Here's something you don't see every day: A $65-billion enterprise, one of the largest in the United States, taking the trouble to write a lengthy news release announcing that it's spending $660. That's $660, without “million” attached to it.
But then, Monsanto is not your usual company when it comes to matters of public image. It's a defensive one, and for good reason. Few businesses are regarded with as much suspicion by their customers. Barb Glen, who edits the Western Producer, the Prairies' top farm newspaper, says a “sizable faction” of her readers view Monsanto as an evil giant – “sort of the poster boy” for what's bad about corporate agribusiness.
In farm country, Monsanto's critics are occasionally turned into folk heroes. So it was with a septuagenarian farmer from Saskatchewan named Percy Schmeiser, who fought a decade-long battle with the St. Louis company over its promotion of genetically modified canola seeds. The case became a cause célèbre. Poets and playwrights weighed in, and a Montreal theatre company staged a drama about it. A Swedish philanthropist awarded Mr. Schmeiser and his wife an “alternative Nobel” prize. Ms. Glen says her newspaper has written no fewer than 50 stories about the saga since 1999.
The first instalment in the legal arena went all the way to the Supreme Court, with Monsanto winning. In the second, Mr. Schmeiser sued the company over canola plants that he said came from Monsanto seeds that had blown on to his fields. So when he agreed to settle the case in March for a measly $660 – the company was going to make sure the world knew about it.
Is Big Agribusiness the new Big Tobacco? Not quite. But it's starting to resemble it: big PR headaches, big questions, and above all else, big profits. While food prices leap upward and people go hungry in the poorest food-importing nations, giant companies in the middle of the food chain are minting money.
Monsanto, in the 12 months that ended Feb. 29, turned an operating profit of $2.5-billion (U.S.), roughly three times what it earned in fiscal 2004. Archer-Daniels-Midland's (ADM) operating profit has roughly doubled in that period. Tractors are suddenly a hotter showroom item than Mini Coopers; Deere might bust through the $3-billion mark in operating profit before long. In 2001, the last time the U.S. had a recession, it made about $350-million.
Are these guys to blame for the jump in global food prices? No. But it's easy enough to argue they are contributing to it. Take ADM. Rising prices for grain are a profit-making opportunity for its grain handling and fertilizer businesses. Yet it's also helping to cause some of that price volatility: It's the largest U.S. producer of ethanol, the expanding production of which is one factor behind the surge in food costs.
It's anyone's guess how big an impact biofuels are having. The U.S. Department of Food and Production estimates they are responsible for 20 per cent of the increase, which is why some U.S. politicians, including Republican presidential candidate John McCain, want to suspend new rules that are designed to force a fivefold increase in ethanol production by 2022. ADM, like the rest of the ethanol industry, is against anything that would slow this.
Tough questions are now being asked about the huge government subsidies that ethanol relies on, and whether there is even any environmental benefit to grinding up thousands of square miles of corn to make fuel. Good. But U.S. voters ought to also be asking how sensible it is for their government to impose huge tariffs to keep out Brazilian ethanol, which is made from sugar and makes far more sense in many ways than corn ethanol. Aside from buying some votes in the corn belt, why protect ADM from the competition?
The longer the food crisis goes on, the harder it will be for the big agrifood companies to avoid taking some blame for it. That might be unfair. Monsanto, for instance, spends hundreds of millions ($780-million last year) on research and development; much of the money goes to developing new strains of genetic corn, soybeans and other crops that better resist drought or pests, or squeeze more grain from every hectare. But they do a crummy job of explaining this.
A little more transparency, and less defensiveness about their critics, might help Big Agribusiness persuade the public that they can actually be part of the solution to food shortages.
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