June 5 (Bloomberg) -- Monsanto Co., the world’s largest seed company, may face more complaints from farmers even as tests so far haven’t shown unapproved gene-altered wheat anywhere beyond an Oregon farm where it was found.
The company was sued in federal court in Wichita by a Kansas farmer who accused it of negligently releasing genetically altered wheat seed in the U.S. and damaging the market for his crop. The lawsuit filed June 3 by Ernest Barnes of Morton County, Kansas, may be the first of many against St. Louis-based Monsanto alleging contamination, his lawyers said in a statement.
"Monsanto has failed our nation’s wheat farmers," Stephen Sussman, a lawyer for Barnes with Houston-based Sussman Godfrey LLP, said in the statement. "Monsanto knew of the risks its genetically altered wheat posed and failed to protect farmers and their crops from those risks."
The discovery of the altered wheat in Oregon, nine years after Monsanto ended an effort to have the wheat approved for commercial sale, prompted Japan to halt imports of western-white and feed wheat. South Korean millers have suspended purchases of U.S. white wheat, and the Taiwan Flour Mills Association said it wants the U.S. to label cargoes by state of origin.
The European Union, which competes with the U.S. for exports, said Monsanto provided a method to detect the rogue strain of genetically modified wheat. The company also has provided the test to regulators in Japan, South Korea and Taiwan.
Tests of U.S. wheat imported by Japan, South Korea and the European Union have found no evidence of the unapproved gene- altered strain discovered in Oregon in April, Agriculture Secretary Tom Vilsack said yesterday. Wheat futures, which entered a bear market in January because of rising global supplies, have risen since the May 29 announcement of the Oregon contamination, closing at $7.09 a bushel yesterday in Chicago.
Information about the Oregon case appears to point toward an isolated situation, according to Val Giddings, a senior fellow at the Information Technology and Innovation Foundation in Washington. Still, if the wheat is found in more than one or two other locations, it could lead to significant trade disruptions, Giddings said in an e-mail. "If it is not, the present disruptions will wane fairly quickly. We are all waiting on more data."
Any estimate of any possible liability Monsanto may face is highly speculative, said Mark Gulley, a New-York based analyst at BGC Partners LP who recommends buying Monsanto shares.