After hearing that GM crops could potentially increase yields, three farmers in Schmeiser’s region planted fields of Monsanto’s seed. Winds pushed pollen from GM canola into Schmeiser’s fields, and the plants cross-pollinated. The breed he had been cultivating for 50 years was now contaminated by Monsanto’s GM canola.
Did Monsanto apologize? No. It sued Schmeiser for patent infringement — first charging the farmer per acre of contamination, then slapping him with another suit for $1 million and attempting to seize his land and farming equipment. After a seven-year battle, the Canadian Supreme Court eventually ruled against him but let him keep his farm and his $1 million. He was one of the lucky ones.
Schmeiser’s case illustrates how Monsanto is dominating — and terrifying — the agricultural world with secretive technologies, strong-arm tactics, and government approval. According to the Center for Food Safety, Monsanto has filed at least 142 similar lawsuits against farmers for alleged infringement of its patents or abuse of its technology agreement. The company has won 72 judgments totaling almost $24 million.
Agriculture is a big industry in Florida. About $130 billion-per-year big, the second-largest industry behind tourism. Statewide, 9 million acres of farmland are divided into more than 47,500 commercial farms. In fact, Palm Beach County is the largest agricultural county east of the Mississippi River.
According to the USDA, 95,000 acres of corn, 125,000 acres of upland cotton, and 25,000 acres of soybeans have been planted in the state in 2013. With Food and Water Watch warning that nationally, 90 to 93 percent of such crops are genetically modified, Floridians have cause to know what’s lurking up the food chain.
A Biotech Revolution
When you’re good at something, you want to leverage that. Monsanto’s specialty is killing stuff.
When lawsuits piled up, putting a crimp in long-term profitability, Monsanto hatched a less lethal, more lucrative plan. It would attempt to take control of the world’s food supply.
This mission started in the mid-’90s, when the company began developing genetically modified crops like soybeans, corn, alfalfa, sugar beets, and wheat (much of it used for livestock feed). Monsanto bred crops that were immune to its leading weed killer, Roundup. That meant farmers no longer had to till the land to kill weeds, as they’d done for hundreds of years. They could simply blast their fields with chemicals. The weeds would die while the crops grew unaffected. Problem solved.
Monsanto put a wonderful spin on this development: The so-called “No-Till Revolution” promised greater yields, better profits for the family farm, and a heightened ability to feed a growing world.
But there was a dark side. First, farmers grew dependent on Monsanto, having to buy new seed every year, along with Monsanto’s pesticides. The effects on human health were largely unknown — would it harm people to consume foods whose genetic profile had suddenly changed after millions of years? Or to eat the animals that had consumed those plants? What about ripple effects on ecosystems?
But agriculture had placed the belligerent strongman in charge of the buffet line.
Monsanto squeezed out competitors by buying the biggest seed companies, spending $12 billion on the splurge. The company bought up the best shelf space and distribution channels. Its braying of global benevolence began to look much more like a naked power grab.
Seed prices began to soar. Since 1996, the cost of soybeans has increased 325 percent. Corn has risen 259 percent. And the price of genetically modified cotton has jumped a stunning 516 percent.
Instead of feeding the world, Monsanto drove prices through the roof — taking the biggest share for itself. A study by Dr. Charles Benbrook at Washington State University found that rapidly increasing seed and pesticide costs were tamping farmers’ income, cutting them from any benefits of the new technology.
Still, Monsanto was doing its best to make them play along. It offered steep discounts to independent dealers willing to restrict themselves to selling mostly Monsanto products. These same contracts brought severe punishment if independents ever sold out to a rival. U.S. regulators showed little concern for Monsanto’s expanding power.
“They’re a pesticide company that’s bought up seed firms,” says Bill Freese, a scientist at the Center for Food Safety. “Businesswise, it’s a beautiful, really smart strategy. It’s just awful for agriculture and the environment.”
Today, Monsanto seeds cover 40 percent of America’s crop acres — and 27 percent worldwide. The company makes nearly $8 billion per year.
“If you put control over plant and genetic resources into the hands of the private sector… and anybody thinks that plant breeding is still going to be used to solve society’s real problems and to advance food security, I have a bridge to sell them,” says Benbrook.
Seeds of Destruction
It didn’t used to be like this. At one time, seed companies were just large-scale farmers who grew various strains for next year’s crop. Most of the innovative hybrids and cross-breeding was done the old-fashioned way at public universities. The results were shared publicly.
“It was done in a completely open-sourced way,” says Benbrook. “Scientists at the U.S. Department of Agriculture exchanged all sort of seeds with other scientists and researchers all over the world. This free trade and exchange of plant genetic resources was the foundation of progress in plant breeding. And in less than a decade, it was over.”
The first crack appeared in 1970, when Congress empowered the USDA to grant exclusive marketing rights to novel strains — with the exception that farmers could replant the seeds if they chose and patented varieties must be provided to researchers.
But that wasn’t enough. Corporations wanted more control, and they got it with a dramatic, landmark U.S. Supreme Court decision in 1980 that allowed the patenting of living organisms. The decision was intended to increase research and innovation. But it did the opposite, encouraging market concentration.
Monsanto, which declined an interview request for this article, would soon gobble up every rival seed company in sight. It patented the best seeds for genetic engineering, leaving only the inferior for sale as non-GM brands.
Syngenta and DuPont both sued, accusing Monsanto of monopolistic practices and a “scorched earth campaign.” But instead of bringing reform, the chemical giants reached settlements that granted them licenses to use, sell, and cross-develop Monsanto products. (Some DuPont suits still drag on today.)
It wasn’t until 2009 that the Justice Department, working in concert with several state attorneys general, began investigating the company for antitrust violations. But three years later, the feds quietly dropped the case. (They also ignored interview requests for this article.)
Dr. Peter Carstensen, a professor at the University of Wisconsin Law School, said some states were interested in pursuing the case and “some of the staff in the antitrust division wanted to do something, but top management — you say the word ‘patent’ and they panic.”
Set the Lawyers to Stun
Historically, farmers were able to save money on seeds by using those produced by last year’s crops for the coming year’s planting. But because Monsanto owns patents on its genetically modified strains, it forces farmers to buy new seeds every year.
Armed with lawyers and private investigators, the company has embarked on a campaign of spying and intimidation to stop any farmer from replanting his seeds.
Farmers call them the “seed police,” using words such as “Gestapo” and “Mafia” to describe Monsanto’s tactics. The company’s agents fan out into small towns, where they secretly videotape and photograph farmers, store owners, and co-ops; infiltrate community meetings; and gather information from informants. Some Monsanto agents pretend to be surveyors. Others confront farmers on their land and try to pressure them to sign papers giving Monsanto access to their private records.
In one case, Monsanto accused Indiana farmer David Runyon of using its soybean seeds, despite documented fact that he’d bought nonpatented seed from local universities for years. While attempting to pressure Runyon, Monsanto’s lawyer claimed the company had an agreement with the Indiana Department of Agriculture to search his land.
One problem: Indiana didn’t have a Department of Agriculture at the time. Like most Monsanto investigations, the case never went to trial and would appear to be more about intimidation than anything. Runyon incurred substantial costs defending himself without having done anything wrong. In 2006, the Center for Food Safety estimated that Monsanto had pressured as many as 4,500 farmers into paying settlements worth as much as $160 million.
Yet Monsanto wanted even more leverage. So it naturally turned to Congress.
Earlier this year, a little-noticed provision was slipped into a budget resolution. The measure, pushed by Sen. Roy Blunt (R-Missouri), granted the company an unheard-of get-out-of-jail-free card, which critics derisively dubbed “The Monsanto Protection Act.”
There have been some indications of adverse health effects, but Monsanto has largely kept its products from researchers. Long-term studies have been limited, but scientists have found greater prevalence of tumors and digestive problems in rats fed GM corn and potatoes, and digestive issues for livestock eating GM feed. Those who have published studies critical of GM have been besieged by industry-funded critics disputing their finding, assailing their professional reputations, and effectively muddying the water. The feds have never bothered to extensively study GM foods. Instead, they’ve basically taken Monsanto’s word that all is kosher. So organic farmers and their allies sued the company in 2009, claiming too little study had been done on Monsanto’s GM sugar beets.
A year later, a judge agreed, ordering all recently planted GM sugar beet crops destroyed until their environmental impact was studied.
The Monsanto Protection Act was designed to end such rulings. It essentially bars judges from intervening in the midst of lawsuits — a notion that would seem highly unconstitutional.
Not that Congress noticed. Monsanto’s spent more than $10 million on campaign contributions during the past decade — plus another $70 million on lobbying since 1998. The money speaks so loudly, Congress has become tone-deaf.
In fact, the U.S. government has become Monsanto’s de facto lobbyist in countries distrustful of GM safety. Two years ago, WikiLeaks released diplomatic cables showing how the feds had lobbied foreign governments to weaken laws and encourage the planting of genetically modified crops in Third World countries.
Other wires from State Department diplomats ask for money to fly in corporate flacks to lean on government officials. Even Mr. Environment, former Vice President Al Gore, was key in getting France to briefly approve Monsanto’s GM corn.
These days, the company has infiltrated the highest levels of government. U.S. Supreme Court Justice Clarence Thomas is a former Monsanto lawyer, and the company’s former and current employees are in high-level posts at the USDA and FDA.
But the real coup came in 2010, when President Obama appointed former Monsanto Vice President Michael Taylor as the FDA’s new deputy commissioner for foods. It was akin to making George Zimmerman the czar of gun safety.
Trust Us. Why Would We Lie?
At the same time Monsanto was cornering the food supply, its principal products — GM crops — were receiving less scrutiny than an NSA contractor.
Monsanto understood early on the best way to stave off bad publicity was to suppress independent research. Until recently, when negotiating an agreement with major universities, the company had severely restricted access to its seeds by requiring researchers to apply for a license and get approval from the company about any proposed research. The documentary Scientists Under Attack: Genetic Engineering in the Magnetic Field of Money noted that nearly 95 percent of genetic engineering research is paid for and controlled by corporations like Monsanto.
Meanwhile, former employees embedded in government make sure the feds never get too nosy.
Meet Michael Taylor. He’s gone back and forth from government to Monsanto enough times that it’s not a revolving door; it’s a Bat-pole. During an early-’90s stint with the FDA, he helped usher bovine growth hormone milk into the food supply and wrote the decision that kept the government out of Monsanto’s GM crop business.
Known as “substantial equivalence,” this policy declared that genetically modified products are essentially the same as their non-GM counterparts — and therefore require no additional labeling, food safety, or toxicity tests. Never mind that no accepted science backed his theory.
“It’s simply a political calculation invented by Michael Taylor and Monsanto and adopted by U.S. federal policymakers to resist labeling,” says Jim Gerritsen, a Maine farmer. “You have this collusion between corporations and the government, and the essence is that the people’s interest isn’t being served.”
The FDA approves GM crops by doing no testing of its own but by simply taking Monsanto’s word for their safety. Amusingly, Monsanto agrees that it should have nothing to do with verifying safety, says spokesman Phil Angell. “Our interest is in selling as much of it as possible. Assuring its safety is the FDA’s job.”
So if neither Monsanto nor the feds is ensuring that the food supply is safe, who is?
The answer: No one.
We’ve Got Bigger Problems Now
So far, it appears the GM movement has done little more than raise the cost of food.
A 2009 study by Dr. Doug Gurian-Sherman looked at four Monsanto seeds and found only minimal increases in yield. And since GM crops cost more to produce, their economic benefits are questionable at best.
“It pales in comparison to other conventional approaches,” says Gurian-Sherman. “It’s a lot more expensive, and it comes with a lot of baggage that goes with it, like pesticide use, monopoly issues, and control of the seed supply.”
Meanwhile, the use of pesticides has soared as weeds and insects become increasingly resistant to these death sprays. Since GM crops were introduced in 1996, pesticide use has increased by 404 million pounds. Last year, Syngenta, one of the world’s largest pesticide makers, reported that sales of its major corn soil insecticide more than doubled in 2012, a response to increased resistance to Monsanto’s pesticides.
Part of the blame belongs to a monoculture that developed around farming. Farmers know it’s better to rotate the crops and pesticides and leave fields fallow for a season. But when corn prices are high, who wants to grow a less profitable crop? The result’s been soil degradation, relatively static yields, and an epidemic of weed and insect resistance.
Weeds and insects are fighting back with their own law — the law of natural selection. Last year, 49 percent of surveyed farmers reported Roundup-resistant weeds on their farms, up from 34 percent the year before. The problem costs farmers more than $1 billion annually.
Nature, as it’s proved so often before, will not be easily vanquished.
Pests like Roundup-resistant pigweed can grow thick as your arm and more than six feet high, requiring removal by hand. Many farmers simply abandon fields that have been infested with it. Pigweed has infested Florida cotton fields, and farmers are now using old pesticides on top of Roundup to combat it.
To kill these adaptive pests, chemical giants like Monsanto and Dow are developing crops capable of withstanding even harsher pesticides. It’s producing an endless cycle of greater pesticide use at commensurate financial and environmental cost.
“It’s not about stewardship of the land,” says Thomas Earnshaw, sustainable farmer, educator, and founder of Outlaw Farmers in the Florida Panhandle. “The north Panhandle is probably the most contaminated land in the state — because of the monoculture farming with all the cotton and soy, both are “Roundup Ready” [GM crops]. They’re just spraying chemical herbicides, pesticides, and fertilizers into the soil, it’s getting into the water table, and farmers aren’t even making any more money — biotech is.”
Next Stop… the World!
The biggest problem for Monsanto’s global growth: It doesn’t have the same juice with foreign governments as it does with ours. That’s why it relies on the State Department to work as its taxpayer-funded lobbyist abroad.
Yet that’s becoming increasingly difficult. Other nations aren’t as willing to play corporate water boy as America is. The countries that need GM seeds often can’t afford them (or don’t trust Monsanto). And the nations that can afford them (other than us) don’t really want them (or don’t trust Monsanto).
Though the European Union imports 30 million tons of GM crops annually for livestock feed, it’s approved only two GM crops for human consumption. Although Brazil is poised to become the world’s largest soybean exporter on the strength of Monsanto seed, thousands of farmers there are suing Monsanto for more than $600 million after the company continued to charge them royalties two years after the expiration of its patent. Ecuador and Peru have shied away from GM crops. And even in the wake of the 2010 earthquake, Haiti mistrusted Monsanto so much that it declined its offer of seeds, even with assurances that the seed wasn’t GM.
In April, biotech companies took another hit when the European Union banned neonicotinoids — AKA “neo-nics” — one of the most powerful and popular insecticides in the world. It’s a derivative of nicotine that’s quite poisonous to plants and insects. German giant Bayer CropScience and Syngenta both make neo-nics, which are used to coat seeds, protecting crops in their early growth stage. In America, 90 percent of America’s corn crop comes with the coating.
The problem is that plants sweat these chemicals out in the morning dew, where they’re picked up by bees like a morning cup of Starbucks. Last year, a study linked neo-nics to the collapse of bee colonies, which threatens the entire food system. One-quarter of the human diet is pollinated by bees.
The mysterious collapse of colonies — in which bees simply fly off and die — has been reported as far back as 1918. Yet over the past seven years, mortality rates have tripled. Some U.S. regions are witnessing the death of more than half their populations, especially at corn planting time.
Last year’s study indicates a link to Monsanto’s GM corn, which has been widely treated with neo-nics since 2005.
But while other countries run from the problem, the U.S. government is content to let its citizens serve as guinea pigs. Beekeepers, though, are starting to fight back. This year, two separate lawsuits have been filed against the EPA demanding a more stringent risk assessment process and labeling laws for pesticides.
What’s Mine Is Yours
The same worries apply to contamination from GM crops. Ask Frank Morton, who grows organic sugar beet seeds in Oregon’s Willamette Valley and is among the few non-GM holdouts.
In 2010, a federal judge demanded farmers stop planting GM sugar beets. Farmers were surprised to find there was very little non-GM sugar-beet seed to be had. Since being introduced in 2005, Monsanto had driven just about everyone out of the market.
Morton’s farm is just two miles from a GM sugar beet farm. Unfortunately, beet pollen can travel as much as five miles, cross-pollinating other farmers’ fields and, in the case of an organic farmer, threatening his ability to sell his crop as organic and GM-free.
Morton has to worry about his fields because GM crops have perverted long-standing property law. Organic farmers are responsible for protecting their farms from contamination, since courts have consistently refused to hold GM growers liable.
Kansas farmer Bryce Stephens had to stop growing organic corn and soybeans for fear of contamination and has 30-foot buffer crops to protect his organic wheat. (Wheat pollen doesn’t travel far.)
“Monsanto and the biotechs need to respect traditional property rights and need to keep their pollution on their side of the fence,” says Maine farmer Jim Gerritsen. “If it was anything but agriculture, nobody would question it. If I decided to spray my house purple and I sprayed on a day that was windy and my purple paint drifted onto your house and contaminated your siding and shingles, there isn’t a court in the nation that wouldn’t in two minutes find me guilty of irresponsibly damaging your property. But when it comes to agriculture, all of a sudden the tables are turned.”
Contamination isn’t just about boutique organic brands. It maims U.S. exports too.
Take Bayer, which grew experimental, GM rice — that was unapproved for cultivation and for human consumption — at test plots around Louisiana State University for just one year. Within five years, these test plots had contaminated 30 percent of U.S. rice acreage. No one’s certain how it happened, but Bayer’s rice was found as far away as Central America and Africa.
Within days of the USDA announcement that this untested GM rice had gotten loose, rice futures lost $150 million in value, while U.S. rice exports dropped by 20 percent during the next year. And Bayer ended up paying farmers $750 million in damages.
Last month brought another hit. A Monsanto test of GM wheat mysteriously contaminated an Oregon farm eight years after the test was shut down. Japan and South Korea immediately halted imports of U.S. soft white wheat — a particularly harsh pill for the Japanese, who have used our white wheat in almost all cakes and confectionary since the 1960s.
Monsanto’s response? It’s blaming the whole mess on eco-terrorists.
Just Label It
Trish Sheldon moved to Florida in 2001, but the bubbly blond still exudes a cool, friendly California air. In 2010, she started a state chapter of Millions Against Monsanto, then in 2011 founded a group called GMO-Free Florida to raise awareness of the risks of GMOs and push for mandatory labeling initiatives.
With Monsanto seeds covering more than 40 percent of America’s crop acres (a March study found that 86 percent of corn, 88 percent of cotton, and 93 percent of soybeans grown here are of a GM variety) and the agri-giant making an expected $7.65 billion profit this year, it’s doubtful the company will go away anytime soon. But as consumers become more aware of the sinister problems lurking in the food chain, activists in many states are pushing for laws that would require foods with GM ingredients to be labeled, much as foods with trans fats are.
More than 23 right-to-know groups have since popped up throughout Florida especially after California’s push for mandatory labeling legislation, called Proposition 37, failed last year. Chemical companies defeated the initiative, thanks to a $46 million publicity campaign full of deceptive statements.
“Even though there were lies and deceit by the biotech industry, that was the catalyst,” Sheldon says. “People were so pissed off that it failed [and] we started gaining steam.” This May, during a global day of action, more than 2 million protesters attended rallies in more than 400 cities across 52 countries. In Miami, organizers lost count when protesters topped 1,300.
“If they’re going to allow the American people to be lab rats in an experiment, could they at least know where it is from so they can decide whether they want to participate or not?” asks Lance Harvell, a Republican state representative from Maine who sponsored a GM labeling law this year. “If the FDA isn’t going to do their job, it’s time we stepped in.”
Maine is just the second state (nine days after Connecticut) to pass such a law. When Vermont raised the issue a year ago, a Monsanto official indicated the company might sue. So the new laws in both Maine and Connecticut won’t take effect until other states pass similar legislation so they can share defense costs.
In Florida, state Sen. Maria Lorts Sachs and House Rep. Michelle Rehwinkel-Vasilinda have sponsored similar bills — but neither version made it to committee. Both intend to revise and resubmit bills in the next legislative session, in January 2014.
“God gave the seed to the earth and the fruit to the trees,” Harvell says. “Notice it didn’t say he granted Monsanto a patent. The human body has developed with its seeds. You’re making a major leap into Pandora’s box, a quantum leap that maybe the human body isn’t ready to make yet.”
As more information comes out, it’s increasingly clear that GM seed isn’t the home run it’s portrayed to be. It encourages greater pesticide use, which has a negative impact on the environment and our bodies. Whether or not GM food is safe to eat, it poses a real threat to biodiversity through monopolization of the seed industry and the kind of industrial farming monoculture this inspires.
Meanwhile, a study by the University of Canterbury in England found that non-GM crops in America and Europe are increasing their yields faster than GM crops.
“All this talk about feeding the world, it’s really PR,” explains Wenonah Hauter, executive director of Food & Water Watch. “The hope is to get into these new markets, force farmers to pay for seed, then start changing the food and eating habits of the developing world.”
But as much as he hates GM, Kansas farmer Stephens is sanguine. “I’ve seen changes since I was little to where it is now,” he says. “I don’t think it will last. This land and these people here have gone through cycles of boom and bust. We’re just in another cycle, and it will be something different.”
Providing we don’t irreparably break it first.
Additional reporting by Sara Ventiera.
Last year, if you’re like the average American, you ate more than your body weight of a group of foods you didn’t even know you were consuming. Foods that have never been proven safe to eat. Foods that are becoming more and more widespread in our food supply.
These foods consist of genetically modified organisms (GMO), plants that have been created in laboratories and then planted by farmers. The most frightening part about these foods is that they are unlike any other foods that humans have ever eaten before recent times. And they were probably on your dinner plate last night and almost certainly in your snack foods.
The Environmental Working Group, a consumer advocate organization, determined that Americans eat, on average, 193 pounds of GMO foods a year. And the group justifiably asks: “If you were planning on eating your body weight of anything in a year, wouldn’t you want to make sure it was safe to eat?”
But you don’t know if these foods are safe to eat, and nobody is planning any research to find out how risky they are. The government doesn’t require international corporations like Monsanto, which make tremendous profits off of these foods, to establish their safety. Other countries are more concerned about these foods than we are. As a matter of fact, the United States is just about alone in not requiring labeling of GMO foods or the performance of safety tests to see whether these bizarre, chemist-created foods are harmless. As a result, about 90 percent of the corn, soy and cotton now produced in the United States are GMO crops. When you eat processed foods like corn chips or breakfast cereal, 70 percent of what you take in has been made from GMO products.
Who stands to profit from this change in our eating habits? Primarily Monsanto, the biotech company that controls 90 percent of all GMO seeds that farmers plant. (For more on agricultural terrorism, go here.
A big reason Monsanto can get away with engineering this profitable threat to health stems from its gargantuan lobbying efforts in Washington. According to a report by Food and Water Watch, a nonprofit consumer organization, Monsanto and other huge food and agricultural biotechnology firms and trade associations lavished more than $540 million in campaign contributions and lobbying efforts on the elected class during the past decade. And their efforts are accelerating.
Food and Water Watch has determined that the annual spending on politicians by these corporations has doubled during that time. These companies employ more than 100 lobbying firms and also have in-house lobbyists who wine and dine politicians and government functionaries to get what they want.
In many cases, the same people who hold high-paying jobs at Monsanto eventually move into positions at the regulatory agencies that are supposed to be protecting us against their abuses of the food system.
Consider the case of Michael Taylor, deputy commissioner for Foods for the Food and Drug Administration (FDA). In the past, he has moved from a job at the FDA to a job at a law firm that represented Monsanto. Then he moved to a job at Monsanto, over to the U.S. Department of Agriculture, back to the law firm, over to Monsanto, to a position on a university, to a think tank and then back to the FDA. It’s a pretty cushy career path for Taylor, but a disaster for our protection from questionable food.
While Taylor was doing his second stint at the FDA, the agency adjusted its regulatory policies so GMOs could be introduced into our diet without being tested for toxic effects.
Aside from the possible danger of eating GMO foods that have had genetic material from other species added to their cells, the GMO crops that farmers grow often have been sprayed with unconscionable amounts of pesticides that contaminate our air and water. Residues of these chemicals may also contaminate foods made from these plants.
Many of these GMO crops are “Roundup®-ready.” That means they have been modified genetically to survive massive amounts of the pesticide called Roundup® (also provided by Monsanto). Glyphosate from Roundup® is now being detected in ground water far from the farms at which it is sprayed. Traces are even being found in the urine of city dwellers. It crosses the placental barrier and can be detected in the blood of unborn children.
This technology threatens you, me and the world around us. Roundup®-ready crops have led to the creation of “frankenweeds,” weeds impervious to herbicides. GMO seeds that produce their own pesticides are creating “frankenbugs” that withstand and even thrive on GMO plants.
But this toxic brew is killing off populations of beneficial insects like pollinating honeybees. It has led to what is called colony collapse disorder and a worldwide die-off of bees. GMO crops may also be wiping out monarch butterfly populations.
Right now, the only way for you to avoid GMO foods is to eat organic food. Any other food, even items marked “all-natural,” may contain GMO ingredients. You can get a free shopping guide to help you find non-GMO foods here.
The Severn Trent takeover – corporate profiteering and tax avoidance on Britain’s water supply | openDemocracy
To the people of Ireland please note this is the future direction of your water system. Is this what you want?
Severn Trent is the latest water company to be targeted for takeover by a motley group of investment funds. An analysis of their past deals reveals huge profits, meagre tax bills and a seemingly casual approach to ethical concerns. Once again public assets are turned into wealth for the few.
As more and more people struggle to pay their water bills, the financial world has been getting itself into a lather over the attempted takeover of Severn Trent, the company supplying water across the Midlands and parts of Wales, by an investment consortium called LongRiver Partners. Severn’s board has so far rejected two offers but financial commentators reckon LongRiver will keep coming back until they get what they want (they have until 11 June to make a final offer).
People living in the areas that Severn Trent is ‘serving’ haven’t been asked about any of this, and they’re not going to be. The decision rests with Severn Trent’s board and shareholders, not the eight million people they call “customers”. As the water supply is a captive market (odd, given that privatisation is generally meant to get rid of monopolies and increase competition) they have no choice over who profits from them each time they turn on their taps.
But should they be worried? LongRiver is an unimaginative front name for a grouping of three investment funds: Borealis Infrastructure Management, the Universities Superannuation Scheme and the Kuwaiti Investment Office. Let’s look at each in turn.
Borealis, with its obscure name, central London office and slick website, at first glance looks like a typical investment fund, run to make some already-very-rich people even richer. But there’s a twist. It is actually owned by the Ontario Municipal Employees Retirement System, the pension fund for over 400,000 municipal workers of the Canadian province. Unfortunately its previous UK investments suggest it doesn’t take a public service ethos into its work.
In the last few years, Borealis has bought three other companies providing important services and infrastructure to various parts of the UK: Scotia Gas, which supplies gas to Scotland and other parts of England, Associated British Ports, which owns and operates 21 ports in England, Scotland, and Wales, and HS1, which operates the rail link between London and the Channel Tunnel. Their accounts show Borealis and its fellow owners (different for each company) are using financial structures that means huge payouts for them, but meagre amounts for the public purse.
All three companies have borrowed huge amounts to finance investment – around £4 billion for each company. The exorbitant debt levels of water companies privately owned by investment funds have been criticised by a range of bodies, coincidentally including Severn Trent, which even wrote a report about it.
However, it is the identity of some of the lenders that should raise eyebrows highest in the case of Borealis’ three companies. Look further into their accounts and it turns out they have borrowed huge amounts from subsidiaries of Borealis and their other owners. Scotia Gas and HS1 each owe around £500 million, while Associated British Ports owes over £2 billion. And the interest rates on these loans are far higher – between 10 and 12% – than they are paying to banks or other third parties for the rest of their debt.
The interest payments – around £70m for Scotia and HS1 in 2012, and £255m for Associated British Ports – on these loans help to slash, and sometimes completely wipe out, the companies’ taxable UK profits. Their corporation tax bills are therefore significantly reduced – and sometimes non-existent – while the interest is accrued annually to Borealis and the other owners whether or not the company has had a good year. This isn’t the only way to invest – Borealis and co could have put the money into the company as equity, and received dividends instead of interest. But dividends are paid after a company has been taxed, so do nothing to reduce that bill.
It gets trickier. If Borealis was lending from its home in Canada, HMRC would keep 10% of the interest payments through what is called “withholding tax”. But the loans have been made through the Channel Islands Stock Exchange. Thanks to a loophole HMRC knows about but refuses to close (called the “quoted Eurobond exemption”), no tax is withheld.
Perhaps unsurprisingly, this type of financing is already popular in the water industry. A Corporate Watch investigation earlier this year found seven companies are using this loophole. It is popular with a range of companies, from private healthcare company Spire to Classic FM owners Global Radio. But the most dispiriting thing about all may be that it is being done to ensure service workers in another part of the world can have as comfortable a retirement as possible.
Which leads us onto the Universities Superannuation Scheme. As its name suggests, it too is a pension fund, for university staff across the UK. The USS describes itself as an “active and responsible” investor that says its will take “material corporate, governance, social, ethical and environmental issues” into account when making investment decisions.
Its track record though, doesn’t provide much hope for the people who may soon be relying on it for their water supply. Its investment portfolio contains a range of companies not generally known for their social, ethical or environmental principles. Oil giants Shell and BP, currently under investigation for oil and petrol price fixing, to add to their other various misdeeds, are both in the top five, as is HSBC, itself being investigated for money laundering. There’s also Vodafone, which could teach even Borealis a thing or two about tax bills, arms company BAE, British American Tobacco and notorious mining giants BHP Billiton and Rio Tinto. The USS has also been criticised for its investments in companies profiting from illegal Israeli settlements in Palestine, for example Astom, a French company involved in the construction of a light railway in occupied East Jerusalem (see here for more details).
And don’t hold out too much hope that the Kuwait Investment Office, a sovereign wealth fund set up with the country’s oil revenues, will be keen to ensure water drinkers get a good deal. The fund’s managers may have first met their USS counterparts at the BP AGM, where they are a major shareholder. The fund also has a hugely valuable property portfolio, especially in the City of London, and bought sizeable stakes in both Citigroup and Merril Lynch when the credit crunch first hit, later selling its Citigroup stock for a tidy profit two years later.
So things aren’t looking good for Severn Trent “customers”. But are they that good anyway? The company’s shares are currently traded ‘publicly’ on the stock exchange, and a lot is being made in the press of the difference between the listed water companies and those owned by consortia like LongRiver, with massive debt and tax avoidance schemes more popular with the latter (download an ownership table here). But the similarities are greater than the differences.
It’s true that Severn Trent’s bills are lower than many of their peers, but they’re still pretty damn high – £311 a year is a lot to be paying for water. Bills have increased by 50% in real terms since privatisation in 1989. A parliamentary briefing produced last month estimated 23% of households across England and Wales “now spend more than 3% of their income on water and sewerage bills” and suggested water bills “might not be affordable for a large number of people”.
Rising bills – approved by the government regulator OFWAT – are justified as necessary for investment in creaking infrastructure. But the money is also going to satisfy shareholders’ demand for a return. Severn Trent paid out dividends of almost £160m in 2012 and has said they will be higher this year. There’s a reason its current management are holding out for more than a 16% premium on its current share value: they know guaranteed rising prices for monopoly control of a resource everyone needs is a deal they can charge extra for.
Add to this chief executive Tony Wray’s £1 million remuneration in 2012 – the second highest of all the water companies – and the £300 million it paid in interest on its £4bn of borrowings in 2012 and the investment figures start to look less impressive (there are no Borealis-style related party loans, but their banks and bondholders are charging them around 6% on average). And Severn Trent’s public listing hasn’t kept it scandal free. It had to pay a record £36m fine and promise to cut customer bills in 2008 after orchestrating what the Independent newspaper called “one of the largest customer overcharging scandals ever perpetrated in the UK”. It was fined £2m in the same year for falsifying leakage data.
So perhaps the choice we should be talking about is not private or publicly-listed, but private or public. Earlier this year, Corporate Watch calculated that £2 billion a year could be saved – or £80 per household – if the water supply was in public ownership. The government can borrow much cheaper than the companies and there would be no private shareholders demanding their dividends (see here for the full piece).
This isn’t to say that a public supply would automatically work well – the pre-privatisation supply was criticised for under-investing and lack of accountability – but there are many examples from around the world of water supplies being run more efficiently and democratically when public (see a short video on this here). And there’s certainly no shortage of examples from around the world of privatisation failing to provide a decent or equitable service,*. England’s water supply**, currently, is one of the them.
* See the Public Services International Research Unit website for more information
** Scotland, Northern Ireland and the rest of Wales have public or not-for-profit- supplies.
U.S. taxpayers are footing the bill for overseas lobbying that promotes controversial biotech crops developed by U.S.-based Monsanto Co and other seed makers, a report issued on Tuesday said.
A review of 926 diplomatic cables of correspondence to and from the U.S. State Department and embassies in more than 100 countries found that State Department officials actively promoted the commercialization of specific biotech seeds, according to the report issued by Food & Water Watch, a nonprofit consumer protection group.
The officials tried to quash public criticism of particular companies and facilitated negotiations between foreign governments and seed companies such as Monsanto over issues like patents and intellectual property, the report said.
The cables show U.S. diplomats supporting Monsanto, the world’s largest seed company, in foreign countries even after it paid $1.5 million in fines after being charged with bribing an Indonesian official and violating the Foreign Corrupt Practices Act in 2005.
One 2009 cable shows the embassy in Spain seeking “high-level U.S. government intervention” at the “urgent request” of Monsanto to combat biotech crop opponents there, according to the Food & Water Watch report.
The report covered cables from 2005-2009 that were released by Wikileaks in 2010 as part of a much larger release by Wikileaks of a range of diplomatic cables it obtained.
Monsanto spokesman Tom Helscher said Monsanto believes it is critical to maintain an open dialogue with government authorities and trade groups in other countries.
“We remain committed to sharing information so that individuals can better understand our business and our commitments to support farmers throughout the world as they work to meet the agriculture demands of our world’s growing population,” he said.
State Department officials had no immediate comment when contacted about the report.
Food & Water Watch said the cables it examined provide a detailed account of how far the State Department goes to support and promote the interests of the agricultural biotech industry, which has had a hard time gaining acceptance in many foreign markets.
“It really goes beyond promoting the U.S.’s biotech industry and agriculture,” said Wenonah Hauter, executive director of Food & Water Watch. “It really gets down to twisting the arms of countries and working to undermine local democratic movements that may be opposed to biotech crops, and pressuring foreign governments to also reduce the oversight of biotech crops.”
But U.S. officials, Monsanto and many other companies and industry experts routinely say that biotech crops are needed around the world to increase global food production as population expands. They maintain that the crops are safe and make farming easier and more environmentally sustainable.
PROMOTION THROUGH PAMPHLETS, DVDs?
The cables show that State Department officials directed embassies to “troubleshoot problematic legislation” that might hinder biotech crop development and to “encourage the development and commercialization of ag-biotech products”.
The State Department also produced pamphlets in Slovenia promoting biotech crops, sent pro-biotech DVDs to high schools in Hong Kong and helped bring foreign officials and media from 17 countries to the United States to promote biotech agriculture, Food & Water Watch said.
Genetically altered crops are widely used in the United States. Crops spliced with DNA from other species are designed to resist pests and tolerate chemical applications, and since their introduction in the mid 1990s have come to dominate millions of acres of U.S. farmland.
The biotech crops are controversial with some groups and in many countries because some studies have shown harmful health impacts for humans and animals, and the crops have been associated with some environmental problems.
They also generally are more expensive than conventional crops, and the biotech seed developers patent the high-tech seeds so farmers using them have to buy new seed every season, a factor that makes them unappealing in some developing nations.
Many countries ban planting of biotech crops or have strict labeling requirements.
“It’s appalling that the State Department is complicit in supporting their (the biotech seed industry’s) goals despite public and government opposition in several countries,” said Ronnie Cummins, executive director of nonprofit organization Organic Consumers Association.
“American taxpayer’s money should not be spent advancing the goals of a few giant biotech companies.”
(Editing by Muralikumar Anantharaman)