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Gates Foundation Puts Its Money Where Its Mouth Is

by: Jill Richardson

Thu Aug 26, 2010 at 15:31:27 PM PDT


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Well, well, well. It's about time. Kind of like when Fox News gave $1 million in campaign contributions to Republicans. It wasn't exactly a secret before, but now it's official. The Gates Foundation just bought a whopping 500,000 shares of Monsanto stock.

Now, there's nothing wrong with buying stock. My parents hold lots of BP stock, and they are hardly guilty of dumping the 4.9 million barrels of oil into the Gulf. But this is one more step in a long line of actions by the Gates Foundation in which it is advocating policies and agricultural technologies that will directly benefit and profit Monsanto while screwing over the most vulnerable people on earth: hungry subsistence farmers in developing countries.

I wrote a piece recently about what happens when American industrial agriculture collides with poor, uneducated subsistence farmers in the developing world and it ain't pretty. In fact, it's tragic. It's criminal. For a corporation to prey upon such a vulnerable population for its own gain, when the result is the starvation, continued impoverishment, or loss of land and lifestyle of the poor.

Perhaps Gates thinks he is doing something good for the world with his advocacy of biotechnology and industrial agriculture. No doubt all of the executives from Monsanto and other biotech and chemical companies tell him that every day. He should instead listen to the 400 scientists who spent 3 years performing the most comprehensive study of agricultural knowledge, science, and technology in the history of the world, the IAASTD report. The report recommends agroecology - what many in the U.S. would refer to as "organics" (even though the term is more nuanced than that).

See the press release from AGRA Watch below.

Jill Richardson :: Gates Foundation Puts Its Money Where Its Mouth Is

GATES FOUNDATION INVESTS IN MONSANTO
Both will profit at expense of small-scale African farmers

Seattle, WA - Farmers and civil society organizations around the world are outraged by the recent discovery of further connections between the Bill and Melinda Gates Foundation and agribusiness titan Monsanto. Last week, a financial website published the Gates Foundation's investment portfolio, including 500,000 shares of Monsanto stock with an estimated worth of $23.1 million purchased in the second quarter of 2010 (see the filing with the Securities and Exchange Commission). This marks a substantial increase from its previous holdings, valued at just over $360,000 (see the Foundation's 2008 990 Form).

"The Foundation's direct investment in Monsanto is problematic on two primary levels," said Dr. Phil Bereano, University of Washington Professor Emeritus and recognized expert on genetic engineering. "First, Monsanto has a history of blatant disregard for the interests and well-being of small farmers around the world, as well as an appalling environmental track record. The strong connections to Monsanto cast serious doubt on the Foundation's heavy funding of agricultural development in Africa and purported goal of alleviating poverty and hunger among small-scale farmers. Second, this investment represents an enormous conflict of interests."

Monsanto has already negatively impacted agriculture in African countries. For example, in South Africa in 2009, Monsanto's genetically modified maize failed to produce kernels and hundreds of farmers were devastated. According to Mariam Mayet, environmental attorney and director of theAfrica Centre for Biosafety in Johannesburg, some farmers suffered up to an 80% crop failure. While Monsanto compensated the large-scale farmers to whom it directly sold the faulty product, it gave nothing to the small-scale farmers to whom it had handed out free sachets of seeds. "When the economic power of Gates is coupled with the irresponsibility of Monsanto, the outlook for African smallholders is not very promising," said Mayet. Monsanto's aggressive patenting practices have also monopolized control over seed in ways that deny farmers control over their own harvest, going so far as to sue-and bankrupt-farmers for "patent infringement."

News of the Foundation's recent Monsanto investment has confirmed the misgivings of many farmers and sustainable agriculture advocates in Africa, among them the Kenya Biodiversity Coalition, who commented, "We have long suspected that the founders of AGRA-the Bill and Melinda Gates Foundation-had a long and more intimate affair with Monsanto." Indeed, according to Travis English, researcher with AGRA Watch, "The Foundation's ownership of Monsanto stock is emblematic of a deeper, more long-standing involvement with the corporation, particularly in Africa." In 2008, AGRA Watch, a project of the Seattle-based organization Community Alliance for Global Justice, uncovered many linkages between the Foundation's grantees and Monsanto. For example, some grantees (in particular about 70% of grantees in Kenya) of the Alliance for a Green Revolution in Africa (AGRA)-considered by the Foundation to be its "African face"-work directly with Monsanto on agricultural development projects. Other prominent links include high-level Foundation staff members who were once senior officials for Monsanto, such as Rob Horsch, formerly Monsanto Vice President of International Development Partnerships and current Senior Program Officer of the Gates Agricultural Development Program.

Transnational corporations like Monsanto have been key collaborators with the Foundation and AGRA's grantees in promoting the spread of industrial agriculture on the continent. This model of production relies on expensive inputs such as chemical fertilizers, genetically modified seeds, and herbicides. Though this package represents enticing market development opportunities for the private sector, many civil society organizations contend it will lead to further displacement of farmers from the land, an actual increase in hunger, and migration to already swollen cities unable to provide employment opportunities. In the words of a representative from the Kenya Biodiversity Coalition, "AGRA is poison for our farming systems and livelihoods. Under the philanthropic banner of greening agriculture, AGRA will eventually eat away what little is left of sustainable small-scale farming in Africa."

A 2008 report initiated by the World Bank and the UN, the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), promotes alternative solutions to the problems of hunger and poverty that emphasize their social and economic roots. The IAASTD concluded that small-scale agroecological farming is more suitable for the third world than the industrial agricultural model favored by Gates and Monsanto. In a summary of the key findings of IAASTD, the Pesticide Action Network North America (PANNA) emphasizes the report's warning that "continued reliance on simplistic technological fixes-including transgenic crops-will not reduce persistent hunger and poverty and could exacerbate environmental problems and worsen social inequity." Furthermore, PANNA explains, "The Assessment's 21 key findings suggest that small-scale agroecological farming may offer one of the best means to feed the hungry while protecting the planet."

The Gates Foundation has been challenged in the past for its questionable investments; in 2007, the L.A. Times exposed the Foundation for investing in its own grantees and for its "holdings in many companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for worker rights, or unethical practices." The Times chastised the Foundation for what it called "blind-eye investing," with at least 41% of its assets invested in "companies that countered the foundation's charitable goals or socially-concerned philosophy."

Although the Foundation announced it would reassess its practices, it decided to retain them. As reported by the L.A. Times, chief executive of the Foundation Patty Stonesifer defended their investments, stating, "It would be naïve...to think that changing the foundation's investment policy could stop the human suffering blamed on the practices of companies in which it invests billions of dollars." This decision is in direct contradiction to the Foundation's official "Investment Philosophy", which, according to its website, "defined areas in which the endowment will not invest, such as companies whose profit model is centrally tied to corporate activity that [Bill and Melinda] find egregious. This is why the endowment does not invest in tobacco stocks."

More recently, the Foundation has come under fire in its own hometown. This week, 250 Seattle residents sent postcards expressing their concern that the Foundation's approach to agricultural development, rather than reducing hunger as pledged, would instead "increase farmer debt, enrich agribusiness corporations like Monsanto and Syngenta, degrade the environment, and dispossess small farmers." In addition to demanding that the Foundation instead fund "socially and ecologically appropriate practices determined locally by African farmers and scientists" and support African food sovereignty, they urged the Foundation to cut all ties to Monsanto and the biotechnology industry.

AGRA Watch, a program of Seattle-based Community Alliance for Global Justice, supports African initiatives and programs that foster farmers' self-determination and food sovereignty. AGRA Watch also supports public engagement in fighting genetic engineering and exploitative agricultural policies, and demands transparency and accountability on the part of the Bill and Melinda Gates Foundation and AGRA.

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ah so. (4.00 / 2)
This can't be MRI (Mission Related Investing) or SRI (Socially Responsible Investing), so it must be PRI (Program Related Investing).

Q. What is the foundation's new approach to Program-Related Investments?

A. We are working with a range of partners to use Program-Related Investments (PRIs) to deepen the impact of our work. We believe that investments are the right instruments to use in situations in which our program strategies are best served by partnering with revenue-generating enterprises, such as NGOs, financial institutions or companies. These entities may not be able to access investment capital from the private markets because the markets or entities that serve the poor may be perceived as too risky or costly to serve, or investors don't have good information to assess the opportunities. By providing investment capital directly or by reducing risk to investors, we can help our partners access the capital they need to grow and demonstrate to the market that financially viable opportunities exist that serve the needs of poor or otherwise disadvantaged persons.  We know we can't solve all problems with these types of investments - grant-making remains critical for those sectors that can never generate revenues or be addressed by market forces.

We have established a pilot program with an envelope of $400 million to invest in a range of investment opportunities. The capital for PRI investments or guarantees will be provided by this special $400M pool which will be managed by the CFO's office of the foundation. Out of this pool, we will invest in PRIs that directly and meaningfully contribute to the achievement of the foundation's charitable purposes.

Q. What types of investments will the foundation do?

A. We will evaluate a full range of investment opportunities that could include:

Debt investments such as loans to NGOs, financial institutions or companies;
Equity investments such as investments in venture capital funds or (less commonly) purchases of shares in companies;
Guaranty investments such as bond back-stops, credit guarantees, or insurance.
Any PRI opportunity must closely align with our program strategies, from increasing financing for agricultural smallholders in Africa, to supporting charter school facilities expansion, to increasing investment in global health technologies.

Q. What criteria will the foundation use to evaluate investments?

A. We have only a limited pool of investment capital so we want to be careful how we use it. We will evaluate investments according to three core criteria:

Strong alignment with our program strategies: We will do PRIs that directly support our program strategies and contribute (via measurable outcomes and impacts) to our program goals;
High leverage of external capital: We expect our investment to be at a minimum matched by other investors (a 1:1 leverage) but would like to see our capital mobilize other capital at a 5:1 ratio.
Transformative investments: We are looking for investments that promote sustainable, scalable solutions that can demonstrate to the market that good opportunities exist. We are also looking for investments in which our capital makes a difference in getting the deal done and increasing the focus on the poor.

Besides that, I suppose Monsanto needs help propping up its share price and supercharging its lobbying efforts. Ya think?


Is buying stock really a direct investment? (4.00 / 1)
Perhaps someone can explain this to me, as I have not been able to figure it out:  how is buying Monsanto stock going to help the Monsanto company?  Gates isn't buying stock from the company, he's buying it from other shareholders, and they are the ones that will reap any profits from stock price increases since the initial issue of the share.  Monsanto doesn't get a commission from the sales, so there is no direct transfer of funds to the company.

The only things I can think of are indirect effects: 1) a higher stock price might lead to lower interest rates on bonds (but that's probably more determined by non-stock things like profits, long-term outlook, etc.). 2) executives with stock options will have earning potential as the price rises. 3) when there is another offering of stock, a higher price in the market might allow a higher offering price, and thus more capital can be raised.


all true (0.00 / 0)
if the shares came from market transactions, but I didn't examine the SEC documents. I don't know where the shares came from.

I was being sarcastic in any case. I didn't intend to suggest that Monsanto would notice 23 million dollars one way or another.


[ Parent ]
I certainly agree with you (4.00 / 1)
it's a common misconception. If you don't like a company, the answer isn't to avoid its stock (unless it's an IPO). Instead, don't buy its products.

"I can understand someone from Iowa promoting corn and soy, but we are not feeding the world, we are feeding animals and soft drink companies." - Jim Goodman

[ Parent ]
But then again... (4.00 / 1)
The bigger question is probably "what does this purchase do to the Gates Foundation?"  Tying the foundation's financial success to Monsanto's success might have implications for the grant-giving department, pushing them in Monsanto's direction, as the commentators in the post point out.  

what I wonder about (0.00 / 0)
is that on the heels of this purchase, the Monsanto CEO bought a bunch more shares too. What do they know that we don't?

"I can understand someone from Iowa promoting corn and soy, but we are not feeding the world, we are feeding animals and soft drink companies." - Jim Goodman

[ Parent ]
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