigger dairy operations," says John Hathaway, co-chair of the National Family Farm Coalition's dairy committee. "The most productive states � Wisconsin, California and New York � already have lost 30 percent of their dairy farms in the last decade. That hasn't brought more efficiency or lower milk prices to the industry, it's only brought more poverty to rural communities and more profits to processors."
Other critics of BGH, such as John Stauber, an associate of the Washington, D.C.-based Foundation on Economic Trends, note that once BGH is successfully introduced, it is bound to create additional markets for the large chemical companies. "Companies ... will clean up on this stuff if it gets approved" he charges. "If the cows get sick, they'll make more money selling antibiotics to the farmers. They just can't lose."
Some food companies and food outlets, such as Ben & Jerry's Ice Cream (urging their customers to "save family farms") and Kroger Co., have already refused to use or sell BGH milk in their products and stores.
Conscious of the growing controversy surrounding BGH, recently banned in Wisconsin and the subject of similar attempts in Vermont, Monsanto has taken aggressive public relations steps. It has enlisted the scientific community and the Food and Drug Administration to gain farmer and consumer confidence and had saturated officials of the American Medical Association with favor-able propaganda. One of the company's tactics, according to the Wall Street Journal, is to insist on using the more scientific � and sanitized � term Bovine Somatatropin or BST, rather than BGH.
Monsanto has also sought to legitimize its BGH efforts bycoopting university experts. The company has enlisted the research help of such land-grant universities as the University of Wisconsin and the University of Vermont in conducting BGH research. These university sponsorships bring more than just additional research. "In the majority of instances where industry interests are involved," charges Epstein, "the only information avaailable to Congress and decision-makers is either developed in-house or by contract with university research arms. This create: an inherent conflict of interest, and a conscious anc subconscious effect on those receiving the funds."
Not so sweet
Monsanto's $2.8 billion purchase of pharmaceutica manufacturer G.D. Searle in 1985 was an important par of its effort to diversify away from commodity chemicals According to Mahoney, the purchase brought Monsantc "both the pharmaceuticals operations we coveted and ar expanding stream of earnings from Nutrasweet sweet ener that could help to see us through the potentially lear years before corporate restructuring began to pay off."
Nutrasweet was in fact Searle's most attractive prod� uct. The world's "first branded ingredient," NutraSweet is sold principally to Coca-Cola and Pepsi. It is used in 161 soft drinks and in some 3000 other products.
By 1989, Nutrasweet had established Monsanto as the clear industry leader in the production of artificial sweetners with a 70 percent market share.
Health and consumer critics charge, however, that aspartame, currently consumed by over 100 million Americans each day in soft drinks and a variety of other products, may cause brain tumors, seizures, mood swings and headaches.
Noting that the FDA has received approximately 3,000 complaints from consumers since it appeared in 1981, Dr. Louis Elias, director of medical genetics at Emory University Medical School, argues that Nutrasweet was not properly tested. "They never asked the right questions about what it does to brain function in humans. They decided without data that you had to have enormous amounts of phenylalanine in your blood before it be-comes a problem. We don't know that's the case."
A 1987 study by a University of Illinois scientist indicated that using Nutrasweet appeared to heighten chances of behavioral disturbances and birth defects. Dr. Reuben Matalona, a pediatrician and geneticist, argues that his test results suggested that large amounts of Nutrasweet could affect small children and millions of people unaware of their body's inability to fully process phenylalanine. High concentrations of the chemical, he suggests, can cause reduced attention span and concentration and memory loss.
Elias and Matalon's concerns are shared by a broad segment of the scientific community. A 1987 General Accounting Office study conducted for Sen. Howard Metzenbaum, D-Ohio, noted that over half of 69 scientists polled voiced concerns about the Nutrasweet's safety.
Petition efforts by James Turner, an attorney with the Community Nutrition Institute, calling on the Food and Drug Administration to ban Nutrasweet as an "imminent hazard to the public health," have been rejected by the federal agency. Turner argues that medical records of a total of 140 Nutrasweet users show them to have suffered from epileptic seizures and eye damage after consuming products containing the artificial sweetener.
Another aspect of the artificial sweetener controversy that has escaped public attention is the monetary cost of the ingredient. For example, in 1987 the wholesale price of aspartame when adjusted to an equivalent amount of sweetening power as sugar was 35 percent higher than sugar and twice as much as high-fructose corn sweeteners, the most widely used sweetening agent.
A poisonous past
In shifting its corporate emphasis to biotechnology, Monsanto leaves behind a sordid record of producing unsafe pesticide and chemical pollutants.
In whose service?
Monsanto was one of the most important players in the chemical revolution which has remade social arrangments in the United States and throughout the world since World War II. That revolution's legacy of poisonous pesticides, toxic dumps and air and water pollution will plague the world for the foreseeable future. The centralizing effect of pesticide-intensive agriculture is also a lasting inheritance.
The biotechnology revolution which Monsanto hopes to lead may offer some beneficial possibilities, but it also has the potential to repeat the destructive experiences of the chemical revolution. In agriculture, for example, "we have the potential to understand biological systems ... as never before, such as understanding the entire cycle of how pests attack crops and how crops respond," " says Jack Doyle, author of Altered Harvests and director of Friends of the Earth's Agriculture and Biotechnology Project. But new technical capabilities are not being used to develop an environmentally and socially sound sustainable agriculture. "The kind of biotechnology that Monsanto has embarked upon is silver-bullet technology that will pro-long the system of agriculture we have now," warns Doyle.
If biotechnology is to serve the public interest, then it will have to be developed and applied according to a model other than Monsanto's. Because when Monsanto says it "is developing a way to use Mother Nature to modify organisms to serve us better," the "us" really refers to Monsanto, not society. ^
A.V. Krebs is Director of the Corporate Agribusiness Project and author of the forthcoming book, The Corporate Reapers: From Seedling to Supermarket.
Research assistance provided by Nadav Savio.