Down but definitely not out, Monsanto's herbicide was just declared a probable carcinogen by a world health body. Photo: Flickr via Mike Mozart.
The United Nations may have just delivered a hard right hook toMonsanto's business. The International Agency for Research on Cancer, the U.N.'s cancer research center at the World Health Organization, declared the main ingredient in Monsanto's leading weed-killer Roundup a probable cancer-causing product.
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Because the glyphosate-based herbicide is primarily responsible for almost half of all Monsanto's revenues, or $5.1 billion in 2014, the declaration could have far-reaching implications for the biotech.
Worse, because the herbicide platform is used to strategically support Monsanto's Roundup Ready crops -- which comprise the vast bulk of the balance of its revenue stream -- the health organization's determination stretches across the whole breadth and depth of Monsanto's operations potentially affecting all $16 billion of its revenues.
Although staggered -- the biotech's stock is down 10% over the past month -- don't expect the ruling to be a knockout blow.
Growing like a weedAccording to the U.S. Department of Agriculture, herbicide-tolerant biotech plants were grown on virtually all soybean fields in the U.S. last year, some 94% of the total, and on 89% of all cornfields. The activist group Food & Water Watch found the volume of glyphosate applied to those crops increased almost 1,000% between 1996 and 2012, from 15 million pounds to 159 million pounds, but the rate of increase in usage has been growing in recent years.
Virtually all soybean grown in the U.S. is genetically modified, such as DuPont'sPioneer Hi-Bred variety. Photo: Flickr via United Soybean Board.
One of the arguments in favor of genetically modifying crop seed is that it ought to lead to the reduction in the use of herbicides and pesticides, but Washington State University says farmers growing GMO crops use about 25% more weed-killer than farmers using traditional seeds. That's apparently led to the creation of so-called "super weeds," weeds that have built up a tolerance to the chemicals being sprayed and are able to grow anyway.
It's also resulted insomething of an arms racein agriculture.The USDA recently approved the sale of seeds that are resistant to a different weed-killer manufactured by Dow Chemical , its Enlist Weed Control System,one whose constituent component -- 2,4-D -- is perhaps best known as one half of the deadly Vietnam War-era herbicide Agent Orange. Even without the dioxin that was found in its other component, 2,4,5-T, it's still considered by some to be more dangerous to humans while also been having shown to cause birth defects in animals.
The likelihood that weeds will become resistant to this new weed-killer after it's put into regular use seems high.
Skewing results to fit a narrativeMonsantovigorously defendsits Roundup herbicide, saying the international agency basically reviewed the same studies others looked at when they concluded it was safe, but somehow came to a different conclusion. Yet it also charges the IARC excluded studies that support the position glyphosate is not a human health risk.
We're consumers, too, Monsanto writes, so "safety is a priority for every person who works" here. The biotech insinuates the only way the review process could have found glyphosate a probable carcinogen was because it was biased.
But with the IARC having determined glyphosate is a probable cancer-causing agent -- one step below the risk designation of "known carcinogen" -- the Environmental Protection Agency, which previously said it was safe because "there is inadequate evidence to state whether or not glyphosate has the potential to cause cancer from a lifetime exposure in drinking water," will now revisit the matter.
Feel free to use it at home thoughThe new designation for glyphosate generally only applies toward industrial and commercial applications of Roundup, so the consumer side of the herbicide, which is handled by Scotts Miracle-Gro for Monsanto, is not considered a health hazard. It's the sustained, prolonged exposure to the chemical such as found in commercial agricultural operations that represents the biggest risk (you will also find Dow's 2,4-D herbicide in Scotts popular Turf Builder weed-and-feed lawn care products).
It's not just Monsanto using powerful chemicals around the house, Scotts Miracle-Gro uses Dow Chemicals' powerful 2,4-D too. Image: Scotts Miracle-Gro.
The effect of the U.N. body's determination certainly won't be immediate, as it will merely cause regulatory agencies such as the EPA and USDA in the U.S. to reexamine their methodologies that led to approval. Other countries like Germany, that only just recently deemed the chemical safe, may also take a second look to see if they missed something.
While one of the IARC's researchers noted, the classification of glyphosate, and by extension Roundup, as a probable carcinogen is "just something for people to be conscious of," the real risk for Monsanto comes from potential lawsuits.
Labor unions or trial attorneys advocating on behalf of workers could very well begin suing agri-corporations for exposing them to the chemical, which in turn might cause them to stop buying it. And if farmers aren't buying Roundup, then there's little reason for them to buy Roundup Resistant seed.
Only then would Monsanto's money-maker be in danger, but at the moment the imminent risk to its business seems to be remote.
The article Did the U.N. Just Ruin This $5 Billion Monsanto Business? originally appeared on Fool.com.
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