–Settlement stems from 2006 contamination of U.S. rice crop
–About 11,000 farmers eligible for settlement
–Bayer had lost several related lawsuits
–Exports to Europe have not fully recovered
CHICAGO –Bayer AG agreed Friday to a $750 million settlement with U.S. rice farmers who sued the company after two of its genetically modified traits contaminated the crop.
The settlement concludes a four-year-old case that followed the revelation that traces of two strains of genetically modified rice, which hadn’t been approved by federal regulators, had entered the U.S. supply. The disclosure prompted several export customers to ban U.S. rice or impose strict testing requirements before allowing it into the country, which sent U.S. prices tumbling.
The contamination occurred between 1998 and 2001, during experiments with the rice strain on U.S. test sites. At the time, the strains were owned by chemicals company Aventis and were designed to make the rice resistant to its own weed killer. Bayer bought parts of Aventis, including the rice strains, in October 2001, and made them part of its Bayer CropScience subsidiary.
Bayer is responsible for the contamination and for waiting at least a couple months after learning of it to notify the U.S. Department of Agriculture, which announced the problem in August 2006, farmers’ attorneys alleged.
Those farmers continue to feel the impact, said Chicago-based Adam Levitt, a lead attorney for the plaintiffs. He said the industry is still “struggling to regain its primacy” in the world market, and that the lawsuit aimed to make Bayer take responsibility for the damage to farmers.
“This excellent settlement goes a long way toward achieving that goal,” Levitt said.
About 11,000 farmers of long-grain rice in five states–Arkansas, Louisiana, Mississippi, Missouri and Texas–will be eligible for the settlement. Farmers who planted rice in each of the five years from 2006 to 2010 will be eligible to receive $310 per acre, plaintiff attorneys said. Those who planted a specific strain of rice that was contaminated in 2006 will be eligible for another $100 per acre.
Bayer said the inclusion of all U.S. long-grain farmers in the case, whether they filed a lawsuit or not, demonstrated its commitment to rice as an important crop for the company.
“Although Bayer CropScience believes it acted responsibly in the handling of its biotech rice, the company considers it important to resolve the litigation so that it can move forward focused on its fundamental mission of providing innovative solutions to modern agriculture,” the company said in a statement.
The settlements have been reached with two groups of attorneys. Rice growers have 90 days to submit their claims, Bayer said.
The U.S. has been a leading adopter of genetically modified crops since they were introduced in the 1990s, but many of its export customers have been more reluctant to accept them.
Following the contamination, countries such as Japan and Russia banned U.S. exports while the E.U. and Mexico, a key U.S. customer, imposed strict testing requirements.
The USA Rice Federation, an industry group that supported farmers in the case, cheered the settlement, and said it has worked since the 2006 incident to reopen closed export markets.
“While the settlement offer is a positive development, long-grain rice markets, particularly in Europe, have not fully recovered from this event,” said spokeswoman Stacy Fitzgerald-Redd.
Long-grain exports elsewhere besides Europe have recovered, she said.
The settlement reinforces that makers of genetically modified crops “need to adhere to a high standard of care,” said Levitt, who was also lead plaintiffs’ attorney in another high-profile case involving an Aventis product, StarLink corn, which contaminated food supplies a decade ago. That lawsuit settled for $110 million.
“The U.S. court systems and American juries have shown they will hold them accountable,” Levitt said.
The settlement follows several jury trials in related state and federal cases that awarded millions of dollars to farmers in the South. Bayer had lost all of the cases, including one brought by Riceland, a farmers’ cooperative and the world’s largest rice miller, which an Arkansas jury awarded $125 million in punitive damages. That award could be reduced, however, as that state’s Supreme Court considers whether an existing $1 million cap on awards is constitutional.
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