Louisiana farmers settle suit on genetically modified rice

This article was published in The Times-Picayune on July 10, 2011.

After years of court battles, Louisiana rice farmers will finally recoup some of their losses stemming from one of the largest genetically modified seed contaminations ever.

Bayer CropScience, the German biotech conglomerate, agreed last week to pay $750 million in damages to 11,000 rice farmers in Louisiana, Arkansas, Mississippi, Texas and Missouri.

The settlement aims to compensate for Bayer’s 2006 accidental leak of a genetically engineered strain of rice into the U.S. rice supply, which rendered billions of dollars’ worth of the crop unfit for export to most countries.

“We lost a lot of money,” said John Owen, a rice farmer in Rayville, who, along with 450 other Louisiana farmers, is seeking damages for the losses his farm suffered, which he values at 15 percent of his annual net revenues. “I think the settlement will be welcomed. I don’t know that it’ll make everyone completely whole, but it’s a step in the right direction. Some farms had to go out of business.”

Each farmer will receive about $310 per acre once the lump settlement is divided. Because half of U.S.-grown rice is typically exported, farmers estimate they lost half their typical harvest value — between $800 and $1,200 per acre — during the years they couldn’t export at pre-2006 levels.

“The lawyers are getting such a large slice of the pie that the actual compensation is probably falling a little bit short, but I think it’s about the best we could hope for,” said Owen.

Bayer had been experimenting with weed-resistant rice in Crowley when the company’s genetically engineered seeds inadvertently got mixed with commercial seed supplies there and were then transferred to thousands of farms around the country. Bayer said their genetically modified strain of rice was safe for human consumption.

“Although Bayer CropScience believes it acted responsibly in the handling of its biotech rice, the company considers it important to resolve the litigation so that it can move forward focused on its fundamental mission of providing innovative solutions to modern agriculture,” the company said in a statement.

While most overseas customers have since resumed importing U.S. rice, the amount of exports to the European Union is still only 18 percent of what it was before 2006, when the leak occurred.

“Who’s to say if the settlement recoups all the losses?” said Clarence Berken, a rice farmer in Louisiana and former chairman of USA Rice Council. “The main thing is to get those European markets back. The EU is very, very important.”

Louisiana is America’s third-largest rice producer, so as the export markets closed in 2006, Louisiana farmers vied for shrinking space in the market with larger Arkansas and Mississippi suppliers. Due to high rice prices during the 2005 planting season, farmers had harvested a larger-than-usual crop in 2006, leaving them with billions of dollars’ worth of unsellable rice.

During the litigation, farmers said rice prices fell 65 percent below the levels they were forecast to hit prior to the contamination. Bayer claimed that rice prices had initially fallen, then rebounded.

“The farmers were getting hit on all sides — rising expenses, price variations, loss of the EU market, contamination of their land,” said Richard Arsenault, a lawyer representing the Louisiana farmers.

In addition, heightened regulations as a result of the leak forced U.S. farmers to pay for more inspections, making shipments cost anywhere from $600 to $12,000 more to produce.

Steve Linscombe, a rice specialist at the LSU Agricultural Center, said the rice industry had to undergo an extensive and time-consuming cleaning process to comply with international zero-tolerance policies.

“It was a pretty major undertaking,” said Linscombe. “This is the first and only time that a rice supply has ever been contaminated by genetically modified organisms.”

The increased production costs caused an economic ripple effect felt throughout the rice industry. Rice seed dealers, millers and transportation workers are still processing litigations against Bayer.

Rice is one of Louisiana’s top agricultural crops, with the industry valued at $535 million in 2010, according to the LSU Agricultural Center.