DAMAGE CONTROL
German firm seeks to win back trust in agriculture business amid cancer lawsuits
Bayer looks to win back trust with plans to invest billions in new weedkillers,
Bayer AG plans to invest 5 billion euros ($5.64 billion U.S.) on developing new ways to combat weeds over the next decade, as the German chemicals and pharmaceuticals giant seeks to win back trust in its business in the wake of thousands of lawsuits alleging its Roundup herbicide causes cancer.
Abig legal fight over the blockbuster weedkiller — inherited with its takeover of Monsanto Co. last year — has plunged Bayer into one of the worst crises in its 155-year history. The company has lost the first three jury trials to plaintiffs claiming Roundup gave them non-Hodgkin lymphoma, with the highest award topping $2 billion. In response, its shares have almost halved over the past year.
While Bayer is appealing the jury verdicts and continues to vigorously defend the safety of Roundup and the active ingredient glyphosate, its announcement Friday shows how the company is being forced to change tack under pressure from its legal woes. Bayer said glyphosate would retain an important role in its portfolio but that it was also “committed to offering more choice for growers.”
The company said the 5 billion euros earmarked for herbicide development over the next 10 years would largely fit into the annual spending of 2.4 billion euros that it had previously estimated for agriculture R&D in coming years.
Herbicide research will represent about one-fifth of Bayer’s overall agriculture research investment, and the commitment announced Friday will include chemical research and regulatory expenses as well as new computer-driven farm-management services.
The company also said it would cut its “environmental impact” by 30% by 2030 through new technologies and making weedkiller use more precise, and that it would also be more transparent about the safety of its products. These measures, it said, would address health and environmental concerns Bayer has faced since buying Monsanto. Bayer also took out newspaper advertisements to promote its message.
The company’s leadership has faced intense criticism over its decision to buy Monsanto. At a heated shareholder meeting in late April, some 55% of shareholders refused to endorse management’s actions in the past year.
Bayer and other agricultural companies are already marketing new herbicides, as glyphosate’s widespread use on U.S. farms has contributed to weeds like palmer amaranth and waterhemp developing resistance to the world’s most widely used weedkiller.
Bayer said Friday that with glyphosate’s global success came “widespread use, weed resistance, and in some instances unintended misapplication.” Monsanto in recent years launched a new herbicide based on the chemical dicamba, along with soybean and cotton seeds genetically engineered to withstand the spray.
Some farmers have said the more-powerful weedkiller drifted onto neighboring fields and damaged nonmodified crops. Agricultural researchers estimate that millions of acres of crops have been damaged by drifting dicamba. Bayer has attributed the crop damage mainly to farmers misapplying the spray. In 2018 the U.S. Environmental Protection Agency said farmers could continue to use dicamba under tighter restrictions.
Rival Corteva Inc. is marketing a competing crop seed and herbicide combination, based around the herbicide 2,4-D.
The legal battle over Roundup could take years to resolve as Bayer has said it would appeal decisions and wait for the outcome of a few more cases before considering a settlement.
Investors say Bayer’s stock is likely to struggle until there is more clarity over how much the litigation will end up costing the company. Analysts’ estimates range from 5 billion euros to 25 billion euros.
In 2015 the International Agency for Research on Cancer, a World Health Organization unit, classified glyphosate as likely having the potential to cause cancer in humans. That classification triggered the wave of lawsuits. Bayer argues hundreds of studies and regulatory decisions around the world show Roundup and glyphosate are safe when used as directed.
In the U.S., where Roundup has become integral to farming, Costco Wholesale Corp. recently pulled Roundup herbicides from its stores. Certain cities in California, Florida, Minnesota and elsewhere have also forbidden use of glyphosate weedkillers on municipal property while other farmstate lawmakers have defended the herbicides.
Several European countries, including France and Austria, are considering phasing out glyphosate. Early this year, a French court banned a Roundup product with the ingredient, even though it still has a European Union seal of approval. A senior executive of German public rail operator Deutsche Bahn AG told a German weekly Friday that the company together with the German environment ministry would research alternatives for combating weeds along its 33,000 kilometers of tracks.
The company said it would invite scientists, journalists and representatives from nonprofits to participate in its efforts to secure re-registration of glyphosate in the EU—a review likely to trigger debate about safety. The process is expected to kick off later this year, with a vote in late 2022.