Market sceptical of ban as EU glyphosate review gets underway

The herbicide glyphosate will continue to be used by farmers globally for the foreseeable future unless a suitable and safe alternative is found, despite the recent rise in public concern on the safety of its use, market sources told Agricensus.

Pressure on the use of the herbicide and its maker Monsanto, now owned by Germany's Bayer AG, has mounted in recent months after two US cases ruled that the chemical caused cancer in two groundsmen.

Bayer has been ordered to pay a combined $114 million in damages and has seen its share price fall by over 20% since last August.

A similar case in France ruled in favour of a farmer who is now seeking €1 million ($1.1 million) in damages from Monsanto.

And most recently Vietnam has announced it will ban the use of the crop.

But the biggest threat to Monsanto is an EU decision over whether to renew its licence when it expires in 2022.

That process will start in December this year, with the review led by the Netherlands, France, Hungary and Sweden, which together have accepted the heavy workload this Monday.

Despite several EU member states indicating that they could ban its use, few think the EU will announce a blanket ban, preferring instead to leave it to member states.

“There will be immense pressure both ways, but without a reliable, safe alternative I think they’ll extend for another five years,” one market source said regarding the EU’s licence renewal.

The stakes are high, with the EU claiming that the review will be undertaken by experts in four countries and not just one, as is the usual process, claiming the “very large application dossier and the related high workload” was too much for one member state.

Besides, no country volunteered to review the chemical on behalf of the bloc, not after the controversy of the last review, where German agencies were accused of bias by relying too heavily on scientific evidence submitted by Bayer.

Prevalent

The use of glyphosate – commonly known as Roundup – is so prevalent that there are nearly 200 retail products on sale in the US alone that contain it.

On an industrial scale it is estimated to be used on 80% of genetically modified crops – that amounts to the vast majority of soybean and corn production globally.

Proponents of its use say that there is no alternative and that it prevents crop failures by maintaining row crops.

Opponents say that there are biological and natural substitutes.

In writing this piece, Agricensus contacted eight consultants and analysts for comment. None were willing to speak publicly about the herbicide, with several stating that they did not want to anger big clients.

A US-based market analyst speaking on condition of anonymity said about potential safety reviews of its use that “it’s going to be years before it really has any market impact,” as there is no clear substitute available.

Over 95% of the corn and soybean planted in the US is genetically modified to make it resilient to Roundup and dubbed Roundup-ready seeds.

Those seeds, also sold by Monsanto, give higher yields as weeds are more easily removed by blanket application glyphosate enabling more space and nutrients to get to the crop.

Yet a ban would not be as dramatic to yields as initially thought as alternatives have been found for other once key banned herbicides and pesticides over the years.

Glyphosate is unlikely to be any different.

Brazilian famers used the same GMO seeds as they apply a no-tilling approach to farming, a technique that reduces erosion of lands, but which requires significant amounts of glyphosate.

“Farmers will fight any national ban that might come up – and farmers have huge influence on Congress and government here,” a Brazilian market analyst said, who again spoke on condition of anonymity.

However, if there is a push from the buyers of soybeans and corn – for this read China, Southeast Asia and the EU – to ban row crops that have been treated with the herbicide, then that may pressure growers in North America and South America.

And collectively, the Americas accounts for more than 70% of the world's corn exports and 80% of soybeans.

“If bans occur in countries that import Brazilian soybeans, that’s a different story. If they stop buying, Brazilian farmers will have to adapt,” the analyst added.

A ban on the chemical is therefore not expected to impact yields drastically, rather the profitability of farms using glyphosate-intense techniques such as no-tilling will be hit badly.

The EU review is due to conclude in October.