Thirty days ago, the investment community accorded only positive attributes, such as innovation, productivity and progress, to GMO corn and soybeans. The success of GMOs was, to a great degree, the basis for the strong growth rates and the huge public and private market valuations accorded this sector. Today, the term GMO has become a liability. We predict that GMOs, once perceived as the driver of the bull case for this sector, will now be perceived as a pariah. We are reducing our rating on Pioneer Hi-Bred to SELL from HOLD, and we would broadly recommend a sale of the seed sector.
Biotech crops are ubiquitous, yet few consumers realize it.
We spelled out the positive case for transgenic seed and outlined what we believed to be the illogical, but persistent, arguments advanced by GMOs' opponents. The message is a scary one - increasingly, GMOs are, or in our opinion, becoming a liability to farmers. For ADM, the program assures the company a supply of non-genetic beans. When it buys beans on the open market, it can't be sure they'll all be unmodified. Take that to the next logical step.