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7-Business: Monsanto and Syngenta shares gain even as EU opposes GMO seeds



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TITLE:  Monsanto, Syngenta Shares Gain Even as EU Opposes GMO Seeds
SOURCE: Bloomberg, USA, by Kotaro Miyata
        http://www.bloomberg.com/apps/news?pid=10000085&sid=ahZvmUmNM9Z8
DATE:   07 Mar 2006

------------------ archive:  http://www.genet-info.org/ ------------------


Monsanto, Syngenta Shares Gain Even as EU Opposes GMO Seeds

March 7 (Bloomberg) -- Genetically modified food, shunned by consumers in
Europe, is winning acceptance in emerging markets. Seedmakers such as
Monsanto Co. and Syngenta AG are reaping the rewards.

Shares of both companies reached records in recent weeks even as the
European Union rejected calls to open its market to seeds that are
genetically altered to resist pests and diseases. Demand from countries
such as China is helping to offset slower sales in the developed world,
said Nick Robinson, who helps manage $2 billion at Aberdeen Asset
Management in Philadelphia.

``The world has to wake up to the fact that there are food shortages out
there,'' said Robinson, who owns shares of Dow Chemical Co., which also
makes genetically modified seeds. ``You can be reasonably confident''
that seedmakers will benefit from demand in developing countries.

Shares of St. Louis-based Monsanto, the world's biggest producer of
genetically modified seeds, have gained 13.5 percent in 2006, reaching a
record on March 3. Syngenta, whose products include corn and soybean
seeds, closed at an all-time high Feb. 22. The Basel, Switzerland-based
company's shares are up 13 percent this year. Morgan Stanley Capital
International's World Index, a measure tracking stocks worldwide, is up
4.3 percent.

Monsanto on Feb. 14 said earnings in the fiscal year ending August will
be at the upper end of its forecast range as farmers plant more bio-
engineered corn such as its Roundup Ready herbicide- resistant seed.
Syngenta on Feb. 9 said profit advanced 35 percent last year, helped by
an increased share of the North American seed market.


Beating the Pack

The companies' shares have outperformed those of competitors such as
DuPont Co., the biggest maker of corn and soybean seeds, and Germany's
Bayer AG, the world's second-largest maker of crop chemicals.

Monsanto and Syngenta make all their sales in agricultural products,
while the other three companies have chemical businesses that are getting
hurt by rising oil prices.

Oil accounts for as much as 60 percent of chemical makers' raw material
costs, according to Credit Suisse. Shares of DuPont, based in Wilmington,
Delaware, have dropped 4.6 percent this year and Midland, Michigan-based
Dow's stock has slipped 0.3 percent. Bayer, based in Leverkusen, Germany,
has declined 8.2 percent.

Seedmakers' shares aren't cheap. Monsanto sells for 41 times the
company's profit for the past year, above the price-earnings multiple of
18 for the Standard & Poor's 500 Index. Syngenta fetches 21 times
earnings versus 16 times for the Dow Jones Stoxx 600 Index.


Growing Market

The global market for genetically altered crops may rise 4.8 percent to
$5.5 billion this year, according to the International Service for the
Acquisition of Agri-biotech Applications, a non- profit group that
provides farm technology to developing nations to alleviate poverty.

The use of biotechnology seeds will accelerate in the next 10 years as
farmers in emerging economies such as China seek more reliable harvests,
according to the organization, which has its U.S. headquarters at Cornell
University in Ithaca, New York.

Argentina and Brazil are the biggest producers of genetically modified
crops after the U.S., according to the International Service for the
Acquisition of Agri-biotech Applications. China is the fifth-largest.

More than 800 million people globally are undernourished, according to
the United Nations. That's equivalent to 12 percent of the world's
population. About 90 percent of the hungry live in Asia and Africa, UN
data show.


Health Effect?

Nobel Peace laureates Norman Borlaug and Jimmy Carter wrote in the Wall
Street Journal in October that opposition to advances in agricultural
science may lead to suffering and death, especially in Africa.

European governments including Germany and France, as well as
environmental groups such as Greenpeace International, have sought to
curb the use of genetically modified seeds, saying the crops harm human
health and the environment.

The EU rejected calls for a more open market, even after the World Trade
Organization ruled last month that the European bloc's ban on seed
imports didn't have adequate scientific evidence to justify it.

``The safety issue surrounding GM food isn't going to go away,'' said
Aberdeen's Robinson.

The U.S., which accounts for 55 percent of the world's genetically
modified crops by acreage, insists that the seeds are safe and shouldn't
be distinguished from conventional ones.

Consumers are skeptical. Americans opposed to gene-altered food
outweighed those in favor by a 2-1 ratio, according to a November survey
by the Pew Initiative on Food and Biotechnology, a Washington-based
research group. The EU in June published a report showing that more than
half of its 450 million citizens thought genetically modified food was
dangerous.


Cultivating Profits

The lack of enthusiasm hasn't prevented a surge in earnings for seedmakers.

Syngenta, formed in 2000 from a merger of the farm chemicals units of
Swiss drugmaker Novartis AG and the U.K.'s AstraZeneca Plc, on Feb. 9
increased its stock buyback program and said it will return $800 million
to shareholders through dividends.

``It's a cash machine,'' said Jan Leroy, who helps manage $7.2 billion
including Syngenta shares at Petercam Asset Management in Brussels. ``The
company is well positioned for growth in Latin America and Asia.''

Monsanto's earnings will rise 17 percent this year and 22 percent in
2007, based on the average analyst forecast compiled by Thomson Financial.

For all the debate in Europe about the safety of genetically modified
foods, consumers eventually may embrace them because they're cheaper,
regardless of what surveys show, according to Peter Braendle, a fund
manager at Swisscanto Asset Management in Zurich.

Shoppers ``will buy the cheaper product, even if it's genetically
modified,'' said Braendle, who helps manage $44 billion and owns shares
of Bayer. ``They might still tell you they're opposed'' to GM food.


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