Bayer rice scandal could cost industry over $1.2 billion

Amsterdam , International — The costs of last year’s scandal in which Bayer’s genetically engineered (GE) rice contaminated US rice stocks sold on the international market could exceed US $1.2 billion, according to a report by an independent economist published by Greenpeace International today.
Traces of the GE rice variety LL601, owned by Bayer, were discovered in US rice supplies in 2006. The contamination arose from experimental field trials of LL601 in the US which had ended in 2001. The discovery triggered the largest financial and marketing disaster in the history of the US rice industry. At least 30 countries were affected by the contamination and many closed their markets to US rice, including major importers such as the European Union and the Philippines.

“The exhorbitant cost of this contamination scandal should be a salutory warning to any industry thinking of venturing down the GE route,” said Dr Doreen Stabinsky, GE campaigner at Greenpeace International. “It is clear that GE crops, even GE field trials, are a high risk, high cost threat to everyone in the conventional food production chain. Banning crop trials and cultivation of GE rice is the only way to prevent a recurrence of such a disaster.”

The report is the first quantification of the costs of the Bayer GE rice scandal across the grain supply chain. Rice growers, harvesters, processors, millers and retailers were unwittingly caught up in the scandal which affected 63 per cent of US rice exports. The overall cost to the industry, estimated at over US $1.2 billion, included losses of up to US $253 million from food product recalls. Future export losses amount to US $445 million.

Hundreds of US farmers and European businesses have filed lawsuits against Bayer in attempts to recoup their losses. Punitive or statutory damages which may be awarded against Bayer may double or even treble the final cost of the GE contamination incident.

The lesson of the scandal is highly relevant for developing nations in which the GE industry is attempting to extend its reach. Among them are India and Thailand, two of the world’s leading rice exporters.

“Greenpeace is extremely concerned that some major rice growers and exporters are considering field trials of GE rice,” said Jeremy Tager, leader of Greenpeace International’s GE rice campaign. “GE field trials have been approved in India. If GE rice planting goes ahead, it could threaten markets for both basmati and non-basmati rice. Who will compensate India’s farmers and millers if the Indian rice trade suffers a catastrophe on the scale of the United States” he added.

“Bayer has blamed the contamination on an ’Act of God’, and the US Government has been unable to find what caused it despite a 14-month investigation,” said Dr Stabinsky of Greenpeace International. “There is only one way for the rice industry to protect itself from another billion dollar debacle and that is to prevent GE rice from ever being grown,” she concluded.