Wednesday, August 6, 2008

Monsanto wants to sell embattled milk hormone unit

By Carey Gillam

KANSAS CITY, Mo., Aug 6 (Reuters) - Monsanto Co (MON.N: Quote, Profile, Research, Stock Buzz) wants to sell its dairy hormone business, a move that comes after many retailers and dairy industry participants across the United States rejected the biotech agricultural product amid questions about its safety.

Monsanto officials said on Wednesday they were pursuing divestiture of Posilac bovine somatotropin, an artificial growth hormone that makes cows produce more milk, to focus on Monsanto's key profit drivers of agricultural seeds and development of specific genetic traits for crops.

Monsanto said concerns raised about the product had no role in the decision.

"That didn't play a role at all," said Monsanto spokeswoman Danielle Jany. "This is really a great product. The business has been strong. Sales have been strong."

Monsanto and its backers have battled with consumer activists for more than a decade over whether Posilac, also known as rbST or rBGH, is harmful to human and animal health.

But the debate took a marked turn in the last two years as a growing number of dairy and food companies started demanding rbST-free milk, citing consumer concerns.

In August, 2007, Kroger Co (KR.N: Quote, Profile, Research, Stock Buzz), one of the nation's largest retail grocery chains, said it was switching to supplies from cows free of synthetic hormones.

Among others now rejecting rbST-milk is Dean Foods Co. (DF.N: Quote, Profile, Research, Stock Buzz), the nation's largest milk processor and distributor, and the Starbucks Corp (SBUX.O: Quote, Profile, Research, Stock Buzz) chain of coffee houses.

For more than a decade the European Union also has rejected imports of meat derived from hormone-treated cattle, sparking a long-running World Trade Organization dispute.

National Milk Producers Federation spokesman Chris Galen said on Wednesday that Monsanto's move comes as the trend against rbST was expanding beyond bottled milk to also include cheese products. "Processors don't want it," Galen said.

St. Louis-based Monsanto Co, the leading developer of biotech crops, is sole producer of the artificial hormone supplement, which is made through recombinant DNA technology.

The company began selling Posilac in 1994 as a method of boosting milk production in cows and says the product is safe and the milk cannot be distinguished from milk from cows that don't receive the supplement. The U.S. Food and Drug Administration has approved the supplement for use.

Monsanto has been waging a largely unsuccessful battle to try to stop dairy industry players from marketing their milk as being free of the rbST hormone, and said in a regulatory filing last year its sales could be limited by the controversy.

Critics charge that milk from cows given rbST pose risks of breast, colon and prostate cancers. They also say the hormone supplement causes a range of health problems for dairy cows.

"This represents a victory for consumers who are choosing healthier foods for themselves and their families. Consumer rejection forced it out of the market," said Jeffrey Smith, executive director of the Institute for Responsible Technology and creator of a documentary critical of Monsanto and Posilac.

Monsanto shares closed up more than 2 percent at $109.40 on the New York Stock Exchange. (Reporting by Carey Gillam; editing by Carol Bishopric)

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