Monsanto Looks to Sell Dairy Hormone Business

After struggling to gain consumer acceptance, Monsanto on Wednesday announced that it would try to sell its business of producing an artificial growth hormone for dairy cows. The company will focus instead on its thriving business of selling seeds and developing ways to improve crops. The decision comes as more retailers, saying they are responding to consumer demand, are selling dairy products from cows not treated with the artificial hormone.

Wal-Mart, Kroger and Publix are among the retailers that now sell house-brand milk from untreated cows. Almost all of the fresh milk sold by Dean Foods, the nation’s largest milk bottler, also comes from cows that were not treated with the artificial hormone, a spokeswoman said.

Monsanto officials said the decision was not related to the retail trend and that business for the artificial hormone, sold under the brand name Posilac, remained brisk. Monsanto, which is based in St. Louis and is the only commercial manufacturer of the hormone, declined to provide sales numbers.

Selling Posilac “will allow Monsanto to focus on the growth of its core seeds and traits business while ensuring that loyal dairy farmers continue to receive the value of Posilac in their operations,” Carl Casale, Monsanto’s executive vice president for strategy and operations, said in a statement.

The growth hormone, approved by the Food and Drug Administration in 1993, was one of the first applications of genetic engineering used in food production. When the artificial hormone, which is made in genetically modified bacteria, is injected into cows, it increases milk production by about a gallon a day. A 2007 survey by the Department of Agriculture said 17 percent of the nation’s dairy cows were receiving it.

Despite the government’s approval, many advocacy groups have long maintained that Posilac is bad for the health of cows. Some even claim it could pose a cancer risk in people, though little scientific evidence has emerged to support that view. Their concerns have been fueled by the refusal of many countries, including Canada and members of the European Union, to permit the use of the hormone. “I think they saw the handwriting on the wall and gave up,” said Andrew Kimbrell, executive director of the Center for Food Safety, a consumer advocacy group based in Washington. “It’s a major victory for consumers.”

Mr. Kimbrell said the original idea of marketing a growth hormone for milk production was flawed because milk is so emblematic of childhood. Fear of the effects of the artificial hormone was one of the primary drivers behind the growth of the organic dairy industry, he said.

But Elena Gonser, a dairy farmer in Everson, Wash., contended that consumers had been misled by misinformation. She added that Posilac, which is also known as bovine somatotropin or BST, was safe and effective. “I believe it’s just catering to ignorance to tell people it’s BST-free, and it’s better for you,” said Ms. Gonser, who along with her husband runs a farm that has 70 cows.

But she added: “I’m not surprised to find they want to step back from it. It’s gotten a bad rap for so long.”

Monsanto’s announcement comes after a year of pitched battles over labeling on dairy packages. A year ago, Monsanto tried unsuccessfully to persuade federal officials to crack down on labels that say the milk has been produced without the hormone, arguing that milk from treated cows was the same as that from untreated cows.

In the months since, a Monsanto-backed advocacy group and a handful of dairy organizations have struggled to have similar laws or regulations passed at the state level. In Pennsylvania, for instance, the secretary of agriculture banned the labels, only to have his order overturned by the governor amid a consumer uproar.

Monsanto will continue to sell and market the product until a buyer is found, said Christie Chavis, who leads commercial development and strategy for the company’s animal agriculture business unit. Posilac is sold in 20 countries. Ms. Chavis said that the artificial hormone was safe and also good for the environment, saying that it takes fewer cows and less resources to produce the same volume of milk.

Jim Werkhoven, a dairy farmer in Monroe, Wash., said he was disappointed when he learned of the move on Wednesday from a Monsanto industrial relations executive. “I certainly understand from a business perspective why they may be doing this,” he said. “At the end of the day, the customer is going to be the one that sets the rules, and at the end of the day, it’s going to be the customer that pays the price.”

(By Andrew Martin and Andrew Pollack, The New York Times, 07/08/2008)