Investors drove down the price of Monsanto shares by 4 percent on Friday as South Korea joined Japan in suspending imports of U.S. wheat after an unapproved strain of genetically modified wheat was discovered in a field in eastern Oregon.
The strain of wheat, designed to resist harmful effects from Monsanto’s Roundup weedkiller, was never commercially developed by the St. Louis-based agriculture giant in large part because wheat growers did not want to risk retaliation from their biggest export markets.
Fields used to test new crop varieties are burned and checked for surviving crops. So the mysterious appearance of the Monsanto wheat has raised questions about how the strain traveled there and whether it is lurking in the commercial wheat crop.
As a precaution, South Korea, which last year bought about half of its wheat imports from the United States, said it would halt purchases while it runs tests this weekend on wheat and flour that it has already imported. The European Union is also testing supplies.
“This is an embarrassment for Monsanto, not as much with the public as it is with food companies, ” said Gene Grabowski, executive vice president of Levick, a communications and public relations firm. Grabowski, a former senior executive at the Grocery Manufacturers Association, said cereal and other food product firms selling in Japan or Europe haven’t wanted to go to the expense of making sure their wheat sources were free of genetic engineering.
“I was in board meetings where I remember food company CEOs who were very concerned about the idea that Monsanto was pushing for approval for biotech wheat,” he said. “They didn’t want it because they already had their hands full dealing with repercussions of biotech corn and soy.”
But Monsanto, which is still testing strains of gene-altered wheat in Hawaii and North Dakota, relies heavily on genetically modified (GM) seeds that make up anywhere from 80 percent to more than 90 percent of U.S. corn, soybean and cotton crops.
“GM technology is extremely important for Monsanto,” said Frank Mitsch, an analyst with Wells Fargo. “Fully three-quarters of company profits are coming from those three crops driven in large part by the GM technology.”
In addition to their widespread adoption in the United States, genetically modified corn and soy seeds are spreading in Latin America, especially in Brazil and Argentina, Mitsch said.
Though there have been widespread protests about genetically modified foods, many lawmakers in Congress support alteration of crops. Sen. Debbie Stabenow (D-Mich.), chairman of the Senate Agriculture Committee, in 2011 hailed the Agriculture Department’s decision to deregulate genetically modified alfalfa.
“Alfalfa was one of nearly two dozen genetically modified crops awaiting USDA evaluation and approval — a bottlenecked process that hinders growth and progress,” she said in a statement. (Stabenow received $570,515 from agribusiness political action committees in 2012; her spokesman did not return calls on Thursday or Friday.)