The Wall Street Journal Europe (WSJE)
1) Succumbing to Green Scare Tactics

2):Financial Times (London) November 23, 1998, Monday

1) By Frank Furedi 11/23/98
Monsanto, one of the world's leading food companies, has become the major
casualty of a bitter environmentalist campaign against genetically
modified food in Europe. Last week, in a coup for anti-technology
lobby groups everywhere, Greenpeace circulated two Monsanto internal memos
revealing a collapse of public support for the U.S.-based company's
genetic technology in Britain and Germany. The memos, written by Stan
chairman of Greenberg Research for Monsanto, paint a sad picture of a
industry. "Over the past year, the situation has deteriorated
steadily and perhaps at an accelerating pace," writes Mr.
Greenberg. He goes on to warn that the situation is likely to
get worse.
Monsanto is particularly worried about flagging enthusiasm
for its products among major retailers and opinion makers. Its
strategy for introducing genetically modified food into Europe
was strongly criticized at a series of meetings held in
September with corporate leaders, scientific advisors and senior
buyers and managers at large retailers such as Marks & Spencer,
Waitrose, Tesco, CWS, Asda and Safeway. Many retailers supported
a moratorium on the introduction of genetically modified food
because they feared attracting negative publicity.
Although Monsanto can be criticized for failing to reckon
earlier with the intense regulatory and anti-innovation culture
that prevails in Europe, the company is not to blame for the
public hostility to biotechnology that a sophisticated campaign
has produced. In recent years, a veritable culture of fear of
new technology has stimulated a cycle of panics about a variety
of drugs and food products. Sadly for Monsanto, its entry into
the European market coincided with the Bovine Spongiform
Encephalopathy panic of 1996-1997. The apparent connection of
BSE, also known as "mad cow disease," with intensive industrial
farming appeared to confirm the impression that scientific
intervention in the food chain must have destructive outcomes.
In this post-BSE climate of anxiety, biotechnology (and
genetically modified food in particular) became an ideal target
for an unusual alliance of interests. Throughout this year,
the British farmyard has been depicted as a kind of rural
concentration camp, where animals kept against their wills are
systematically subjected to the most barbaric practices. Back in
April, a special issue of the Sunday Times Magazine titled "Who
is Killing the Countryside?" spoke of the "killing fields" of
Cambridgeshire. A similar note of near-hysteria was struck by
the National Consumer Council, a leading consumer advocacy
group, which warned that intensive farming methods could lead to
"life-threatening illnesses" with "incalculable" risks. Despite
the fact that food is more nourishing and cheaper than ever
before, the conviction that eating has become a uniquely
dangerous practice is rarely questioned. Even relatively
intelligent observers believe that genetically modified food
technology represents a major danger to people and to nature.
Malcolm Walker, the chief executive of the food chain Iceland
declared back in March "that genetically modified ingredients
{are} probably the most significant and potentially dangerous
development this century." The chain has decided not to put its
own label on food made with genetically modified soya from the
United States.
The campaign has been endowed with a degree of moral
authority by Prince Charles, who declared this summer that the
"genetic modification of crops is taking mankind into realms
that belong to God, and to God alone." A moral crusade was born
as a variety of different interests --the Consumers'
Association, English Nature, the Soil Association, the
Vegetarian Society and others -- issued reports distancing
themselves from modified food.
The media joined the campaign, depicting environmentalists
who wrecked test sites as peoples' heroes tackling giant
American Goliaths. Opinion polls suggested that the
characterization of genetically modified food as "Frankenstein
Food" stuck, and since the end of the summer the Labour
government has become sensitive to the charge that it has been
"too soft" on the industry.
After facing a barrage of criticism, the British food
industry sought to demonstrate its green credentials by jumping
on the
anti-biotechnology bandwagon. Even farming interests have
attempted to curry favor with the environmental lobby by
distancing themselves from this technology.
As far as Monsanto is concerned, yes, it has made mistakes.
Instead of initiating a public debate, Monsanto has tried to
build bridges with consumer and green advocacy groups. Its
public-relations campaign was narrowly focused on convincing the
socio-economic elite of biotechnology's benefits. It hoped that
these opinion makers could in turn influence the public about
the virtues of this technology. Monsanto clearly underestimated
the moral fervor of its opponents. Its attempt to win friends
has been interpreted as a sign of weakness and has only
encouraged green lobbyists to put the boot in further. This
strategy of attempting to engage the political elite of Britain
and Germany expresses a surprising degree of naivete about
European political culture. If there is one section of society
that heavily subscribes to anti-enterprise and anti-technology
superstition, it is precisely those elites. Politicians,
journalists and other public figures have always been more
cynical about biotechnology than the general public. That is why
Monsanto's publicity campaign was an exercise in wasting money.
But that's not all. While Monsanto was trying to make friends
of its enemies, the anti-technology crusaders were bombarding
the buying public with their propaganda. The media quickly
rallied behind the moral crusade against biotechnology and,
sadly, the battle for the heart of the public became a one-sided
affair. The genetic-food industry kept quiet, never took on its
opponents and hoped the problem would go away. As a result, the
public has only heard one side of the story. The crisis
facing Monsanto has implications that go way beyond the
biotechnology industry. It shows that European societies have
become so scared of taking risks, that they regard innovation
and experimentation with deep suspicion. If something as
relatively safe as modified foods can be recast as a major risk
to society then virtually any new technology can expect a
similar treatment. And as long as the opponents of progress are
able to monopolize the debate, they will be able to occupy the
moral high ground and force "irresponsible' technologies on the
defensive. Greenpeace is entitled to gloat about its publicity
coup. And it will go on gloating until supporters of
biotechnology directly confront the challenge presented by
today's Luddites.
Mr. Furedi is professor at the Department of Sociology of
Darwin College, University of Kent, Canterbury.

Financial Times (London) November 23, 1998, Monday

2) Monsanto's shareholders have had to school themselves in patience.
Since its merger with American Home Products collapsed a month ago, the
sciences group has revealed problems with one of its drug candidates
postponed a $ 2.5bn bond issue. The shares have lost a third of their
in four weeks. There is plenty of potential in Monsanto. An $ 8bn
acquisition spree over the past three years has transformed the former
chemicals group into a leader in plant genetics. Meanwhile, a
of Searle, its pharmaceutical arm, has produced one
of the industry's most promising drug pipelines, including a
potential blockbuster in Celebrex, an arthritis treatment. The
snag is financing this embarrassment of riches. Monsanto does
not expect the acquisitions, taken as a whole, to cover its cost
of capital until 2002. And launching new drugs will require lots
of extra spending.
That is why AHP's deep pockets would have been so welcome and
why the bond issue, part of a $ 5bn cash-raising plan - also
including $ 1bn of equity and disposals - has become so
important. Without either, the group's debt to capital ratio
would rise to nearly 70 per cent. That makes the shares an
intriguing gamble. If Monsanto gets its money and some breathing
space to knit its new collection of assets together, it could
produce tremendous growth beyond 2000. But investors will have
to show even more patience until then.

11/23 1311
3) Monsanto Co., Unit Affirmed By S&P; Off Watch; Outlook
NEW YORK (Dow Jones)--Standard & Poor's Monday affirmed its ratings on
Monsanto Co. and its unit. These ratings were removed from CreditWatch,
they were placed May 12. The outlook is negative. At the same time, S&P
assigned its single-Ar-minus rating to Monsanto's proposed issuance
of $500
million of adjustable conversion-rate equity securities (ACES), which
consist of junior subordinated deferrable debentures due November
2003 and
a purchase contract under which the holder will purchase Monsanto
stock in November 2001. S&P said the affirmation incorporates
recently announced initiatives - including plans to divest non-
core businesses and to issue common equity and equity-linked
securities - will lead to meaningful debt reduction in the near
term and bolster the financial profile that has been stretched
by a series of mostly debt-financed acquisitions
"Ratings recognize Monsanto Co.'s strengthened positions in
pharmaceuticals and agricultural chemicals, including its
leadership in the emerging plant biotechnology sector, as well
as prudent financial policies that reflect a near-term focus on
debt reduction. The company spun off its industrial chemicals
operations in late 1997 and now is focused on higher growth,
more stable agricultural, pharmaceutical and food ingredients
markets. "Many product lines enjoy above-average profitability
and solid cash flow generation. In particular, the blockbuster
Roundup herbicide product lines benefit from very strong and
entrenched market positions. The company faces the potential of
heightened generic competition when key Roundup patents expire
in year 2000, but the company's sound strategy to address
competitive challenges through pricing adjustments and cost
reductions should mute potential adverse effects.
"Weaker than anticipated success in the commercialization of
new products or additional debt-financed acquisitions would
forestall the strengthening of the financial profile that is
expected over the next two years and would lead to a ratings
downgrade," S&P said.
Rating Monsanto
Corporate credit rating A
Short-term corporate credit rating A-1
Senior unsecured debt A
Medium-term notes A
Commercial paper A-1
Monsanto Defined Contribution & Employee Stk Ownership Trust
Senior unsecured* A
*Guaranteed by Monsanto Co.
01:11 PM

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