We have met with corn farmers all across the United States to discuss their claims against Syngenta. On more than one occasion farmers have expressed concern that they do not want to see Syngenta put out of business. It is a testament to the big hearted nature of the American corn farmer that they are concerned for the well being of someone who did them wrong. It is ironic. When Syngenta had a business decision to prematurely market its seed and gain early sales, at the possible risk to the United States export market, Syngenta did not hesitate but decided to sell its new seed traits at the earliest possible time, regardless of the risks of harm to their own customers and other famers who rely on the export market to maintain United States corn prices. Syngenta did not hesitate to place corn farmers’ livelihoods at risk for their own financial gain. Now, when the corn farmers have the opportunity to right this wrong and file a claim to recover their losses caused by Syngenta, some corn farmers express concern for Syngenta.
Syngenta has a market capitalization of 32 billion dollars. Syngenta generated 15.1 billion dollars in group sales in 2014. Syngenta had $3.355 billion in corn sales in 2014. Syngenta’s earnings before interest, taxes, and amortization in 2014 was 2.9 billion dollars. In 2014, Syngenta had a gross profit of 6.942 billion dollars, which resulted in a net income of 1.62 billion dollars. Syngenta is a publicly traded company and according to their Securities and Exchange Commission filings, Syngenta has 1.6 billion dollars in cash and cash equivalents on hand. Thus, between Syngenta’s insurance and its cash equivalents on hand, Syngenta has liquid assets of almost three billion dollars. The lawsuits will take a few years to resolve and Syngenta should begin to increase its liquid assets. Since Syngenta had a net income in 2014 of 1.62 billion dollars, Syngenta can begin to increase its cash and cash equivalents in coming years. Based on Syngenta’s ability to generate earnings, and its present assets, and insurance, Syngenta should be able to satisfy whatever judgments are entered against it.
Syngenta also has an insurance policy worth $1.2 billion euros, which at current exchange rates is over $1.2 billion United States dollars. Syngenta has liquid assets including its insurance of almost $3 billion dollars. Additionally, Syngenta generates significant cash from operations annually. An independent neutral third-party grain trade organization, the North American Export Grain Association, projected that Syngenta’s premature marketing of its GMO traits could cost the American corn farmer in 2013 and 2014, over $6.3 billion of damages. Of course, this future looking projection was for damages to all corn farmers. However, many corn farmers will not file claims against Syngenta, and thus the actual pool of claims, which are filed prior to the statute of limitations will only represent a portion of the total loss Syngenta caused. Some farmer’s claims will be time barred or simply not filed. Thus it appears unlikely that if Syngenta is required to pay for the damage it caused, that Syngenta would be bankrupted or even suffer a significant loss considering its 32 billion dollar market valuation.
While the question: “Can Syngenta afford to pay farmers?” is an interesting study in the big-hearted nature of farmers, the better question is: “Can Syngenta afford not to pay farmers?” Syngenta made a business decision to place its customers’ and other farmers’ foreign market at risk. There are a lot of corn farmers who had major financial losses when the price of corn collapsed in 2013 and 2014. There are a lot of farmers who realize that Syngenta undoubtedly caused part of the price collapsed because it was their GMO traits that caused China to ban all American corn. Thus a lot of farmers are angry with Syngenta about placing their livelihood at risk. Corn farmers are Syngenta’s customers. If Syngenta doesn’t act like a responsible corporate citizen and compensate farmers for the losses they cause farmers, Syngenta is going to lose a lot of customers. We have already talked with farmers who have said they will not buy Syngenta products until Syngenta pays for the harm they caused and promises not to let this happen again. Syngenta may be content to pay their lawyers for the time being, but if they want the trust and business of the corn farmer, they are going to have to earn that trust and business. Fighting with their customers, won’t earn the business of the farmers. However, settling with the farmers and paying for the losses Syngenta caused, combined with new business practices designed to place the customer first, might help.
The bottom line is Syngenta can’t afford not to pay their customers and change their business practices. They can’t prosper in business by risking their customer’s prices and profitability.
Written by:
Jon Givens
Watts Guerra LLP
4 Dominion Drive, Bldg. 3, Suite 100
San Antonio, Texas 78257
Phone (210) 447-0500
© Watts Guerra LLP 2015
