Dow Jones | December 21, 1999
By all accounts, he riveted the crowd at his forum. A loyal following ensued, one that some have called almost a personality cult. At a dinner in Chicago's Field Museum after the conference, one enamored employee hung her name tag around Mr. Shapiro's neck. Soon, others were doing likewise.
Within months, project teams on "sustainability" - focusing on topics like world hunger and global water supplies - started up within Monsanto. Preaching that Monsanto needed to become an "ecosystem" capable of making decisions quickly, Mr. Shapiro ordered executives out of big offices and into cubicles. They were linked in a novel organizational structure called "two in a box" that forced managers from different departments to work together.
The business Monsanto had pursued for close to a century, commodity chemicals, was spun off. Instead, the company invested heavily in the pharmaceutical half of the life-sciences equation Mr. Shapiro envisioned. And in the agricultural half, it went all-out: buying seed companies and gene technology and ultimately spending several billion dollars to build a crop-biotech empire.
Mr. Shapiro approved paying huge premiums to buy seed producers, figuring Monsanto needed them to get its genes into the hands of farmers. Two years ago, the company paid $1 billion for a family-owned seed company in Iowa that had roughly $50 million in yearly revenue.
As a marketer, Monsanto, when it made commodity chemicals such as carpet fiber, was accustomed to staying in the background. Mr. Shapiro evidently didn't have a clear plan to get public acceptance of bio-engineered food. "He didn't realize that he had to start thinking like a food executive," says Bill Jorgenson, managing principal of SJH & Co., a food consultant in Danvers, Mass.
The first genetically modified seeds Monsanto brought to the world didn't have anything to do with healthier food or cheaper drugs, the vision that inspired Mr. Shapiro's followers. Instead, they were products created in the laboratory to sell more of a Monsanto weedkiller called Roundup.
The potent herbicide will kill almost anything green. In 1996, Monsanto began selling seeds for soybean plants it had genetically altered so they could survive a dousing with Roundup. This made it far easier for farmers to get rid of weeds. No longer would they have to drive their tractors across soybean fields several times every year rooting out the weeds mechanically. They lined up to plant Monsanto's "Roundup-ready soybeans" - and buy more Roundup.
As it turned out, tinkering first with soybeans, of all crops, was a bad idea from a consumer standpoint. A lot of American soybeans go to Britain, where food calamities such as mad-cow disease had made consumers extremely wary of any food seen as unnatural. Some consumers felt trapped, because soybeans are ubiquitous in British grocery stores as an ingredient in foods ranging from cooking oil to candy.
Europeans began claiming a right to know whether food contained ingredients from genetically modified plants. It became such a torrid issue that the European Union imposed mandatory labels on some foods with such ingredients. And soon, British grocery chains were racing to advertise house brands as "GMO-free" - no genetically modified organisms.
Mr. Shapiro wishes now that, instead of herbicide-resistant soybeans, he had entered the marketplace first with a crop genetically modified to make healthier cooking oil or vitamin-enriched food. "Certainly if our first products had been something that had health benefits, it would have been easier to make our case. Then many consumers would have seen benefits, like has happened in the pharmaceutical world," where biotechnology isn't such a cause of opposition.
Early this summer, the efforts of European environmental groups fervently opposed to genetically modified foods began to raise awareness of them in the U.S. The activists argued that the crops risked inadvertently unleashing genes in the environment, with unpredictable effects.
Regulators such as the Food and Drug Administration hadn't interfered with genetically modified crops, seeing no reason to think they weren't safe to eat. But surveys now show that the vast majority of Americans want such foods labeled. A labeling bill has been introduced in Congress, and the FDA has held hearings on the matter.
So now, after three years of surging sales of modified seeds by Monsanto, Novartis and others, the business has hit a hitch. The industry now expects sales to farmers to flatten or drop next year. While few Midwestern farmers share the environmentalists' concerns, they fret that the crops won't be exportable to Europe or that food companies will stop buying them to avoid the issue.
Mr. Shapiro's dream goes far beyond soybeans and corn (which is made resistant to insects so it doesn't need to be sprayed with pesticide). Monsanto has also been trying to genetically engineer colored cotton that would reduce the need for synthetic dyes. For the developing world, it is rigging canola and mustard plants to make nutrients such as beta-carotene, a vitamin A source; the plants' oil could be cheaply added to spreads and other foods. Monsanto is also trying to engineer soybeans whose texture and flavor mimic meat, making soy a more pleasing source of protein.
Impressive, some say, but will it sell? "You don't build a business around research - you build it around consumers," says Charles Arntzen, president of Boyce Thompson Institute for Plant Research at Cornell University. To him, "Shapiro is brilliant, but he is wrong."
And how does Mr. Shapiro feel, seeing a vision he figured could serve both humanity and shareholders come under such attack - its products labeled "Frankenfoods" and the company demonized as "Monsatan"?
He leaves no doubt of how misguided he thinks the environmental activists opposing genetically modified food are, and he even suspects short-seller investors, those who profit when a stock declines, might have some role in the horrible press Monsanto has been getting. As for himself, though, he simply says, "Everybody likes to see themselves as Jimmy Stewart: In the end everyone picks you on their shoulders and carries you around the room and sings he's a jolly good fellow. But this is the real world. There are people who have concerns about the technology and are expressing them."
Mr. Shapiro says he is sure that farm biotech will eventually be recognized as "a very important tool in feeding people and moving toward sustainable agriculture." But in the meantime, he adds, "Democracy is a pretty robust process."
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