August was not a good month for glyphosate and Bayer executives who recently finalized a $62.5 billion purchase of Monsanto and Roundup herbicide. Here’s why:
- Monsanto lost a lawsuit in California in which a school groundskeeper was awarded $289 million with a claim that exposure to Roundup had contributed to his cancer.
- A judge in Brazil moved to ban the use of glyphosate throughout the country until more toxicology studies are completed.
- The California Supreme Court declined to hear Monsanto’s appeal to remove glyphosate from the state’s list of chemicals that cause cancer or birth defects.
Despite the month’s bad news, these cases are not closed, as legal maneuvers and appeals may mean one or more of these decisions gets overturned.
Verdict Stings Bayer
The $289 million that Monsanto was ordered to pay in California represents a huge legal headache for Bayer. In reaching its decision, the jury maintained Monsanto either knew or should have known about the potential risks of glyphosate.
Bayer says it will vigorously defend this verdict and other challenges to the use of Roundup. Unfortunately, this ruling is at odds with the EPA’s stance that glyphosate isn’t carcinogenic. Bayer officials also point out that more than 800 studies done over the past 40 years indicate glyphosate is a safe product.
In the first day of stock trading after the court ruling, Bayer shares dropped 10%, wiping $10.7 billion off Bayer’s market value. This was roughly 37 times the value of the California courtroom damages.
In Business Week, Jonas Oxgaard an analyst for Sanford C. Bernstein & Co., was blunt in describing the enormous size of the $289 million verdict. The plaintiff in the California case “probably got $2 million to $3 million for the horrible suffering, another $3 million because he was a sympathetic guy and $280 million because people hate Monsanto,” he pointed out.
Monsanto had earlier recorded a liability of $254 million for future Roundup product claims with over 8,000 lawsuits related to glyphosate currently pending in state and federal courts. Sales of Monsanto’s Roundup generated $3.7 billion in 2017 sales, representing about one-quarter of the company’s total sales for the year.
At this point, nothing has changed with the regulatory status of glyphosate products for use by North America no-tillers. Across the Atlantic, the European Union voted in 2017 to delay a decision on the future of glyphosate for 3-5 years. However, it gave each country the immediate right to ban the herbicide, which several countries have already done.
The judge in Brazil moved to ban the use of glyphosate throughout the country by prohibiting future registration of new products containing glyphosate and suspending existing registrations. With a 30-day window before this becomes law, the country’s Minister of Agriculture has already asked for an emergency injunction, so growers can keep using glyphosate products. The government maintains the use of this herbicide is essential with the country’s huge no-till soybean acreage.
On September 4, a Brazilian court sided with the government’s ag minister and ruled that growers in the country can continue to use glyphosate-based herbicides. The court added that approving the emergency injunction was not a ruling on glyphosate safety but was only related to dealing with delays in routine regulatory reviews of crop-protection products.
Appeal Turned Down
The California’s Supreme Court decision not to hear Monsanto’s appeal to remove glyphosate from the state’s dangerous chemical list was another blow to Bayer. This ruling leaves in place a lower court decision based on the World Health Organization’s earlier determination that glyphosate is probably carcinogenic to humans.
As part of the Monsanto purchase requirement to meet antitrust restrictions, Bayer had to unload its LibertyLink herbicide and seed business, which was purchased by BASF.
In hindsight, do you think there might be Bayer folks who wish they’d kept the LibertyLink business and instead unloaded the Roundup product line?