SAN FRANCISCO – The genetically engineered hormone that induces a third of the nation’s dairy herds to make more milk is in very short supply now that federal inspectors found quality-control problems at the factory where it’s produced.
Starting March 1, Monsanto Co. will be able to provide only half of its usual shipments of recombinant bovine somatotrophin, or rBST, which is sold under the brand name Posilac. The St. Louis-based biotechnology company also is raising the hormone’s price 9 percent.
Consumers will likely be unaffected, because there’s already an overabundance of milk on the market, which is highly subsidized and regulated to control prices.
The rationing is expected to last all year while Monsanto works to correct the sterility problems, uncovered during a routine Food and Drug Administration inspection in November of the plant in Austria where the hormone is made.
Monsanto spokeswoman Janice Armstrong said a small number of batches were contaminated with bacteria. She declined to speculate on what effect the tainted batches would have had on cows because “none left the factory.” Monsanto contracts with Sandoz Inc. to manufacture the hormone.
Still, Monsanto’s production woes are rekindling a decade-old debate over the safety of the hormone, the first major biotechnology-related product to enter the country’s food supply.
The FDA approved the hormone in 1993, ruling that there’s no difference between milk produced by hormone-injected cows and conventionally bred bovines.
The approval came after years of intense debate. Farmers, animal rights activists, consumer groups and environmental organizations had opposed it, and Congress even imposed a brief moratorium on commercial release.
While demand for milk labeled BST-free continues to grow, the furor has largely subsided. Ten years after the technology was supposed to revolutionize milk production, a Department of Agriculture survey found only 22 percent of the nation’s milk in 2002 was derived from treated cows.
Monsanto, the artificial hormone’s only producer, doesn’t release sales figures for Posilac, but analysts estimate it accounts for $300 million, or 5 percent, of the company’s annual sales.
Still, the production cutback isn’t expected to dramatically alter Monsanto’s profits.
“There are a lot of factors that affect the milk supply and this is just a small blip on the radar,” said Steven Larson, managing editor of the trade journal Hoard’s Dairyman. Bigger factors influencing production include weather, feed quality and cow prices, Larson said.
The Posilac problem also won’t likely slow Monsanto’s recent momentum on Wall Street, where its stock price has surged near its 52-week high. Last week, UBS analyst Andrew Cash wrote a rosy report predicting that Monsanto would exceed profit expectations in 2004.
The cutback did prompt a price spike for milk futures, and analysts predict a 1 percent to 2 percent tightening of milk output in 2004 because of the Posilac shortage. That should lead to slight increases in wholesale prices, a small silver lining for dairy farmers.
“Milk prices have been depressed for a couple of years because of a glut,” said Darrell Reece, who administers Posilac to most of the 200 dairy cows on his family farm in Knob Lick, Ky.
Reece said he and his family have used Posilac since the FDA first approved the hormone and credits it with increasing milk production by as much as 15 percent.
Organic farmers and animal welfare organizations still argue that no scientific consensus exists about the hormone’s health consequences on people and cows. Canada and Europe ban the hormone, mostly out of concern that it makes cows more prone to illness.