Aventis Urges To Compensate Farmers

Wednesday, November 15th 2000, 12:00 am

By: News On 6

DES MOINES, Iowa (AP) â€” Sixteen state attorneys general are pressing the company that makes StarLink corn to do more to compensate farmers and grain elevators hurt when the genetically modified strain showed up in the food supply.

Meanwhile, the company, Aventis SA, announced plans to sell or spin off its agrochemicals business, which developed StarLink. The Strasbourg, France-based company said the move would allow it to focus on its pharmaceuticals, which include allergy drug Allegra.

The decision follows similar moves by rivals AstraZeneca PLC, Novartis AG and Monsanto Co. to abandon the idea of grouping health care and agriculture under one roof.

``I think what you're seeing is the recognition that drugs have a higher growth rate than agriculture does,'' said James Wilbur, managing director of Salomon Smith Barney in New York.

The agrochemicals business proved troublesome for Aventis after StarLink corn was found in taco shells, prompting a massive recall.

The Environmental Protection Agency has yet to approve the corn for human consumption because of questions about whether it can cause allergic reactions.

Iowa Attorney General Tom Miller urged Aventis CropScience on Wednesday to establish claims-handling procedures to compensate farmers and elevators for any losses linked to the corn.

``We told Aventis that our goals are to protect the food chain, to keep the grain-handling system running smoothly to reduce any additional losses, and to protect the economic interests of farmers, elevators and others in the grain industry,'' Miller said. ``Aventis has taken some initial steps, but we urge them to go further.''

The company has agreed to pay farmers 25 cents per bushel over normal local prices for StarLink and ``buffer corn'' â€” crops grown near the genetically modified corn â€” but not comingled corn. Aventis also is reimbursing the U.S. Agriculture Department for the cost of shipping and storing the corn to make sure it goes to livestock or industrial uses.

Taking part in the program does not waive any rights to recover additional damages farmers may incur as a result of growing StarLink corn, Aventis said in a statement. The company also said it will pay grain elevators for additional transportation and testing costs.

Additional concessions being sought by the attorneys general include:

â€”An expedited claims process for farmers and elevators with an easily accessible handling system made available on the Internet.

â€”Increased transportation and storage capabilities ``to prevent serious disruptions of the grain handling system.'' The attorneys general asked the company to identify more storage sites, hire additional staff members to answer questions and provide more testing resources.

â€”Further steps to accept responsibility for economic losses. ``It is inevitable that StarLink corn and commingled corn will suffer some loss in value,'' Miller wrote in a letter to the company Tuesday.

Aventis said Wednesday it takes the concerns raised in the letter seriously and would continue to work with farmers, elevator operators and grain handlers on a case-by-case basis. The company has acknowledged that some farmers did not know about restrictions on the corn's use.

Aventis last week estimated the cost of recovering the crop at ``significantly below'' $1 billion.

The request from the 16 attorneys general came a day after Aventis' board members approved a plan to rename Aventis CropScience as Agreva and to divest its interest, possibly through an initial public stock offering of stock.

Meanwhile, a Japanese consumer group met with U.S. Embassy officials Wednesday asking for improved screening to prevent corn shipments contaminated with StarLink from entering Japan. The group said last month that StarLink corn had been found in food in Japan.

Some analysts have said North Carolina-based CropScience, 24-percent owned by Germany's Schering AG, may be worth about $5 billion. Schering said it was not yet interested in selling its stake but would not stand in Aventis' way.

Analysts downplayed any link between the StarLink controversy and the company's decision, saying Aventis had weighed a possible sell-off before the scandal hit.

``StarLink is another factor, I don't think it's a driving factor,'' said Sano Shimoda, president and founder of California-based BioScience Securities, Inc. ``The life sciences concept, in its current form, does not appear to have as much potential as companies thought it would a few years ago.''

Aventis CropScience ranks second in agrochemicals only to Anglo-Swiss rival Syngenta, which was formed through the merger of the agrochemical businesses of Novartis and AstraZeneca.

Aventis was created last year by the merger of Hoechst AG and Rhone-Poulenc SA.

The letter was signed by attorneys general from Alabama, Connecticut, Illinois, Iowa, Kentucky, Maryland, Michigan, Minnesota, Missouri, Nebraska, New Mexico, North Dakota, Ohio, Oklahoma, South Dakota and Tennessee.

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Associated Press Writer Angela Doland in Paris contributed to this report.

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On the Net: USDA's biotechnology web site: http://www.http://www.aphis.usda.gov/biotechnology

Special Aventis site: http://www.starlinkcorn.com

Genetically Engineered Food Alert: http://www.gefoodalert.org

Iowa Attorney General Tom Miller: http://www.iowaattorneygeneral.org/