Analysis Of GMO Food Products Companies Financial Risks And Opportunities In The Global Agriculture Industry

African J. Economic and Sustainable Development, Vol. 6, No. 1, 2017 1
Copyright © 2017 Inderscience Enterprises Ltd.
Analysis of GMO food products companies: financial
risks and opportunities in the global agriculture
industry
Hannah M. Martin
Texas A&M University,
College Station, TX, USA
Email: hannahmichellemartin@gmail.com
David Durr
Murray State University,
351 Business Building, Murray, KY 42071, USA
Email: ddurr@murraystate.edu
L. Murphy Smith*
Bauernfeind College of Business,
Murray, KY 42071, USA
Email: msmith93@murraystate.edu
*Corresponding author
Rachel Finke
Murray, KY 42071, USA
Email: rfinke@murraystate.edu
Audie Cherry
Freed-Hardeman University,
TN 38340, USA
Email: audie.cherry15@gmail.com
Abstract: One of the biggest issues facing the global agriculture industry is the
use of genetically modified organisms (GMOs) in crops and food products.
This study compares financial performance of major GMO food companies to
other industries. Findings indicate that GMO companies had an average higher
return on equity but also a higher level of risk. In addition, the study presents
positive and negative perspectives toward GMO foods, along with a discussion
of the risks and opportunities. Agricultural studies indicate that applying GMO
technology is likely the most effective way to feed many of the world’s hungry.
In addition, research supports the safety and nutritional benefits of GMO food
products. However, concerns expressed by GMO opponents have been
effective in limiting GMO acceptance by the public. Research indicates that the

2 H.M. Martin et al.
inconsistency between negative public opinion and positive scientific evidence
supporting GMO crops is at least partly the result of misrepresentations about
GMOs. The ultimate acceptance or rejection of GMO foods will greatly affect
food producers, distributors, retailers, and consumers.
Keywords: agriculture industry; financial performance; genetically modified
organism; GMO food; genetically engineered food.
Reference to this paper should be made as follows: Martin, H.M., Durr, D.,
Smith, L.M., Finke, R. and Cherry, A. (2017) ‘Analysis of GMO food products
companies: financial risks and opportunities in the global agriculture industry’,
African J. Economic and Sustainable Development, Vol. 6, No. 1, pp.1–17.
Biographical notes: Hannah M. Martin is an agriculture PhD student at Texas
A&M University. She previously served on the faculty at Murray State
University as a Lecturer in the Hutson School of Agriculture. Her research
examines GMO foods, nutrition, and the role of sustainable agriculture in
societal well-being, including efforts to stop human trafficking. She helped start
the student chapter of International Justice Mission at Murray State University.
David Durr is the Arthur J. Bauernfeind Endowed Chair in Business and
Investment Management. He is a Chartered Financial Analyst and certified
financial planner. He has an extensive record of research, teaching, and service
contributions. He is a member of the American Finance Association, Certified
Financial Planner Board of Standards, and CFA Institute. His research has
appeared in journals such as Journal of Law and Financial Management,
Journal of Southern Agricultural Education Research, and Human Systems
Management.
L. Murphy Smith is the David and Ashley Dill Distinguished Professor of
Accounting in the Bauernfeind College of Business at Murray State University.
His academic record includes numerous journal articles, research grants, books,
academic conference presentations, and awards for teaching and research. His
work has been cited in various news media, including National Public Radio,
Fortune, USA Today and The Wall Street Journal. His work is among the most
downloaded, with over 48,000 article-downloads on Social Science Research
Network (SSRN.com). His work is highly cited, with over 1,770 citations per
Google Scholar.
Rachel Finke is a Research Assistant. She is a graduate of the Jesse D. Jones
College of Science, Engineering and Technology at Murray State University.
She is currently enrolled at Murray State as a post-baccalaureate student with
plans of advancing her career in medicine. She has a background in the
biological and chemical sciences, with a focus on the way systems work at the
genome level.
Audie Cherry focuses his research on international agricultural development.
He earned his Masters degree in Agricultural Leadership, Education, and
Communications from Texas A&M University and his Bachelor of Science
Degree in Agriculture, Agriculture Science and Technology from Murray State
University.
This paper is a revised and expanded version of a paper entitled ‘Analysis of
GMO food products companies: financial risks and opportunities in the
agriculture industry’ presented at Melbourne International Business and Social
Science Research Conference, Melbourne, Australia, 2–4 October 2015.

Analysis of GMO food products companies 3
1 Introduction
Use of genetically modified organisms (GMOs) in crops and food products has become
one of the most controversial issues in world society. Acceptance or rejection of GMO
foods will have a major impact on people’s nutrition and health. Proponents of GMO
foods perceive them as a solution for global problems such as climate change and world
hunger. Such benefits would be particularly meaningful to people in developing countries
in Africa, Asia, and Latin America. Detractors of GMO foods are concerned about
potential unpredictable consequences. First sold in grocery stores in 1994, GMO foods
are now sold in virtually all chain supermarkets, with the most pervasive GM foods being
soy-, corn-, and wheat-based products.
This study presents an economic and financial performance analysis of major
companies that are associated with GMO food products. Whether GMO foods are
accepted or rejected will have a major impact on food producers, distributors, retailers,
and consumers. Results from the financial performance analysis will be of interest to
investors and other stakeholders regarding how these GMO food companies compare to
other industries. In addition, the study presents the positive and negative perspectives
toward GMO foods, along with a discussion of the risks and opportunities for
GMO-connected companies.
1.1 Research questions
The objective of this study is to evaluate the financial vitality of companies associated
with GMO foods. Proponents of GMO foods have expressed that there has been
unwarranted and unscientific negativity expressed in the media, that the benefits of GMO
foods have been unfairly overshadowed by false concerns. At the same time, detractors of
GMO foods feel that there has been a lack of study of GMO foods and that more study is
needed before GMO foods are widely distributed (Linnhoff et al., 2015). The study
addresses two research questions:
RQ1 How does the economic and financial performance of the GMO companies
compare to other industries?
RQ2 To what extent have GMO foods been affected by the positive and negative
perspectives expressed about GMOs?
To test the first research question, statistical tests will be used to compare the means of
key financial ratios [price to earnings (P/E) ratio, profit margin, debt to equity (D/E)
ratio, and return on equity (ROE) ratio] of selected GMO food companies to ratios of
companies in other industries. To test the second research question, an evaluation will be
made of the positive and negative views that have been expressed regarding GMOs.
2 Literature review
The two most common types of GMOs fall under one of the two categories: transgenic or
cisgenic. As shown in Figure 1(a), cisgenesis is a genetic modification of a recipient plant
with a natural gene from a crossable, sexually compatible plant. As shown in Figure 1(b),
transgenesis is a genetic modification of a recipient plant with one or more genes from a

non-plant organism, or a donor plant that is sexually incompatible with the recipient
plant and would not occur in nature. As illustrated in Figure 1(c), traditional breeding
includes all plant breeding methods that do not fall under current GMO methodology
(Schouten et al., 2006).
Figure 1 Types of food crops, modified and traditional, (a) panel A: representation of cisgenic
modification in food crops (b) panel B: representation of transgenesis modification in
food crops (c) panel C: representation of traditional breeding in food crops
(a)
(b)
(c)
Source: Schouten et al. (2006)
2.1 A history of benefits and concerns
Linnhoff et al. (2015) indicate that possible positive outcomes of GMOs include
enhancing agricultural productivity via crops that are drought resistant and insect
resistant; this, in turn would lead to reduction in world hunger, notably in developing
countries. Most of the world’s poorest people are located in developing countries in
Africa, Asia, and Latin America. Improvements in agriculture would be especially
meaningful in these locations. While there is a need for additional research on use of
GMOs, there has been extensive research on agriculture in developing countries, such as
regarding rehabilitation of natural resources in Ethiopia (Ebrahim, 2014), water
infrastructure in Libya (Abdudayem and Scott, 2014), and climate change on agriculture
in Nigeria (Odozi et al., 2013).
Creation of GM products can be traced back thousands of years to when Native
Americans used a primitive version of genetic manipulation, referred to as selective
breeding, to produce food with desirable traits. Only within the last century have plant
breeders gained control at the genome level, allowing for single gene modifications
(Falk et al., 2002). The first successful GM plant was created in 1983, but it was not until
1994 that the first GM food was approved for production and resale (Batista and Oliveira,
2009). From 2013 to 2014, the amount of GM crops produced globally increased by

6.3 million hectares to a total of 181.5 million hectares. Even with this increasing
popularity, GM technology still engenders controversy.
Falk and his associate researchers observe that “food, an emotional and personal
topic, combined with misunderstanding of biotechnology, sensationalized media
coverage, and complex ethical and social matters have interacted to create fear in some
consumers” [Falk et al., (2002), p.1388]. According to the same research, when asked in
a national survey how often GM plays a role in the production of processed foods, only
14% of Americans answered correctly. Lack of knowledge creates a major roadblock for
the public acceptance of GM products.
Although there has been no evidence of detrimental effects from use of GM, people
continue to be wary. Some critics say that the acceptance of GM technology brings with
it a sub-goal of altering fundamental perceptions and values. These critics are not so
worried about the potential for physical harm but the potential for damage that diminishes
the “environment, human values and relationships, and intellectual property rights”
(Knight et al., 2005).
Proponents of GM crops point to the advantage to farmers of cultivating GM crops as
well as positive outcomes for consumers. GM provides tools to silence or introduce
specific genes that directly affect different biological processes, such as ripening and
ability to withstand varying environmental circumstances. GM products have been
manipulated to increase protein, starch and oil composition, and micronutrient content,
thereby making these products more nutritious for consumers. Carotenoids have been
introduced in some GM crops. Carotenoids are a class of minerals common in many
vegetables that may help reduce risks for certain diseases and cancers (Falk et al., 2002).
Bakshi (2003) estimates that 350,000 people per year go blind due to inadequate food
supplies and poor nutrition. GM crops may help alleviate this and other problems.
Considerable research examines the risks versus benefits of GM crops. Furthermore,
regulation of plant biotechnology is considerably more rigorous than in past years.
According to Kuiper et al. (2001), a commonly practiced safety assessment is based on
‘the concept of substantial equivalence,’ in which a GM product is compared to its
original counterpart. Researchers are able to quickly identify changes, both positive and
negative. As a result of this safety-related assessment and increasing public knowledge of
GM science, some predict increased cultivation and consumption of GM products in
future years.
2.2 GMO food product outcomes
While public opposition to GMOs continues, scientific research has shown that GM crops
make a highly valuable contribution to sustainable agriculture, with no observed negative
consequences. According to Blancke e al. (2015), the inconsistency between negative
public opinion and the positive scientific evidence supporting GM crops is subject at least
partly to misrepresentations of GMOs. The researchers explain how the interplay of
certain intuitions leads to the popularity, persistence, and typical aspects of GM
opposition. In their study, they state that “intuitive judgments steer people away from
sustainable solutions” (Blancke e al., 2015).
The genetically modified (GM) FLAVR SAVR tomato was introduced to the market
in 1994. From years 1996 to 1999 clearly labeled GM tomato paste was successfully sold
in Safeway and Sainsbury supermarkets. Since that time, GM crops and food have
become the center of public controversy. By 2013, GM crops were grown on more than

175 million hectares globally, by millions of farmers, many in developing countries. Use
of GM crops is the fastest growing technology ever adopted by farmers in the history of
agriculture. Following a large-scale study that found no impact of GM feedstuffs on
livestock populations, one researcher declared that the debate about GMO safety had
come to an end. While this may be true among scientists, the public continues to debate
whether GM crops are damaging to the environment or detrimental to farmers (Gruissem,
2015).
In a recent meta-analysis of all the relevant literature since 1995, findings indicated
that production of GM crops reduces chemical pesticide input by 37%, increases crop
yields by 22%, and increases farmers’ profits by 68% on average. The authors focused on
herbicide-tolerant and insect-resistant crops (maize, soybean, cotton) for which a large
number of original peer-reviewed impact study reports were already available and that
have also been discussed widely in the non-peer reviewed literature. The accumulated
land area planted with GM crops represents an agricultural production area more than
150% of the size of the USA or China. The positive impact of GM crops increasing yield
means that GM crops can produce more on a smaller area of land. Thus, there are
considerable advantages of GM crops for both the environment as well as the economic
well-being of farmers (Gruissem, 2015).
Given the importance of rice as staple crop for much of the world’s poorest people,
GM varieties of rice will have major implications for alleviation of poverty, hunger, and
malnutrition. Rice is the key food crop of the developing world and the staple food for
more than half the world’s population. More than 3.5 billion people rely on rice for more
than 20% of their daily calorie intake. The desire to increase yields, improve disease
resistance and lower the cost of rice production, along with providing nutritionally
enhanced rice, are strong motivations for creating genetically engineered varieties.
Similar to other GM crops, such as soybeans, maize, canola and cotton, agronomic traits
such as herbicide-tolerance (HT) and insect-resistance (IR) are factors in R&D and
commercialisation efforts for GM rice (Demont and Stein, 2013).
Herbicide-tolerant GM rice can be expected to boost yields where no or little
herbicide is used. The most well-known GM rice crop is provitamin A-rich ‘golden rice,’
which is especially beneficial in developing countries suffering from vitamin A
deficiency (VAD). VAD is connected to serious health problems, including loss of sight
and diminished ability to fight infections. Lactoferrin enrichment is another developing
trait to go into GM rice, which helps to reduce diarrhea in high-risk patients. Studies have
shown that golden rice can potentially control VAD and at a very low cost. A study found
that breeding and dissemination of golden rice in India was successful, and that the crop
could reduce the VAD by 60% and annually prevent the loss of 1.4 million healthy life
years, also known as ‘disability-adjusted life years’ or DALYs. Even in a ‘low impact’
scenario, at US$20 per DALY saved; golden rice still represents a very cost-effective
alternative to other VA fortification or supplementation (Demont and Stein, 2013).
Part of the controversy surrounding GMOs includes human health and environmental
concerns. While nations, such as those in the European Union, are able to adequately
produce agricultural products without GM products, there are other nations, notably those
less developed, that are facing extreme difficulty providing an adequate and stable food
supply for their national economy and citizen consumption. Cohen and Paarlberg (2004)
stated, “biotechnology applications provide potential contributions to sustainable
agricultural productivity and new inputs for poor and/or small scale farmers in
developing countries” (p.1563). Given the dire need of many people, both economic- and

health-related, there is great need to evaluate and, where appropriate, implement use of
GM products. Andrew Natsios, head of USAID, has argued that a lack of moving
forward puts millions of lives at risk (Zerbe, 2004).
The need for a more efficient means of agricultural production for both an economic
and human welfare advantage has not gone unnoticed across the world, and some nations
and institutions are making steps to help bridge the productivity gap between developed
and less-developed nations. “developing countries now account for 38% of global
transgenic crop area”, according to Raney (2006, p.174). Raney identified national
institutional capacity, research, and policy as key components to reaping benefits from
biotechnological advancements in developing nations.
The International Rice Research Institute (IRRI) located at the University of the
Philippines in Los Baños, works to reduce poverty and hunger, advance the health of rice
farmers and consumers, and safeguard environmental sustainability of rice farming. The
IRRI engages in collaborative research and strengthening national agricultural research
and extension systems in countries where IRRI works. The IRRI is working to develop
golden rice as a new food-based approach to improve vitamin A status (IRRI, 2015).
A study by Aerni and Bernauer (2006) found that the general populations of some
developing countries (i.e., Mexico, Philippines, and South Africa) see GM products as
positive and a potential solution to productivity issues. This contrasts with an earlier
study by Zerbe (2004) that identified considerable debate regarding use of GM
technology on an international scale. Positive outcomes were identified in a study by
Thirtle et al. (2003), in which stakeholders who adopted Bt cotton in KwaZulu-Natal,
South Africa were more efficient in production.
Research by Raney (2006) highlighted several cases in which GM crops were shown
to be beneficial for those who adopted them. According to Raney two small-sized farmers
in China using GM cotton had a net income over twice as much as that of larger-scale
farms that did not adopt the GM cotton. Raney also noted Argentinian farmers who used
the same GM variety of cotton received similar benefits, as well as receiving a 10%
increase in productivity on average using transgenetic soybeans. In addition, Raney also
noted an estimated 83% economic gain in Mexico, 80% benefit in India, and advantages
(i.e., yield, pesticide, income) in KwaZulu-Natal by using the same GM cotton variety.
2.3 GMOs and diet
While there have been numerous studies of the importance of a nutritious diet, there have
been relatively few specifically about GMO-free diets. Some prior studies have examined
the value of a vegetarian diet, but such studies did not distinguish whether the vegetables
were GMO foods or GMO-free, such as the study by Fraser et al. (2003) that found that
longevity was associated with a vegetarian diet. At the same time, diet is only one part of
a healthy lifestyle, whether diet includes GMO foods or not; being physically, mentally,
and spiritually active have also been identified as important factors associated with
overall well-being (Martin et al., 2016).
Consuming a healthy diet has been a concern from the dawn of history. In ancient
Egypt, health benefits of eating certain foods to sustain health were known long before
vitamins were identified. The ancient Egyptians found that consuming liver would aid in
curing night blindness, an illness now recognised to be the result of VAD (Per Ankh,
2005). According to the ancient Greeks, the feasts of the Persians were morally depraved.
The Greeks regarded gluttony as barbaric. They placed high esteem on frugality in their

dining and drinking. The Greek views on food and health persisted until the end of the
Middle Ages (Cook’s Info, 2015). The biblical account of Daniel, written about 540 B.C.,
describes the benefits of consuming healthy food. Daniel along with his three Hebrew
friends decided not to eat the rich Babylonian food, but instead to dine on vegetables and
water. The consequence was that “they looked healthier and better nourished than any of
the young men who ate the royal food” (Daniel 1:15, cited in Martin et al., 2016).
One alternative to GMO foods is ‘organic’ foods. The US Department of Agriculture
indicates that for produce to be labelled organic, the produce must be grown without
pesticides, synthetic fertilisers, or GMOs. For meat to be labelled organic, the animal
must be raised in a natural setting, fed 100% organic feed, and not receive any antibiotics
or hormones. In the case of packaged foods, if the label indicates ‘100%’ organic, then
the product was made only with organic ingredients. However, if the label indicates
‘organic’, then that means that only 95 percent of the ingredients are organic. For
products that are labelled ‘made with organic ingredients’, a minimum of 70 percent of
the ingredients must be organic (Lazarus, 2015).
Consumer Reports indicates that organic foods and beverages cost an average of 47%
more in price than conventional alternatives, with some costing more than 300% more.
The question consumers’ face is whether that markup is worth the cost. According to
researchers at the Mayo Clinic, organically and conventionally produced foodstuffs are
not significantly different in their nutrition value. Lisa Herzig, an associate professor of
nutrition at Fresno State, states, “buying organic does not necessarily mean there’s more
health and nutrition benefits. The pesticide content will be higher with conventional
produce, but it’s still at safe levels” (Lazarus, 2015).
3 Sample selection: major corporations associated with GMO food
products
The sample of 30 major publicly traded companies connected to GMO food products
were selected based on financial news sources and company websites. The GMO
companies, along with ticker symbol and headquarters location, are shown in Table 1.
Table 1 Major companies with GMO food products
Company name Ticker symbol HQ
Archer-Daniels-Midland Company ADM Chicago, IL
B&G Foods BGS Parsippany, NJ
BASF SE BAS.DE Germany
Bunge Limited BG White Plains, NY
Campbell Soup Company CPB Camden, NJ
CoCa-Cola Company KO Atlanta, GA
ConAgra Foods, Inc. CAG Omaha, NE
Dean Foods Company DF Dallas, TX
Dow Chemical Company DOW Midland, MI
Eli Lilly & Company LLY Indianapolis, IN
Flowers Foods, Inc. FLO Thomasville, GA

Table 1 Major companies with GMO food products (continued)
Company name Ticker symbol HQ
General Mills GIS Minneapolis, MN
Hershey Company HSY Hershey, PA
Hormel Foods Corp. HRL Austin, MN
J.M. Smucker Company SJM Orrville, OH
Kellogg Company K Battle Creek, MI
Kraft Foods Group Inc. KRFT Northfield, IL
McCormick & Company, Inc MKC Sparks, MD
McDonald’s Corporation MCD Oak Brook, IL
Monsanto Company MON St. Louis, MO
Nestle S.A. NESR.DE Switzerland
Pepsico, Inc PEP Purchase, NY
Pilgrim’s Pride Corporation PPC Greeley, CO
Pinnacle Foods, Inc. PF Parsippany, NJ
Starbucks Corporation SBUX Seattle, WA
Syngenta AG SYT Switzerland
Target Corp TGT Minneapolis, MN
Treehouse Foods, Inc. THS Oak Brook, IL
Tyson Foods, Inc. TSN Springdale, AR
Whitewave Foods Company WWAV Denver, CO
4 Methodology, analysis and results
To evaluate the economic and financial health of the 30 major companies associated with
GMO food products, the following financial ratios will be evaluated: P/E ratio, profit
margin, D/E, and ROE. The ratios for the GMO companies will be compared to the ratios
of the top 15 industries, as measured by market capitalisation (Yahoo, 2015).
The P/E ratio shows the relationship between a company’s market price per share of
stock and its net income per share, also referred to as its earnings per share (EPS). The
P/E ratio indicates how many years it would take for a company’s annual EPS to add up
to the price of the company’s stock price. The formula is as follows:
P E Market Price of the Stock Earnings per Share
=
Profit margin is the most extensively used measure of profitability. Profit margin is the
ratio of net income (profit) to revenue (sales). The formula is as follows:
Profit Margin Net Income Total Revenue
=
D/E ratio indicates the relative proportion of capital contributed by creditors to capital
contributed by shareholders. A higher D/E ratio generally indicates a higher level of
riskiness. The formula is as follows:

D E Average Total Liabilities Average Total Stockholders’ Equity
=
The ROE ratio shows how profitable a corporation’s stockholders’ equity is in generating
revenue. The ROE ratio provides investors (stockholders) an indication of how well their
investment is performing. The formula is as follows:
ROE Net Income Average Total Stockholders’ Equity
=
The average financial ratios for the top 15 industries are shown in Table 2. The P/E ratio
ranged from a low of 4.8 to a high of 34.2, with an average of 19.6. The average profit
margin was 10.5%. The D/E ratio ranged from a low of 29.9% to a high of 270.5%, with
an average of 107%. The average ROE was 16.4%.
Table 2 Top 15 industries by market capitalisation
Industry
Market cap
($ billions)
P/E
Profit
margin (%)
D/E (%) ROE (%)
Money centre banks 909,647 17.9 14.5 60.8 7.6
Major integrated oil and gas 109,164 10.0 5.7 29.9 13.7
Business equipment 84,651 17.9 6.1 67.8 10.5
Wireless communications 63,922 4.8 30.2 270.5 30.9
Information technology
services
38,788 16.0 11.2 163.7 36.4
Drug manufacturers – major 33,218 27.0 16.6 105.7 19.8
Industrial metals and
minerals
31,163 20.8 6.9 53.4 6.7
Personal products 26,263 20.0 11.0 77.3 24.6
Recreational goods, other 19,120 34.2 8.4 108.1 25.2
Tobacco products, other 15,546 12.0 3.1 210.5 9.2
Diversified utilities 14,945 21.2 9.4 145.7 8.2
Biotechnology 14,272 na 6.5 70.8 5.3
Diversified machinery 13,527 20.8 9.5 137.3 14.1
Electronic equipment 12,895 33.9 13.3 32.5 25.8
Life insurance 12,810 17.5 5.2 71.7 8.4
Average 93,329 19.6 10.5 107.0 16.4
Source: Yahoo (2015)
Table 3 provides the P/E ratio for the selected 30 major companies associated with GMO
food products. The P/E ratio ranged from a low of 13 to a high of 61. The average P/E
ratio for the GMO companies was 26.7. This was greater than the average P/E ratio for
the top 15 major industries by market capitalisation. The top 15 industries’ average P/E
was 19.6. The average P/E ratio for the GMO companies and the average P/E ratio for the
top 15 industries were significantly different (p < .032).

Table 3 P/E ratios for major GMO food companies
Company name P/E
Archer-Daniels-Midland Company 13
B&G Foods 38
Basf SE 15
Bunge Limited 18
Campbell Soup Company 19
CoCa-Cola Company 25
ConAgra Foods, Inc. na
Dean Foods Company na
Dow Chemical Company 16
Eli Lilly & Company 41
Flowers Foods, Inc. 26
General Mills 24
Hershey Company 24
Hormel Foods Corp. 23
J.M. Smucker Company 34
Kellogg Company 49
Kraft Foods Group Inc. 53
McCormick & Company, Inc 24
McDonald’s Corporation 21
Monsanto Company 24
Nestle S.A. 14
Pepsico, Inc 22
Pilgrim’s Pride Corporation 13
Pinnacle Foods, Inc. 20
Starbucks Corporation 31
Syngenta AG 24
Target Corp na
Treehouse Foods, Inc. 32
Tyson Foods, Inc. 17
Whitewave Foods Company 61
Average for GMO companies 26.7
Top 15 industries’ average 19.6
Notes: T-Test results: t = 2.22, significance p < .032.
Table 4 shows the profit margin for the selected 30 major companies associated with
GMO food products. The profit margin ranged from a low of 0.1 percent to a high of
32.4 percent. The top 15 industries had an average profit margin of 10.5%. The average
profit margin for the GMO companies and the profit margin for the top 15 industries
were not significantly different.

Table 4 Profit margin for major GMO food companies
Company name Profit margin (%)
Archer-Daniels-Midland Company 1.5
B&G Foods 7.2
Basf SE 6.5
Bunge Limited 0.5
Campbell Soup Company 5.7
CoCa-Cola Company 18.3
ConAgra Foods, Inc. 21.7
Dean Foods Company 9.0
Dow Chemical Company 8.4
Eli Lilly & Company 20.3
Flowers Foods, Inc. 6.2
General Mills 10.4
Hershey Company 11.5
Hormel Foods Corp. 6.0
J.M. Smucker Company 9.2
Kellogg Company 12.2
Kraft Foods Group Inc. 14.9
McCormick & Company, Inc 9.4
McDonald’s Corporation 19.9
Monsanto Company 32.4
Nestle S.A. 10.8
Pepsico, Inc 19.2
Pilgrim’s Pride Corporation 6.5
Pinnacle Foods, Inc. 3.6
Starbucks Corporation 0.1
Syngenta AG 11.2
Target Corp 2.8
Treehouse Foods, Inc. 3.8
Tyson Foods, Inc. 2.3
Whitewave Foods Company 3.9
Top 15 industry average 10.5
Notes: T-test results: t = 0.30, significance p < .765.
Table 5 shows the D/E ratio for the selected 30 major companies associated with GMO
food products. The D/E ratio ranged from a low of 49.6% to a high of 583.9%. The
average D/E ratio for the GMO companies was 183.0%. This was greater than the
average D/E ratio for the top 15 major industries by market capitalisation, which had an
average D/E ratio of 107.0%. The average D/E ratio for the GMO companies and the
ratio for the top 15 industries were significantly different (p < .004).

Table 5 D/E ratio for major GMO food companies
Company name D/E (%)
B&G Foods 292.3
Basf SE 132.0
Bunge Limited 171.7
General Mills 239.6
Nestle S.A. 87.8
Pepsico, Inc 217.4
Syngenta AG 113.0
Target Corp 174.5
Note: T-test results: t = 3.03, significance p < .004.
Table 6 shows the ROE ratio for the selected 30 major companies associated with GMO
food products. The ROE ratio ranged from a low of 0.2 percent to a high of 151.8%. The
average ROE ratio for the GMO companies was 27.7%. This was higher than the average
ROE ratio for the top 15 major industries by market capitalisation, which had an average
ROE of 16.4%. The average ROE ratio for the GMO companies and the ratio for the top
15 industries were significantly different (p < .055).

Table 6 ROE ratios for major GMO food companies
Company name ROE (%)
B&G Foods 14.2
BASF SE 18.0
Bunge Limited 3.0
General Mills 28.3
Nestle S.A. 15.8
Pepsico, Inc 28.8
Syngenta AG 18.1
Target Corp 12.0
Notes: T-test results: t = 1.97, significance p < .055.
A summary of the results of the analysis of the financial ratios is shown in Table 7. The
average P/E ratio for the 30 GMO companies was 26.7, which was higher than the major
industries’ average P/E ratio of 19.6. The difference was significant. This shows that an
investor had to pay a higher average price, relative to its EPS, for a share of stock in a
GMO company than for a share of stock in an average company in the top 15 industries.
Thus, it would take more years for the earnings of the average GMO company to add up

to the price paid for a share of stock. In general, stocks with higher P/E ratios are
categorised as growth stocks. Investors pay more, relative to the stock’s EPS, because of
the potential and expectations of future growth in earnings.
The average profit margin was about the same for the top 15 industries, 10.5%, as for
the GMO companies, 9.9%. The average D/E ratio was 183.0% for the GMO companies
and 107.0% for the top 15 industries. The D/E ratio was significantly higher, indicating a
higher level of riskiness for GMO companies. The average ROE was 27.7% for the GMO
companies and 16.4% for the top 15 industries. GMO companies provided a significantly
higher ROE.
Table 7 Summary of financial ratios of major GMO food companies and top 15 industries
GMO companies Major industries
P/E ratio 26.7 19.6**
Profit margin 9.9 10.5
D/E ratio 183.0 107.0***
ROE 27.7 16.4*
Notes: Significantly different at: *p < .10, **p < .05; ***p < .01. *Top 15 major
industries based on market capitalisation.
Source: From Yahoo (2015)
5 Summary and conclusions
The first research question concerned the economic and financial performance of
companies associated with GMO food products, as compared to companies in
top 15 industries. Regarding financial and economic performance, GMO companies had
higher averages on two of the four measures of performance (financial ratios),
specifically, P/E ratio and ROE. Regarding the other two measures, compared to the
top 15 industries, GMO companies had about the same profit margin and had a higher
level of riskiness, as measured by the D/E ratio. Investors appear to have responded to the
higher average ROE of GMO companies by paying a higher price per share relative to
EPS. This indicates that investors hold a positive future outlook for GMO companies.
The second research question concerned the extent that GMO foods have been
affected by the positive and negative perspectives expressed about GMOs. While there
will continue to be much discussion and debate, GM research and technology appears to
be the most effective way to feed many of the world’s hungry, notably in developing
countries in Africa, Asia, and Latin America. Numerous scientific studies affirm the
safety and nutritional benefits of GMO food products. However, concerns expressed by
GMO opponents have been effective in limiting GMO acceptance by the public.
Research indicates that the inconsistency between negative public opinion and the
positive scientific evidence supporting GM crops is at least partly the result of
misrepresentations of GMOs.
While much research has already been done, additional research can lead to better
understanding of the benefits and potential negatives of genetic modification and
biotechnology. With additional research and information dissemination, the GMO food
products controversy might eventually come to an end. At this time, the future prospects
for GMO companies appear positive, at least according to investors, suggesting a belief

that future contributions to society by GMO companies will outweigh negative concerns.
In the end, acceptance or rejection of GMO foods will have a major impact on food
producers, distributors, retailers, and, particularly, consumers.
6 Limitations and future research
The current study was limited by the sample of companies included in the analysis and by
the time period examined. Future studies could include a different sample of companies
and include other time periods. This study provides a benchmark for future studies that
evaluate the economic and financial performance of companies associated with GMO
food products. With regard to GMO foods, this study described some of the benefits of
GMOs, such as improvements to people’s health and increases in food production, along
with concerns about potential negative consequences.
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