Today, I'm going to hold a conference about Bayer-Monsanto.
That day, the Bayer stock tumbled and never recovered. On August 9, 2018, Dewayne Johnson, a former, terminally ill non-Hodgkin's Lymphoma gardener, succeeded in his lawsuit against Monsanto, who did not inform him of the risks he was running by using his flagship product, Roundup. The famous glyphosate product, the most widely used herbicide in the world, is for the first time made responsible for cancer by a court, which condemned Monsanto to pay the plaintiff 289 million $. Bayer, which bought the seed company Monsanto in June 2018, was visibly affected: 10 billion euros in stock market value evaporated in a few hours.
The "Monsanto risk" now corresponded to a monstrous number. And the descent into hell began. Bayer assured investors that the trial would be overturned on appeal, that the sentence would be lightened and that the judge would go to the conclusions of "800 scientific studies" proving the safety of the molecule. But on Monday 22 October, the verdict came down: the judge Suzanne Bolanos will not reopen the trial and upholds the judgment but eases the financial penalty, bringing it down to $ 78.5 million. The stock collapsed again, reaching its lowest level in five years. On November 1, Dewayne Johnson accepted - in order to avoid the weight of a new trial - the reduced damages. Since the acquisition of Monsanto, Bayer lost the gigantic sum of 30 billion euros in market value, while the group made a capital increase of 9 billion euros to complete the merger.
Was the "marriage of the century" at the top of world agrochemistry a mistake? Already condemned by the ecologists, it is also challenged by the markets. Everything in this alliance is disproportionate: the price of the transaction ($ 63 billion); the size of the new group, which has become the world's leading producer of glyphosate and the world champion in agrochemistry; the reputation of Monsanto, a name so negatively charged that Bayer planned to make it disappear. But it is especially the magnitude of the new legal risk that freaks the investors: 7 800 lawsuits are currently brought against Monsanto in the United States, that are billions of dollars of damages and potential interests.
"Monsanto's operations bring high environmental, social and governance risks," said Ingo Speich, fund manager at Union Investment. Has Bayer sufficiently measured the risks? Shareholders are all the more worried that the group's other activities are showing signs of weakness: the nonprescription drug department saw its results decline in the last half of the year. In conventional pharmacy, several Bayer patents are coming to an end, and the new molecules currently being approved will not be able to compensate for the loss of turnover.
Internally, since August, it's the jerk of the fight. "The atmosphere is disastrous. Many had already struggled to swallow the decision to buy Monsanto, given the image they have. But here, the situation is not sustainable in the long term. If a hedge fund wants to buy us, it can do it cheaply, "worries an internal source. To save the merger, even the family jewels are examined. At the end of September, the German press reports that Bayer is closely studying a sale of its animal health business, which could bring in 6-7 billion euros. Information not confirmed by the group.
At the end of September, at a staff meeting in Leverkusen at Bayer Headquarters, Werner Baumann, boss of the group, discussed the possibility of separating from parts of his research department in medicine, one of Bayer's traditional hearts. Employee representatives are alarmed.
Above all, Bayer wants to save the glyphosate soldier. The controversial herbicide is of crucial importance to the group. It accounted for a quarter of Monsanto's sales. In the consolidated Bayer Group, it has a turnover of 3 billion euros. The pro-glyphosate speech of Bayer's boss is a surprise. Because, since the beginning of 2018, it is quite another speech that was put forward. Liam Condon, director of the Crop Science department, has multiplied the interventions in the press and with environmental associations to explain the approach of the new group. He plays the card of dialogue and appeasement.
At the end of March, in the magazine Capital, a discussion is organized with the co-chairman of the German environmental party, Robert Habeck, on the question of how to feed the planet with 10 billion inhabitants in 2050. This is the first time that such a debate is organized in the country, symptomatic of a double movement: the will of Bayer to cut the ties with the past of Monsanto, which systematically refused the debate with its opponents, and the new orientation of the German environmentalists, traditionally a party of highly educated urban, who no longer want to be seen as enemies of innovation. Positions remain antagonistic, especially on the issue of patents on plants, but some points of agreement are identified. The question is hot: in the context of an increase in population, a climate warming and a species extinction, how to increase agricultural production without extending the arable land to the detriment of wild spaces?
How to adapt agriculture to rising sea levels? How to do it with less water, less fertilizer and less synthetic pesticides?
Liam Condon is Bayer's weapon in this sensitive debate. In mid-June, in the weekly FAS, he gave a glimpse of what Bayer's agriculture of the future might look like: more technique and less chemistry. Even if he continues to defend glyphosate as a "safe" herbicide. "The big solution that will save the world does not exist," he says. Agriculture is too varied. But there will be a series of small contributions. He names three. The first is the Crispr-Cas technology, or "genetic scissors", a technology discovered in 2012 by the French Emmanuelle Charpentier, which makes it possible to modify the DNA of a plant more quickly than before, without resorting to the genetic material of another plant. It could create more drought-resistant and more productive organisms that can grow in salt water, say scientists, who call it a "revolution in agriculture." The method currently divides German ecologists and the case is very controversial in Europe. A judgment of the European Court of Justice in late July has put a brake on the development of technology on European soils. Plants treated with the Crispr-Cas method are considered as GMOs and must be properly labeled.
Bayer's second technology is "digital farming", which involves, for example, the use of autonomous robots in fields that spot harmful plants and destroy them with lasers. Or that of sensors, able to measure as closely as hygrometry and the amount of inputs to use. The third innovation is based on a better knowledge of the microorganisms or microbes present in the soil and their relation to the growth of the plant. It offers biological solutions for soil fertilization or protection against diseases. Some preparations already on the market are also used in organic farming.
Asked by Le Monde, several sources in ecology agree, that these innovations are "interesting" and that they are the emergence of a "post-chemistry" agriculture. But they maintain their condemnation of the concentration of the agrotechnology sector. For shareholders, these new methods do not promise short-term profits. But the stock market is cruel: it measures the environmental risk, but does not want to give up the safe profits. For Bayer, the challenge is twofold: it has to convince that this model of agriculture of the future is as "sustainable" as it claims, and that it can generate as much profit as glyphosate.
The brands that use Monsanto products and therefore containing glyphosate
