Why the Supreme Court Was the Least of Monsanto Company (MON)’s Concerns Yesterday

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Monsanto Company (NYSE:MON)If your company ever has to stand before the Supreme Court, it’s a big deal. Winning your case – an even bigger deal. Winning your case with a unanimous verdict – that’s downright huge.

That was the news for Monsanto Company (NYSE:MON) yesterday, and it probably wasn’t even the most important revelation of the day for the company.

An open and shut case
For some time now, Monsanto Company (NYSE:MON) has been catching a lot of negative press for its genetically modified seeds. But yesterday’s win had nothing to do with the safety or morality of genetically modified organisms, or GMOs, and everything to do with a farmer trying to circumnavigate the law.

Indiana farmer Vernon Bowman signed an agreement in 1999 that he wouldn’t collect the seeds after harvesting his crop of Roundup-resistant soybeans provided by Monsanto Company (NYSE:MON). In an attempt to save money, Bowman bought commodity grain from a grain elevator. Such grain is usually used as feed for animals; but Bowman planted it, knowing that some may contain Monsanto seeds.

After using the Roundup herbicide and harvesting the plot, it turned out there were resistant seeds in Bowman’s purchase. He continued to use these seeds for eight years without paying Monsanto Company (NYSE:MON).

Though the Supreme Court ruled unanimously in Monsanto’s favor, Justice Kagan made it clear this wasn’t as far reaching a ruling as some may have you believe: “Our holding today is limited,” Kagan said, “addressing the situation before us, rather than every one involving a self-replicating product.”

Government responds to public outcry
But no sooner had the court verdict been read than Monsanto Company (NYSE:MON), as well as fellow GMO-producer The Dow Chemical Company (NYSE:DOW), were dealt a blow by the U.S. Department of Agriculture.

The Dow Chemical Company (NYSE:DOW) was hoping to gain approval for crops that will tolerate the 2,4-D pesticide/herbicide, while Monsanto Company (NYSE:MON) was seeking approval for crops that would survive the application of dicamba – an herbicide.

The news came as a surprise to both companies, but the Department of Agriculture said it was inundated with requests from the public to continue investigating the GMOs before granting approval.

The USDA said it received 8,200 comments and petitions signed by 400,000 people to stop Dow’s petition to deregulate 2,4-D; it received 500 comments and 31,000 form letters from individuals concerning Monsanto’s request.

The Dow Chemical Company (NYSE:DOW) said that herbicide-resistant weeds were growing rapidly in the United States, and approval was needed to meet this potential crisis.

A long-term solution?
Showing my colors a little, it’s hard for me to sympathize with either company. As chemicals are used, nature usually figures out a way to engineer organisms (weeds) that are resistant. The only way to combat these new resistant strains is by using stronger chemicals.

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