Forbes sells the next best thing to snake oil

Forbes Magazine this month named Monsanto as "Company of the Year."

Monsanto's business model employs the company's monopoly on several lines of genetically modified crop seeds to extract an unusually large fraction of the producer surplus earned by corn and soybean farmers. The seeds grow corn and soybean plants, which have pesticidal properties or which can tolerate especially large applications of the chemical pesticide glyphosate (Roundup). Roundup, of course, is sold by Monsanto.

That business model is profitable, but it does not usually win praise from others. So, Monsanto's public relations folks spend endless hours promoting products that have not yet been marketed successfully, which some day may end world hunger, repair the environment, or reverse obesity and chronic disease.

Forbes credulously repeats these promises about future products as if they were already here, while burying its more skeptical coverage of Monsanto's main business lines.

The article focuses first of all on Monsanto's efforts to provide omega-3 fatty acids through genetically modified soybeans. These fatty acids are found naturally in fish oils. Citing a not-yet-refereed paper from a recent scientific conference, Forbes gushes: "Wouldn't that be a wonderful product to have for sale? Stops heart disease--and protects the environment, too. People could get their nutritional supplements without depleting fish stocks."

Stops heart disease? For starters, let us look for the statement on omega-3 fatty acids in the Food and Drug Administration's page about health claims that have significant scientific agreement. No wait, omega-3 and fish oil claims are not there, because the evidence is too weak. So, let us look on FDA's page about second-tier "qualified" health claims that have mixed scientific evidence, and which are permitted only because the Supreme Court restricted FDA's ability to regulate claims that might perhaps maybe come true. Here, we find that fish oil merits a qualified health claim. If Monsanto made this claim on a label, the company would have to state the claim's evidence base in "supportive but not conclusive research." Instead of such frankness, wouldn't it be nice for Monsanto if it could instead convince Forbes to carry the message that the product will "stop heart disease."

Even if you believe the fish oil health claim, which many people do, Monsanto's genetically modified technological marvel would achieve the same outcome that you already have available in a common dietary supplement.

Forbes' adoration of Monsanto is not the unanimous view of the business media. Here is Jim Cramer's more insightful summary last Fall of Monsanto's business and policy risks. I use this video in my teaching, in a class session on imperfect competition in the food industry.