Global agribusiness giant Monsanto (NYSE: MON) was yesterday found negligent in relation to its Roundup product after a US court awarded a US man US$80 million in compensation from the company.
What happened to Monsanto in the US?
Roundup is a glyphosate-based line of weed killers produced by Bayer AG (ETR: BAYN) owned Monsanto, which is currently subject to more than 10,000 Roundup lawsuits following accusations that the product is carcinogenic and carries inadequate warnings.
Yesterday's findings follow the August 2018 case in which Dewayne Johnson, who has non-Hodgkin's lymphoma, was awarded $289 million in damages (since cut to $78 million) after a jury in San Francisco found that Monsanto had failed to adequately warn consumers of cancer risks posed by the herbicide. Monsanto is currently appealing that decision.
So while Bayer and Monsanto are in crisis mode – what does this all mean for Nufarm Limited (ASX: NUF) investors?
The Nufarm situation
Nufarm is one of Australia's largest chemicals and agribusiness companies which makes its own glyphosate-based products.
The company said regulators in Canada and Brazil had confirmed regulatory approval of the herbicide and that "glyphosate is safe to use and presents no risk to users when used in accordance with label instructions".
The Nufarm share price plummeted nearly 17% in August 2018 following the Johnson case ruling, with Macquarie Bank analysts estimating that Nufarm earns about a fifth of its revenue from products containing glyphosate.
The company's share price fell 2.70% yesterday on the US court ruling news and its current $4.70 valuation is a far cry from its 52-week high of $9.55 per share.
While there doesn't appear to be any immediate risk for Nufarm, the longer-term regulatory environment could present headwinds for the agribusiness company.
In the meantime, growth-seeking investors who want exposure to new industries should check out this top-rated growth stock is in the buy zone and could be set to surge higher in 2019.
