The Nufarm Limited (ASX: NUF) share price fell 5% on Monday after the company released an update to the ASX warning investors it could face litigation over its sales of glyphosate, even though it says the widely used herbicide is safe to use as directed.
Nufarm is one of the world’s leading developers and manufacturers of seed and crop protection solutions, helping farmers fight disease, weeds and pests to increase crop yields. With the company’s origins dating back over 100 years, Nufarm has built a global crop protection business with operations in North and South America, Europe, New Zealand and Asia.
Nufarm’s Glyphosate update
Nufarm provided an update following a number of press articles regarding glyphosate.
In the US courts, we’ve seen verdicts against Monsanto, owned by Bayer
AG (ETR: BAYN), in relation to glyphosate. Litigants blamed Roundup, which contains phosphate, for giving them cancer. Monsanto said they have in excess of 13,000 pending claims against them.
Roundup is a glyphosate-based line of weed killers produced by Monsanto. Nufarm purchases glyphosate in bulk from Monsanto and other manufacturers to formulate into glyphosate-based products which they then sell.
Nufarm stated:
“as these matters are litigated, the science – which has consistently shown that there is no causal link between glyphosate and cancer – will ultimately prevail”
While there are no lawsuits against Nufarm themselves, the company said, “the corporate risk relating to glyphosate has increased”. Just this week the Sydney Morning Herald penned an article stating that a number of Sydney Councils have stopped using Roundup weedkiller and that there was a looming class action from Australian law firms.
Buy, Hold or Sell
It’s been a tough time lately for agriculture stocks given the Costa Group Holdings Ltd (ASX: CGC) downgrade last week. It’s been a particularly tough 12 months for Nufarm shareholders with the share price 60% lower than its high of $9.50 this time last year.
Unfortunately, given the drought and the concerns with glyphosate, it could be another tough 12 months ahead.
[ls_content_block id=”18457″ para=”paragraphs”]
Disclosure: At the time of publishing, David does not have a financial interest in any of the companies mentioned.
