Deutsche Bank doubts GM crop prospects

Financial analysts predict "pariah" status for GMOs, falls in share values for seed firms

Deutsche Bank financial analysts have issued a stark warning that continuing public hostility to genetically modified (GM) crops could derail large parts of the agricultural biotechnology industry. The research report by staff of Deutsche Bank Securities in New York in May appeared on an internet discussion group two days ago, since when several UK newspapers have covered the story. Entitled "GMOs are Dead", the document predicts that GMOs "once perceived as the driver of the bull case for [agricultural crops such as maize and soya] will now be perceived as a pariah". The analysts see particular pressure emerging from Europe, where they say that food processors are now paying premiums for non-GM crops rather than the other way around. The result, they claim, is that "value added" is becoming "value detracted," leading potentially to an "earnings nightmare" for seed firms such as Pioneer Hi-Bred and Monsanto and a share "valuation hit for virtually all companies connected with GMOs". Even "output traits," the expected second generation of GM crops carrying specific consumer benefits, are predicted to be at risk from the trend. Overall, the analysts conclude, "from a three-year perspective, GMOs are a policy liability".

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