Tainted: Academies of Science GMO Report

The report issued today from the Academies of Science which essentially stated that GMOs in our food supply are safe for humans to consume came under fire by several consumer advocacy groups. The media coverage of the report can easily be found, and in fact, USA Today did fair and balanced overviews of both sides of this argument.

The focus of this commentary on my own blog here is to not delve into the specifics of the report from this organization, but rather to focus on the facts and implications that still remain in the “great GMO debate” in America. Most of you know as readers of my prior work on the topic of GMOs that I am very strongly anti-GMO. That stance has been honed by researching tons of scientific studies and empirical data from trusted sources and reading accounts of the effects of herbicides such as Roundup and their impact on the soil and crops in our country over a period of roughly 20 years.

Despite what this report released today states, GMOs are not safe for humans to consume, products such as herbicides and pesticides have caused all sorts of illnesses in children and adults. The use of genetically engineered seeds and other products in our agricultural production processes has a direct correlation to increased incidences of gastrointestinal, autoimmune, cancers, and other diseases.

Several other consumer advocacy groups and others involved in the food industry agree with my view on this report and on this situation. The reason: the Academies of Science report is tainted, it is skewed because the scientists and other members of the organization are linked with the large biotech companies and the agricultural production giants such as Monsanto. This effectively caused one group, Food & Water Watch (which is a respected consumer advocacy group) to call the results “watered down”.

This is not the first time, nor will it be the last, that the biotech and big agricultural giants like Dow Chemical and Monsanto got involved to directly or indirectly influence a report or a legislative measure when it comes to GMOs. I have written numerous articles over the past few years on this same subject with political donations being linked to high powered politicians who then change the course of a particular bill so that it is favorable to the big business interests involved.

This should come as no surprise to anyone in the audience because the genetic engineering of food has always at the core been inherently about pure greed. The ability to grow more product or make the food last longer so that stores had less perishable or expired inventory has been the catalyst behind a “make it GMO or bust” mentality.

The evidence of that is clear in the U.S. according to reports published in USA Today, Yahoo! News, and other trusted sources the following numbers for 2015 are staggering with regard to the prevalent nature of genetically engineered produce in our food supply. I have listed below the percentage of each crop that is genetically engineered:
Sugar beets = 99%
Soybeans = 94%
Cotton = 94%
Feed corn = 92%

I have written previously about the pervasive and persistent nature of the GMO problem in the U.S. based on these numbers above. It has created conditions where now the staple products are genetically modified and the soil has been degraded to a point where it is not capable of growing non-GMO produce. The other issue which is just as troubling is that the seed used in so many crops are genetically modified and two main companies – Dow and Monsanto control a huge market share in the seed business for our food supply.

The amount of feed corn that is genetically modified is also a tremendous problem because it has a direct impact on so many areas of agriculture which impacts the food that is provided to many of our sources of animal protein. In turn that creates a scenario where it is very difficult to avoid GMO containing products in your given daily food intake.

In any case, despite your view on the situation, God created all that we have been given here on Earth, every living thing, the soil, the seeds, the water, and the Sun. Then mankind came along and decided that they knew better than God and they decided to alter what God created in the name of enhanced profit margins. There are many other people and groups out there that also agree with this component of my argument against GMOs.

The incidences of increased levels of autoimmune diseases such as celiac, Parkinson’s disease, dementia, certain types of cancers, and other gastrointestinal diseases all jumped up in the past 20 years since man decided that they would alter the crops and the seeds and the soil with chemical ingredients and herbicides.

I cannot emphasize enough that the ties to the Academies of Science and the biotech and agricultural products suppliers casts a huge cloud of suspicion over the validity of the report issued today. It certainly was a far cry from an independent analysis on this issue.

National Geographic put together a really informative and well done piece on the effect of Roundup brand herbicide on the crops and the soil in the American farming system. The results, and the amount that we do not know about such a widely used chemical are alarming.

The final subtopic I will touch on with regard to this issue is the labeling of GMO product which is a debate that I have covered vigorously over the past few years as well. The consumer groups today stated that the majority of Americans still believe strongly that they have the right to know if the food they are consuming is GMO containing. That fight over labeling standards and a national protocol for labeling food products is not going away with this announcement today.

The basic premise being that even if a group states that GMOs are safe, the majority of people, whether they believe those ingredients are bad or unhealthy or not, still maintain that they should know whether the product they are going to purchase contains genetically engineered components.

The fact that so many of the staple food crops that I referenced earlier in this piece are genetically engineered creates a potentially very negative situation for certain large food producing companies such as Nestle and ConAgra just to name two. The consumer will most definitely think twice about buying a can of soup with genetically modified soy in the ingredients.

The federal government has to get involved with a standard protocol because each individual state cannot have their own separate ways of declaring GMOs on labeling for grocery products, it will become a complete nightmare for interstate commerce.

In the end, the report today did nothing to quell the debate over GMOs in the food we eat, instead it stoked the fire. This debate will continue because there is a mountain of evidence to refute what this report claimed today. The trend toward healthy and fresh/ organic eating habits in the American consumer will not change because of this report today. The distrust of the government, the disdain for lobbyists, and the general skepticism towards large corporations will continue in America, and in fact was emboldened by this report today. I urge you to educate yourself on this topic because it can have a dramatic impact on your health and that of the rest of your family. This report cannot change that fact.

Creating A Duopoly: The Dow – DuPont Merger

The $130 billion mega-merger announced late last week between Dow and DuPont is just the latest agreement in what has become an environment of increasing consolidation across all industrial and commercial markets. This deal is unique because once the merger takes effect then the companies plan to split into three separate publicly traded companies.

 

The rationale behind the three-way split is for tax efficiency purposes and will take nearly 24 months to complete just one phase of this complex transaction, which some on Wall Street believe will invite further regulatory scrutiny. In fact, regulators have been hitting the pause button on several merger deals in recent weeks. The most high profile being the Staples merger with Office Depot which is being blocked currently by the FTC (Federal Trade Commission) creating a saga where most recently the Staples-Office Depot legal team has filed a countersuit which is expected to be heard in federal court in March 2016.

 

Those who track and analyze M&A activity are bracing for another contentious scenario with the proposed merger between Dow and DuPont, two of the oldest and largest American companies in the chemical and agricultural products industries. The obvious prevailing theory being that if the FTC is giving Staples a huge amount of pushback over their proposed merger in the office supply industry, just imagine the type of scrutiny they could enact on the largest merger deal ever in the chemical space.

 

The Importance of EBITDA

 

The CEOs of both companies, Dow and DuPont respectively, were on all the financial cable network shows last week trying to get their corporate PR version of why the merger should move ahead in an attempt to set the narrative before the FTC and other regulators provide the public with their version.

 

In particular they were pressed by the financial media as to the rationale behind the merger followed by the split into three companies. The concerns are due to the regulatory process involved in that type of complicated transaction as well as the sheer amount of time required to complete the entire transition into three distinct and publicly traded companies.

 

Both CEOs explained that the most tax efficient method was to complete the transaction in this manner. In their view this protocol could actually reduce overall regulatory scrutiny and anti-trust concerns because the mega conglomeration would essentially be split into three parts.

 

The concerns from the side of the average stock holder, big investor, or the Wall Street firms analyzing this deal hinge on what this type of transaction will mean for earnings growth. This measurement of performance is always paramount, but takes on added significance if this deal gets cold water thrown on it by the FTC or other ant-trust regulatory bodies.

 

In order to address some of that potential reticence the two CEOs from both of these iconic American corporations discussed the importance of EBITDA to this overall transaction. I interpreted this emphasis to be driven by the strong value of the US Dollar which has stripped away the revenues for giant companies such as Dow and DuPont, so shifting the focus to EBITDA is being done to demonstrate the cash flow overall for the combined entity prior to the 3 way split.
In my own view, I would caution investors on that rationale because EBITDA can be manipulated in a variety of ways to present an unrepresentative picture of the financial health of any given business. I am in no way insinuating that this is the case with Dow-DuPont, no evidence of that exists at this point, but as a general rule of thumb I would tread lightly and not use that one measurement to determine the overall viability of a company.

 

Moreover, the bigger issue for this proposed Dow – DuPont entity is twofold:

  1. The flattening curve in the commodities pricing market
  2. The potential creation of a “duopoly” in the seed industry

 

The decreasing demand for agricultural products is also an issue here but the commodities markets that both companies have large stakes within have been beset by falling prices.

 

The creation of a “duopoly” has been mentioned in other media reports regarding this mega-merger. The eventual 3 way split into three companies would result in an agricultural products entity that would combine Dow and DuPont’s seed and crop protection product lines.

 

The major anti-trust “red flag” would result because in that scenario Dow-DuPont and Monsanto, just two companies would control a huge portion of that industry segment. They would be able to set pricing and enact inventory controls that could have enormous consequences to farming and access to commodity products and the food supply. That could be the cause of significant regulatory concern especially if the public is informed and expresses those concerns to their elected representatives in Washington.

 

Three Way Split

 

The three way split of the company, provided the merger is approved by the summer of 2016, should take place according to the reports anywhere from 18 to 24 months from that point. The three companies proposed in this merger announcement are:

  1. Agriculture Company – see above explanation
  2. Material Science – combines product lines from material sciences and performance plastics divisions and performance materials/chemicals
  3. Specialty Products Company – nutrition, health, industrial bioscience, safety, and communications product lines merged for this company to form

 

This merger is seen as necessary for the ultimate survival of both companies between the commodity market issues I raised earlier to the strengthening of the US Dollar, the unpredictability of agricultural product sales, and falling crop prices; Dow and DuPont were individually facing some difficult hurdles to their future growth.

 

DuPont was rumored to have been mulling a variety of staff reduction plans in order to slash costs due to the negative impact of market conditions on their business units. Meanwhile, Dow was said to be reviewing the repositioning of some of their product lines in the marketplace as well as exploring other options in the event that the proposal to merge with DuPont was met with resistance.

 

Final Analysis

 

In my view, as one who has reported on mergers and acquisitions across many industry types and for a few large news organizations, this particular transaction will face some significant regulatory hurdles on the path to approval. The rationale behind that reality exists on a multitude of levels, from the obvious (the sheer size of the two conglomerates involved) to the subtle (the impact on the commodities markets for certain agricultural products).

 

The most pressing issue involved is the potential for a duopoly in the seed business with the potential merged Dow-DuPont and Monsanto. The consolidation of market share of any single industry into the hands of two corporations is usually, but in no way an absolute, death knell for M&A activity on this scale.

 

In recent history some exceptions to this rule have been made but the seed business is a different scenario and it will be viewed in that regard during the regulatory process. It may not necessarily scuttle the deal, but a revision to how that proposed merged business unit will operate will likely be the resolution. The sale of current Dow or DuPont brands or business units to other competitors is also a likely outcome in order to usher the merger through the regulatory approval process.

 

In addition, it is important to note that this merger, if approved, will not completely insulate the current staff head count. The financial news media has reported that job cuts from various divisions of both companies will come in order to position “the books” from an accounting perspective and enhance the profitability of this acquisition.

 

It is also my opinion that the merger into a one company followed by the 3 way split into multiple publicly traded entities could likely derail this merger from the way it was intended. The complexities involved in the transaction coupled with the longer period of regulatory review needed for this deal to process successfully are factors in forming my opinion in this regard. That is not to say that will not eventually happen (with this much money involved that seems unlikely) but the manner in which the companies are split may change, and the market conditions will dictate how that will all eventually come to fruition.

 

In the end analysis, this announcement of the proposed merger of Dow and DuPont, two enormous and iconic American corporations, is just the beginning of a lengthy process toward a potential merger. In the interim, we will read and see reports detailing tax efficiency, earnings, commodity pricing, market conditions and a myriad of other terms detailing the road either to consummation or perdition for this merger. It is a sad, stark reminder that even the big fish are not immune to the rough waters of a constantly changing global economy.

 

 

Between The Lines: GMOs and Food Labeling

The announcement today that Congress is considering a bill introduced by Representative Mike Pompeo of Kansas which would nullify the laws in place on the state level regarding the disclosure of GMO ingredients in food products is troubling.

 

My rationale for this viewpoint is different than others in this matter because I still maintain that a federal standard for food labeling is the only practical solution to this issue moving forward. The problem I have with the bill introduced today called the Safe and Accurate Food Labeling Act is that it would remove any mandated disclosure of GMO ingredients in our food products.

 

Mr. Pompeo made remarks today to the media that GMO products are safe and healthy for the consumer, and that is why he maintains that the separate labeling disclosure is not needed. Some experts within both the scientific and environmental protection communities would respectfully disagree with this notion made by the congressman from Kansas earlier today.

 

In fairness to both sides of this issue, scientific study data has demonstrated evidence of potential health problems in both animals and humans with regard to GMO ingredients. The environmental groups are concerned about the chemicals used in the process of growing genetically engineered food ingredients. The Monsanto product Roundup is just one of a number of chemicals used in GM farming that have created issues such as weed resistance.

 

Mountain of Data

 

The scientific data is mounting regarding the negative effects of GMO containing ingredients in food products. One study has linked GMOs in food to 18 million diagnosed celiac disease patients.

 

Another study shows that the before mentioned Roundup product is classified as a “xenoestrogen” which simulates the effect of real estrogen in the human body. The increased levels of this hormone is linked to a higher risk for cancer, infertility, and thyroid conditions.

 

Moreover, the higher levels of estrogen and glyphosate in genetically altered soybeans has been linked to increased cases of breast cancer.

 

Genetically modified foods have been shown to lower crop yields and increase overall pesticide use per a study published in the Journal of Food and Chemical Toxicology. This study and others brought about the push for action in California and Washington state, which I covered in a previous article, where ballot initiatives regarding the use of GMOs fell short of gaining approval by very small margins respectively.

 

In each state, Monsanto, the Grocery Manufacturers Association, and a consortium of large food manufacturers spent millions of dollars on advertising campaigns to defeat these measures.

 

The Future

 

The future of the GMO labeling debate took a step in Congress where the food companies could volunteer to disclose the presence of GMOs in their products. The current backlash against GMOs in our food have caused the American public to look negatively upon those products which contain modified ingredients.

In that light, what food company would voluntarily choose to disclose GMOs in their products? They know that it will effectively decrease the sales of the product, so they will choose to not provide that information, which eliminates any substance from this proposed Congressional bill.

 

Currently, 27 states have proposed legislation regarding the disclosure of GMO containing ingredients in food products. I have stated before that the state-by-state approach will not work, it will cause chaos in our food supply system, and disrupt interstate commerce.

 

The federal system has to provide a universal food labeling solution to this GMO dilemma. The evidence is clear that these products are not good for the health and safety of humans or animals. The solution provided needs to promote a mandatory declaration of any GMO containing ingredients.

 

The sheer cost of the treatment of Americans from various illnesses potentially linked to GMO containing products is reason enough for us to try to resolve this matter.

 

In my view, it should be a fundamental right for us, as Americans, to make an informed choice with regard to GMOs in our food. I hope our government will trust us to do so and provide us the mechanism in which we can determine our own food consumption choices in the future.

 

It is clear, this debate regarding GMOs, regardless of recent Congressional activity, is far from being resolved.

 

(Background information and statistics courtesy of Reuters, CBS News, Journal of Food and Chemical Toxicology, Institute for Responsible Technology, and Global Research.org)