Monsanto controversy

374 Part 5: Cases

Case 5

Monsanto: A Growing Controversy*

INTRODUCTION

When you think of Monsanto, the phrase genetically modified likely comes to mind. The Monsanto Company is the world’s largest seed company, with sales of $13.5 billion. It spe- cializes in biotechnology, or the genetic manipulation of organisms. Monsanto scientists have spent the last few decades modifying crops—often by inserting new genes or adapt- ing existing genes within plant seeds—to meet certain aims, such as higher crop yields or insect resistance. Monsanto develops genetically engineered seeds of plants that can sur- vive weeks of drought, ward off weeds, and kill invasive insects. Monsanto’s genetically modified (GM) seeds have increased the quantity and availability of crops, helping farmers worldwide increase food production and revenues.

Today, 90 percent of the world’s GM seeds are sold by Monsanto or companies that use Monsanto genes. Yet Monsanto has met its share of criticism from sources as diverse as governments, farmers, activists, and advocacy groups. Monsanto supporters say the com- pany creates solutions to world hunger by generating higher crop yields and hardier plants. Critics accuse the multinational giant of attempting to take over the world’s food supply and destroying biodiversity. The announcement that Bayer AG is acquiring Monsanto for $66 billion has intensified these concerns because the acquisition would create a company that would command over one-fourth of the world’s seeds and pesticides market. Since biotechnology is relatively new, critics also express concerns about the possibility of nega- tive health and environmental effects from biotech food. These criticisms have not kept Monsanto from becoming one of the world’s most successful businesses.

This analysis first looks at the history of Monsanto as it progressed from a chemical company to an organization focused on biotechnology. It then examines Monsanto’s cur- rent focus on developing GM seeds, including stakeholder concerns regarding the safety and environmental effects of these seeds. Next, we discuss key ethical concerns, includ- ing organizational misconduct and patent issues. We also look at Monsanto’s corporate responsibility initiatives. We conclude by examining the challenges and opportunities that Monsanto may face in the future.

*This case was prepared by Jennifer Sawayda, Danielle Jolley, and Annalisa LaRue for and under the direction of O.C. Ferrell and Linda Ferrell. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material © 2019.

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Case 5: Monsanto: A Growing Controversy 375

HISTORY: FROM CHEMICAlS TO FOOD

Monsanto was founded by John E. Queeny in 1901 in St. Louis, Missouri. He named the company after his wife, Olga Monsanto Queeny. The company’s first product was the arti- ficial sweetener saccharine, which it sold to Coca-Cola. Monsanto also sold Coca-Cola caffeine extract and vanillin, an artificial vanilla flavoring. At the start of World War I, company leaders realized the growth opportunities in the industrial chemicals industry and renamed the company The Monsanto Chemical Company. The company began spe- cializing in plastics, its own agricultural chemicals, and synthetic rubbers.

Due to its expanding product lines, the company’s name was changed back to the Monsanto Company in 1964. By this time, Monsanto was producing such diverse products as petroleum, fibers, and packaging. A few years later, Monsanto created its first Roundup herbicide, a successful product that propelled the company even more into the spotlight.

However, during the 1970s Monsanto encountered a major legal obstacle. The com- pany had produced a chemical known as Agent Orange, which was used during the Vietnam War to quickly deforest the thick Vietnamese jungles. Agent Orange contained dioxin, a chemical that caused a legal nightmare for Monsanto. Dioxin was found to be extremely carcinogenic, and in 1979 a lawsuit was filed against Monsanto on behalf of hun- dreds of veterans who claimed they were harmed by the chemical. Monsanto and several other manufacturers agreed to settle for $180 million.

In 1981 Monsanto leaders determined that biotechnology would be the company’s new strategic focus. In 1986 Monsanto successfully spliced bacterium DNA into a seed. The bacterium was lethal to certain types of insects that feed on corn, potatoes, and cotton. The quest for biotechnology was on, and in 1994 Monsanto introduced the first biotech- nology product to win regulatory approval. Soon the company was selling soybean, cotton, and canola seeds engineered to be tolerant to Monsanto’s Roundup herbicide. Many other herbicides killed good plants as well as the bad ones. Roundup Ready seeds allowed farm- ers to use the herbicide to eliminate weeds while sparing the crop.

In 1997 Monsanto spun off its chemical business as Solutia, and in 2000 the company entered into a merger and changed its name to the Pharmacia Corporation. Two years later, a new Monsanto, focused entirely on agriculture, broke off from Pharmacia, and the companies became two legally separate entities.