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Proposition 37 Could Spur Fertilizer Profits

October 15, 2012
By: Davis Michaelsen, Pro Farmer Inputs Monitor Editor

There is more at stake on election day this year than the Oval Office. In California, voters will weigh in on Proposition 37 which has the potential to set a precedent that could affect agriculture worldwide.

Proposition 37 would require that any food containing genetically modified organisms (GMO) carry a label that indicates a GMO component. Some estimates calculate that up to 70% of the foods on grocery store shelves in America are touched by GMOs in some way. Prop 37 would also require that any food containing GMOs may not be labeled as 'all natural'. These two are benign enough, and in the spirit of transparency and disclosure, no real harm is to be done.

The third requirement gets a little dicey. This feature allows for either the government or a private citizen to file a lawsuit over mislabeled food without requiring the litigant to demonstrate any damages. This exposes GMO producers like DuPont and Monsanto to tremendous risk from activist litigation, particularly since no damages would have to be demonstrated.

Monsanto and DuPont have reportedly paid out $35 million between the two of them in an anti-Prop 37 campaign.

The silver lining could come for fertilizer producers, however. If GMOs are shunned by the public, more fertilizers will need to be used to keep pace with yield expectations in the absence of GMO seed. With Canada's Canpotex sitting on India and China's August/September potash shipments, Prop 37 would augment demand in a year when nutria has already taken center stage, increasing profits for nutrient producers.

If Proposition 37 passes in California, look for GMO producers like Monsanto and DuPont to dip in the immediate aftermath while nutrient producers will undoubtedly benefit from increased demand.


 

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