May 19, 2004



Syngenta May Struggle To Sell Gene-Modified Corn In Europe

Syngenta AG, the world's biggest maker of crop chemicals, will have a hard time getting European retailers and consumers to accept its gene-modified sweet corn, which the European Union is poised to approve for import today, analysts and supermarket companies say.


"We will avoid gene-modified food because consumers don't want it,'' said Urs Peter Naef, spokesman of the Federation of Migros Cooperatives, Switzerland's biggest retailer with annual sales of 20 billion Swiss francs ($15.6 billion). The Syngenta corn, known as Bt11 sweet maize, is resistant to the corn borer pest and is already approved in Switzerland.


The European Commission, the EU's regulatory arm, got the power to decide the product's future because of a split between the farm ministers of member countries. Even with approval, Basel, Switzerland-based Syngenta has to sell its benefits to Europeans, analysts say.


While the product is used mainly as corn-on-the-cob in the U.S. and Canada, it would probably be sold canned or frozen in Europe. EU farmers still would not be allowed to grow the corn.


"It's considered to be an important decision because it's the first one after many years,'' commission spokeswoman Beate Gminder told a Brussels news conference last week when the date for the final decision was set. The marketing approval will last for 10 years.


The EU's approval would be the first one for a gene-modified product since 1998. The European Commission is considering about 30 gene-modified products, including some from companies such as Bayer AG and Monsanto Co. Syngenta has also asked for permission to cultivate gene-modified sweet corn, both for field maize and sweet corn.


"It is a huge difference if you apply for cultivation or sale,'' said Banque Pictet analyst Patrick Lambert, who has a "buy'' rating on Syngenta.


Syngenta's application is less controversial because the company is asking for the right to import it, not to grow it, Lambert said. Still, some groups see cultivating gene-modified corn as damaging to the environment and health, he added.


"It doesn't really matter what happens on political levels. It is the consumers who will decide and for now they are still very skeptical toward gene-modified food in Europe,'' said Zuercher Kantonalbank analyst Bernd Pomrehn. He has an "overweight'' rating on the stock.


Syngenta officials do not anticipate high sales of the product.


"This will be an important step to open up for new technologies and products in addition to contributing to create a favorable environment for science and research, but it won't have any immediate financial impact,'' Syngenta spokesman Markus Payer said. "It will take some time to broaden acceptance of gene-modified food in Europe.''


"We hope that the approval for imported gene-modified sweet corn will also ease approval for cultivation in Europe,'' Payer said. "Ultimately it is the consumer who will decide.''


A request for a gene-modified sugar beet, the so-called Event 77, which was filed together with Monsanto has been withdrawn because the company does not see any potential for the product, Syngenta's Payer said.


Gene-modified food products at Syngenta made up about 3 percent of the company's $6.6 billion in revenue last year. It invested $146 million last year on research in biotech.


"It is in our strategic interest to grow our seed business, we have just recently acquired Advanta's North American corn and soya business, which also includes gene-modifying technology,'' Payer said. He declined to give a specific target for the gene-modified products.


Last week, Syngenta bought Dutch Advanta BV's North American corn and soybean business for 239 million euros ($286 million).


The European Union ban affects products ranging from grain to tomatoes whose genetic material has been altered to add beneficial traits. Examples include soybeans that are not harmed by weed-killing chemicals and corn that protects itself against certain insects.


Syngenta's Bt11 sweet corn is allowed for sale in Switzerland, the U.S., Canada, Argentina, South Africa, Australia, New Zealand, Japan, South Korea and the Philippines. The U.S., Canada, Argentina, South Africa and Japan permit it to be grown as well.

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