WSJ has a few interesting articles on Green efforts winning vs. other industries due to the fact that Green strategies uses less resources. This article compares Monsanto an engineered food company which claims it is 30% more efficient in using land, water, and energy to produce food than other food. The article then goes on to compare the stock price of Monsanto vs. Whole Food. Monsanto is the winner.
Food Shortage Recasts Image of 'Organic'
By KAREN RICHARDSON
June 25, 2008
The salad days of organic salad are wilting in favor of high-tech tomatoes.
As global food shortages threaten to ignite social and economic instability from Nigeria to India, the popular aversion to genetically modified foods is turning into more of a luxury for the wealthy than a practical option for the masses.
This trend is evident in the share price and earnings growth of Monsanto, the world leader in agricultural biotechnology by market share. Its stock has soared 22% this year, trading at a breathless 37 times estimated 2008 per-share earnings. On Wednesday, the company is expected to report a third-quarter profit of $1.39 a share, up 35% from a year earlier.
Gourmets' fears of "frankenfoods" that make corn taste like cardboard seem to be taking a back seat to the growing global demands of feeding emerging middle classes in developing countries with limited natural resources.
Monsanto's seeds produce insect-resistant, drought-tolerant crops. It has pledged to double crop yields by 2030 for corn, soybeans and cotton and to reduce the need for water, land and energy by 30%, an effort to position itself as a solution to concerns about mounting strain on the globe's natural resources.
The firm is in a strong position. Farmers who want to raise their yields of corn for feed or ethanol have to pay the price, while buyers of that corn have to eat it. Monsanto has already increased its earnings outlook several times this year because of demand and higher prices.
It stands in stark contrast to Whole Foods Market, the supermarket for all things organic. It is a price taker that can't easily pass higher costs to its customers. From 2001 to the end of 2006, the company's earnings grew an average annual rate of 25%. In 2007, earnings were down more than 10%, and they're falling further.
Engineered food is clearly getting an upper hand.