Kraft Food's (KFT - NYSE)
continued use of genetically engineered foods pose unnecessary financial risk
to the company and its investors, according a new report entitled, Risky
Business: Financial Risks that Genetically Engineered Foods Pose to Kraft Foods,
Inc. and Shareholders.
The report reveals that
Kraft's use of genetically engineered ingredients poses risk of product recalls
and liability lawsuits, especially with the possibility that biopharm crops—food
crops genetically engineered to produce prescription drugs or industrial chemicals—could
contaminate Kraft's products. Other financial risks include loss of competitive
advantage, consumer rejection of Kraft's products, and damage to reputation
resulting from increased controversy surrounding these foods.
The report also makes the
case that genetically engineered foods do not offer financial benefits to Kraft
or marketable benefits to consumers. Genetically engineered crops may even cost
more to produce than non-genetically engineered counterparts.
"Continued use of genetically
engineered ingredients is a no-win situation for Kraft and shareholders,"
stated Kate Madigan, advocate for the state Public Interest Research Groups
and author of the report. "Kraft is gambling with controversial ingredients
when there is nothing to gain from doing so."
The financial risks of genetically
engineered foods became evident with the StarLink contamination of the food
supply in 2000, which is estimated to have cost the food industry billions of
dollars. StarLink is a variety of genetically engineered corn that was not approved
for human consumption because of concerns that it might trigger allergic reactions.
StarLink was first discovered in Kraft's Taco Bell brand taco shells and Kraft's
brand name has been linked with genetically engineered foods ever since.
"Kraft derives no financial
or nutritional benefit from using genetically engineered foods, there is no
consumer demand for these products and the massive recall of Kraft products
has already proven them to be a liability," stated Michael Passoff of As
You Sow Foundation. "Kraft shareholders have a right to know about the
risks their investments exposed to, especially if these risks can be avoided."
In response to these financial
risks and to the growing consumer demand for non-genetically engineered foods,
many U.S. food companies have already removed genetically engineered ingredients
from their products, including Frito-Lay, Gerber, McDonald's, and supermarket
chain Trader Joe's. These manufacturers reported no financial difficulties resulting
from the switch and sales increased in most cases as a result.
"Kraft has already
removed genetically engineered ingredients from its products in Europe,"
stated Rebecca O'Malley, program director for ecopledge.com, an organization
that organizes students, consumers, and investors to influence corporate social
and environmental responsibility. "These financial risks can be avoided
and Kraft knows how to avoid them. The company needs to finish the job and remove
these ingredients from the rest of its products."
According to the report,
current FDA regulations do not shield Kraft from liability lawsuits and other
financial risks posed by genetically engineered foods.
