Thursday, May 19, 2016
UC Davis wins early ruling in strawberry lawsuit
By Dale Kasler
UC Davis and its lucrative strawberry-breeding program have won an important early victory in a lawsuit filed by two former campus scientists who have formed their own strawberry-breeding company.
A federal judge in San Francisco last week rejected an attempt by the two former UC Davis scientists’ new company, California Berry Cultivars LLC, to gain control of a family of valuable strawberry plants located in a campus greenhouse. U.S. District Judge Vince Chhabria rejected California Berry’s request for a temporary restraining order that would have forced UC Davis to turn over copies of the plants to a third-party grower so they can be bred this summer into strawberries.
The judge’s ruling doesn’t end the case, but it suggests California Berry faces an uphill battle. In denying the request, Chhabria wrote that California Berry “has not shown a likelihood of success on the merits” of the case.
The two scientists, Douglas Shaw and Kirk Larson, left the university in late 2014 to start California Berry. The company’s lawsuit says UC Davis is illegally trying to squelch competition by denying the company access to the strawberry plants, which were developed by Shaw and Larson.
The plants, known collectively as the germplasm, can be vital to developing new varieties of strawberries.
California Berry’s suit is the second case filed against the university over the strawberry program, which generates millions in patent royalties for the university. In 2014 the California Strawberry Commission, an association controlled by growers, accused the university in a lawsuit of allowing the breeding program to collapse after Shaw and Larson’s departure. Growers rely heavily on the breeding program; strawberries developed at UC Davis generate about half of California’s $2.6 billion-a-year crop. The Strawberry Commission’s suit was settled after the university hired a replacement for Shaw and Larson.
Dale Kasler: 916-321-1066, @dakasler, email@example.com
Merced Sun Star
Los Banos-area farmers seek voice in High-Speed Rail Project
By Vikaas Shanker
LOS BANOS – Los Banos-area farmers worry their livelihoods and family legacies will be threatened by the California High-Speed Rail project, yet the benefits of the rail line will be sent elsewhere.
During an informational meeting held this week in Los Banos, farmers pressed representatives of the California High-Speed Rail Authority to take their interests into consideration while planning the rail system that is expected to eventually stretch from Sacramento to San Diego.
“This is going to be a big hardship on me,” local farmer Robert McDonald said.
McDonald said the project would cut through 1 1/2 miles of his property and could jeopardize the high quality of his water well. He also is concerned about the accuracy of appraisal values and encroachment upon farmland.
Monday’s meeting, the first of three regional open house sessions being held this month, allowed the public to view detailed maps of the plan and ask questions about how the project will affect the land. Another session was held Tuesday in San Jose, and a third open house will be held Thursday at 5 p.m. at the Gilroy Senior Center, 7371 Hanna St.
Northern Regional Director Ben Tripousis said the feedback was part of a process of gathering information about the high-speed rail project from those who are most affected.
“It speaks volumes about why we are reaching out to the local communities,” Tripousis said. “Minimizing impact is central to our abilities.”
The high-speed rail project aims to connect the Bay Area to Southern California through the Central Valley. High-speed trains are faster than normal trains, with officials expecting to zip from San Francisco to Los Angeles in less than three hours.
The plan, split up in phases, would connect Sacramento and Modesto to Merced, with a separate line coming from San Francisco to Merced with stations in San Jose and Gilroy.
The line would go south through Madera, Fresno, Kings and Tulare, Bakersfield and Palmdale before heading through Burbank into Los Angeles. Another Los Angeles line would round into San Bernardino and Riverside heading to San Diego.
Although the San Francisco line crosses Los Banos on its way to Merced, there is no proposed station near the city. Farmers say they would bear the economic cost of their land being divided without seeing the benefits because residents still would need to drive west to Gilroy or east to Merced to board the train.
Others, such as Los Banos farmer Gene Vierra, said the plans presented a personal cost, taking land that has been farmed by generations of family members.
“Our land has been in the family for 107 years,” Vierra said. “It’s about legacy. We were born on the ranch. Our DNA is there. Our pets are buried there.”
Breanne Ramos from the Merced County Farm Bureau gave the rail authority a list of requests.
Those requests included using the bureau as a way to disseminate information to farmers, providing ample time for landowners to submit comments and letters and time to comply, ensuring contractors are abiding by guidelines relating to giving notice to landowners and including in plans local irrigation districts’ work on subsidence.
Some of the comments were heated and accusatory in nature. But Tripousis said the High-Speed Rail Authority is working hard to “follow the letter of the law,” and give landowners fair, market-value deals.
According to current project plans, the first phase would build a line from San Francisco to Los Angeles and Anaheim, becoming operational by 2029 and costing an estimated $64.2 billion.
The segment from San Jose to just north of Bakersfield, expected to be operational by 2025, is fully funded and would cost $20.7 billion.
Construction on 119 miles of the line is underway from Madera to north of Bakersfield.
The rail authority noted that the project would include investments from 266 certified small businesses statewide, including enterprises employing disadvantaged people and disabled veterans.
The first phase of the project is expected to employ about 67,000 annually for 15 years, according to updated plans.
Los Angeles Times
Produce industry giants team up to promote responsible labor practices
By Richard Marosi
Faced with growing questions from consumers about where their food comes from, the nation’s largest produce industry groups say they are joining forces to promote responsible farm labor practices — the latest and possibly most significant attempt by the industry to rid its supply chains of abusive treatment of workers.
The move by the Produce Marketing Assn. and the United Fresh Produce Assn., still at an early stage, would be the industry’s first attempt to unite thousands of growers, distributors and retailers behind a global approach to raising worker standards.
It was prompted in part by a Los Angeles Times investigation, published in late 2014, that exposed widespread labor abuses at Mexican export farms. That series led to reform pledges by Wal-Mart and the Mexican government, and raised consumer awareness of tainted supply chains.
“We’re at a point in society where there’s just a tremendous amount of interest in where food is grown and how it’s grown,” said Tom Stenzel, chief executive of United Fresh. “It’s an evolution. Ten years ago we weren’t getting those questions from consumers.”
Stenzel said the initiative may be partly modeled on the audit-based approach adopted by the apparel and electronics industries after they came under scrutiny for harsh labor conditions.
The joint committee established by the associations is co-chaired by the chairman of Sam’s Club, and Stenzel said all players in the supply chain, including labor groups, will be permitted to participate.
“If we’re going to do this right we have to listen to everybody and have an open and transparent process,” Stenzel said this week.
The effort, like other industry-led initiatives, is getting a mixed reception. Considered an important and symbolic step to address the issue, the effort’s credibility will hinge on various factors, labor groups and industry experts say, including its willingness to include certification and labor groups in the process.
“When the two major produce trade organizations come together to recognize that more needs to be done on labor issues, we applaud those efforts,” said Erik Nicholson, vice president of the United Farm Workers. “They haven’t reached out to us, which leaves us feeling a little skeptical. But we hope that happens in the near future so we can work together.”
The move comes at a time when boycott campaigns, media scrutiny and shifting consumer behavior have kept the industry under constant pressure. Supermarket shelves feature fresh produce from all over the world, creating supply chain challenges that span borders.
Boycott campaigns and other public pressure have helped the Coalition of Immokalee Workers, a Florida-based labor movement, force Taco Bell, Wal-Mart, Burger King and other companies to join its Fair Food Program, which among other things provides bonus pay for workers.
Farm laborers in Baja California are pushing a boycott campaign against Driscoll’s, the world’s largest berry distributor, despite the company’s suppliers in the region paying some of the highest farm worker wages in Mexico.
The Times’ “Product of Mexico” series exposed the harsh living and working conditions experienced by laborers at Mexican farms that supply Wal-Mart and other U.S. retailers. Many lived essentially trapped in squalid labor camps, often without beds or reliable water supplies, and had their pay illegally withheld.
The series, along with media coverage of a labor strike of pickers in Baja California, has contributed to reforms in Mexico. They include a historic agreement to raise wages in Baja California and the formation of a social responsibility trade group to improve the lives of more than 1 million laborers.
But progress has been mixed, and much resistance remains.
The industry’s challenges, experts say, are similar to the ones it faced a decade ago, when it was forced to raise food safety standards to satisfy consumers. That effort proved largely successful after growers quickly began adopting minimum standards pushed by U.S. retailers.
Tackling labor issues will be more complicated. The approaches favored in the past by the industry, which include creating globally recognized worker standards, are criticized by some for lacking enforcement mechanisms. And proposals raised by labor groups have been rejected as too costly.
On the positive side, motivation should not be lacking. “There’s a desire for companies to get ahead of this game … because consumers are concerned about these issues … and retailers want to be able to present to their consumers that they’re protecting their supply chain from abuse,” said Jim Prevor, a leading produce industry analyst.
Among the groups most eager to get involved are the many that conduct workplace audits and other certification services that retailers increasingly use as a way to assure consumers that their food is ethically produced.
Peter O’Driscoll, executive director of the Equitable Food Initiative, a certification program that includes laborers in workplace issues and counts Costco among its partners, said the industry’s effort sends a clear signal on responsible labor practices.
“These two organizations are making an important statement that this issue needs to be dealt with,” he said. “It puts it on the map and now we can start focusing on specifics.”
firstname.lastname@example.org, Twitter: @ricardin24
Wall Street Journal
Bayer Proposes to Acquire Monsanto
Takeover deal, which could be valued at $42 billion, would create world’s largest seed-and-pesticide company
By Jacob Bunge and Dana Mattioli
Bayer AG has approached Monsanto Co. about a takeover that would fuse two of the world’s largest suppliers of crop seeds and pesticides, the companies said.
Details of the offer couldn’t be learned and it was unclear whether Monsanto would be receptive to it. Should there be a deal, it could be valued at more than $42 billion, which is Monsanto’s current market capitalization.
Monsanto in a statement confirmed the approach, reported earlier Wednesday by The Wall Street Journal, saying the company had received “an unsolicited, non-binding proposal” for a potential acquisition. Monsanto’s board of directors is reviewing the proposal, and the company said there was no assurance a deal would happen.
Bayer early Thursday confirmed that executives from the German company had met with executives of Monsanto to discuss a possible acquisition, saying a tie-up would “create a leading integrated agriculture business.”
Bayer supervisory board member Reiner Hoffmann said later Thursday that Monsanto “is a complementary business. There will be synergies.”
Should the bid succeed, a combination of the companies could boast $67 billion in annual sales and create the world’s largest seed and crop-chemical company. A successful deal would ratchet up consolidation in the agricultural sector, after rivals Dow Chemical Co., DuPont Co. and Syngenta AG struck their own deals over the past six months.
But there is no guarantee regulators would bless such a tie-up, and if Monsanto isn’t on board, winning regulatory approval could be an even greater challenge. Indeed, people familiar with the matter have questioned whether Monsanto would be interested in such a deal.
Absorbing St. Louis-based Monsanto, the world’s top seed company in terms of sales, would push Bayer far more deeply into agriculture, which currently accounts for about 22% of the German company’s business. Monsanto’s $15 billion in seed and herbicide sales could make agriculture about 40% of the combined entity’s business, with the rest coming from pharmaceuticals and consumer health products.
The approach comes as the agricultural sector faces heavy pressure after three years of sliding crop prices, which slashed U.S. farmers’ income to the lowest level in over a decade and forced companies to cut prices on seeds while scaling back research and laying off staff. Monsanto in May cut its profit forecast for the year and is eliminating about 16% of its employees.
Folding Monsanto’s world-leading seed franchise and its trademark Roundup herbicide business into Bayer would create a company that could market products ranging from Aspirin pain-relief pills to crop genetics that enable plants to withstand bugs and weedkillers. The combination would sell about 28% of the world’s pesticides and about 36% of U.S. corn seeds and 28% of soybean seeds, according to Morgan Stanley estimates.
The companies’ agricultural portfolios are geographically complementary, with North America as Monsanto’s largest market and Bayer having a greater presence in Europe and Asia. Bayer’s broader portfolio of chemicals to kill crop-damaging bugs and weeds can be sold across more countries than the 28 that permit genetically modified crops, a business where global growth has slowed.
As crop prices have fallen around the world and biotech seeds have neared a point of saturation in major markets where they are allowed, such as the U.S. and Brazil, world-wide acreage of genetically engineered crops edged 1% lower last year, the first such decline on record, according to the International Service for the Acquisition of Agri-Biotech Applications.
Bayer has no significant business in corn and soybean seeds, the two largest U.S. crops in terms of acreage, though overlap in the companies’ vegetable and cotton seed units may need to be addressed through divestitures, analysts said after Bloomberg reported last week that the German company was considering the approach.
Merging the businesses could require Bayer to divest itself of its glufosinate herbicide business, which competes with Monsanto’s Roundup, as well as related seed genes that allow corn, cotton and soybean seeds to withstand the herbicide, analysts said.
Monsanto sparked the deal fervor last year with an unsuccessful, $46 billion bid for Swiss rival Syngenta AG, which ultimately agreed to sell itself to China National Chemical Corp., while Dow Chemical Co. and DuPont Co. unveiled their own merger. That left the other major global seed and pesticide players—Monsanto, Bayer and BASF SE—to potentially face enlarged rivals, and entertain a narrower range of potential partners.
Hugh Grant, Monsanto’s chairman and chief executive, said last month that his company no longer planned to pursue big deals to grow, instead focusing on its core business and weighing partnerships or joint ventures to develop a broader pesticide business. Monsanto’s currency for deals has also waned. The company’s share price had declined 8.3% for the year before reports last week that bidders, including Bayer, were considering an offer for the biotech seed giant.
A combination of the two companies could achieve Monsanto’s goal in the Syngenta deal: adding a broad portfolio of pesticides and deep research capabilities to match Monsanto’s prowess in breeding and engineering high-yielding seeds paired with new and more powerful crop sprays. In pitching the Syngenta deal to investors and farmers, Monsanto touted the potential to reduce research spending by combining functions and the potential to bring new products more quickly to farm fields.
Another seed-sector merger would also test farmers’ appetite for consolidation. Monsanto’s bid for Syngenta and the Dow-DuPont merger plan have heightened concerns over competition in the U.S. Farm Belt, with a shrinking number of firms overseeing greater swaths of the seed and pesticide business. The National Farmers Union and other groups raised concerns that the mergers could yield higher prices and fewer choices at grain elevators and crop supply stores where farmers purchase their seeds and sprays.
—Christopher Alessi in Frankfurt and Andrea Thomas in Berlin contributed to this article.
Write to Jacob Bunge at email@example.com and Dana Mattioli at firstname.lastname@example.org
Corrections & Amplifications:
Folding Monsanto into Bayer would create a company with a combined $67 billion in annual sales. An earlier version of this article incorrectly stated the figure as $68 billion. (May 18, 2016)
Non-GMO demand growing despite report that says GMOs are safe
By Hadley Malcolm
Research may prove genetically modified organisms are safe to eat, but the swelling trend toward non-GMO foods shows that many skeptical shoppers don’t care.
Data show that customers want non-GMO foods, and companies will continue to face pressure to introduce non-GMO products to meet demand.
A report out Tuesday that took two years to compile concluded that genetically modified crops do not adversely affect human health. A committee convened by the National Academies of Sciences, Engineering and Medicine reviewed more than 900 studies and 20 years worth of data. Despite its thoroughness, it’s not likely to drastically alter consumer opinion, says Darren Seifer, food and beverage industry analyst at NPD Group.
The reason: At the crux of the debate over GMOs is the fact that it’s one largely “based on fear, not logic,” Seifer says. And the stakes are high when people feel like they don’t know what they’re eating.
“Consumers are looking for purity in their food,” Seifer says. “Particularly for those that try to find that authenticity in their food, (the report) is not going to phase them.”
Non-GMO advocates reiterated that thought. A Los Angeles-based online subscription company that exclusively sells non-GMO food to about 250,000 customers around the country says the report is only the latest in a string — with many conflicting when it comes to their findings.
“We feel like it’s too early to know if it’s safe,” says Gunnar Lovelace, co-CEO of Thrive Market. “We are taking a huge risk in inserting GMOs into the food stream at the rate we are.”
The report found that genetically engineered crops have not caused increases in cancer, obesity, autism or a number of other health risks.
Concern over GMO ingredients has grown in recent years, swept along by local ballot measures that proposed requirements for labeling foods with GMOs. Increasingly, the phrase GMO became part of the question about what’s considered safe, healthy and natural food. Sales of foods labeled as non-GMO have gone from $12.9 billion in 2012 to $21.2 billion in the year ended April 30, according to Nielsen.
And yet, most people don’t understand what genetically modified organisms are. In a survey NPD conducted in 2013, when asked to describe in their own words what GMO means based on what they’d heard or read, the most common response NPD got was, “I don’t know.”
Non-GMO products make up a very small portion of the overall food supply. An analysis last month of products in grocery store aisles by data company Label Insight found that non-GMO labels were most prevalent in categories such as diet and nutrition, where just 1.2% of products had the label, and snacks, cookies and candy, where 1.1% of products were labeled non-GMO.
But demand is brewing, and major food companies are rushing to cater to this fledgling customer segment. Earlier this month, Hershey launched a non-GMO version of its chocolate syrup, emphasizing that the pared down sauce was made from just five ingredients people “recognize, know and trust.” Nestle last month updated some of its Dreyer’s and Haagen-Dazs ice cream flavors to be non-GMO.
Del Monte committed to getting rid of GMOs in its fruit cups and vegetables this year, which it told USA TODAY “is not a statement about the science around this issue, but a direct response and commitment towards meeting the evolving preferences of many consumers.”
The report is unlikely to have much effect on the businesses that supply farmers or the farmers themselves because they’ve been strong advocates of the technology all along, says Chad Hart, a professor of agricultural economics at Iowa State University in Ames, Iowa.
Since the mid-1990s, U.S. commodity crop farmers growing feed corn, soybeans, cotton, canola and sugar beets switched almost entirely to genetically modified varieties because of the cost savings, so for them the report simply supports what they’ve long believed.
Still, the issue will keep cropping up, because new GMO traits and crops are always in the pipeline and each new food type will require close study.
“I don’t think this is the last word,” Hart says. “I don’t think there is a last word.”
Wall Street Journal
Study Projects TPP Will Provide Modest Gains for U.S. Economy
If ratified, 12-nation Pacific trade deal would buoy agriculture and services, but hurt manufacturing
By William Mauldin
President Barack Obama’s signature Pacific trade agreement, which has come under intense fire in the 2016 election, would boost American agriculture and the services sector that dominates the U.S. economy but weigh on manufacturing, a nonpartisan government agency said Wednesday.
If ratified, the 12-nation trade agreement would likely lift U.S. gross domestic product by a small amount—0.15%, or $42.7 billion, by 2032—and increase employment by a net of 128,000 full-time jobs, according to the report from the U.S. International Trade Commission.
Signed in February, the Trans-Pacific Partnership, or TPP, would lower or eliminate tariffs and drop many other trade barriers between the U.S. and Japan, Canada, Mexico, Australia, Vietnam, Malaysia and five other countries around the Pacific, not including China.
U.S. food and agriculture would get a big boost from the TPP, which would lower barriers to U.S. exports to Japan and other countries. The services sector would get a $42.3 billion lift by 2032, including $11.6 billion for business services and $7.5 billion for retailers and wholesalers. But output in manufacturing would decrease slightly under the TPP, as the trade deal opens some U.S. companies to greater competition.
The U.S. trade balance with TPP countries would improve over 15 years, the ITC says, but the overall U.S. trade deficit is unlikely to change much due to the TPP.
In recent months the presumptive Republican presidential nominee, Donald Trump, and the Democratic front-runner, Hillary Clinton, have rejected the TPP.
Now Congress is unlikely to consider the deal, which requires majority votes in the House and Senate, before the November election.
Mr. Trump and Sen. Bernie Sanders, Mrs. Clinton’s Democratic rival, have slammed past trade agreements and blamed U.S. trade policy for the uncertain labor market and stagnant incomes that have hurt many of their supporters.
If anything, the The ITC report and other reviews by economists show the deal’s impact of the TPP is likely to be extremely small on the overall U.S. economy and most industries.
Still, the ITC study could help claw back some congressional support for Mr. Obama’s trade policy.
Mr. Obama is set to travel to Vietnam next week with U.S. trade representative Mike Froman to promote the TPP and lay the groundwork for the implementation of the deal. The administration is billing it as a strategic bulwark against China’s increasing military and economic assertiveness in the Pacific region.
“What cannot be quantified in this study or any other is the cost to American leadership if we fail to pass TPP and allow China to carve up the Asia-Pacific through their own trade agreement,” Mr. Froman said in a statement.
A previous study, co-authored by Peter Petri of Brandeis University, said the U.S. could get extra economic growth of about 0.4% by 2030 if the TPP is enacted. Vietnam’s economy could get a 10% boost in that period, according to that study.
Yet another study, published in January by Tufts University, forecast the TPP would result in a reduction of 0.5% to U.S. GDP over 10 years. Many economists who support freer trade have since criticized the Tufts study, saying it doesn’t accurately model effects of the trade agreement.
Meanwhile, the Obama administration says the ITC study doesn’t take into account all the TPP’s benefits, including the reduction in regulatory barriers to trade that can’t be measured in the same way as tariffs.
Predictions of growth and income due to trade agreements are difficult to make before the deals are implemented, and assessing the actual impact of trade agreements such as the North American Free Trade Agreement is still difficult years down the road, economists say.
Individual trade agreements have a much smaller effect on U.S. income and jobs than the overall trends in globalization, technology, demographics and productivity, they say.
Democratic lawmakers, labor leaders and environmental activists have said the TPP doesn’t go far enough to raise standards in Vietnam to prevent multinational companies from shifting U.S. jobs there or to other countries. Activists protested in front of the ITC in Washington on Wednesday, saying the report was designed to expedite passage of the TPP. The ITC is an independent government agency that includes three Democratic commissioners and three Republicans, all confirmed by the Senate.
But increasingly, Republicans aligned with the tea party and Donald Trump have also questioned trade agreements, a trend that could make it hard for House Republican leaders to muster votes for the deal.
Backed by business groups, some Republicans who support lifting trade barriers—including House Speaker Paul Ryan and Finance Committee Chairman Sen. Orrin Hatch—are demanding changes or clarifications to the TPP to protect the intellectual property of biologic drugmakers for longer periods or loosen the rules on customer data for financial institutions.
The administration is working with Republican lawmakers and trading partners on resolving these concerns.
Write to William Mauldin at email@example.com