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Sell Block: Monsanto’s Growth Choking Out Competition?

Thursday, 13 Aug 2009 | 7:09 PM ET

The Obama administration is stepping up its antitrust enforcement, Cramer said Thursday, and Monsanto could be the first target. Recent moves by the company seem to be daring the Justice Department to file a suit.

Believe Cramer when he says that the government has a strong case against Monsanto . A series of competition-crushing acquisitions made this biotech disguised as an agriculture outfit the market leader in genetically modified US corn, soybean and cotton seeds. And Monsanto maintains strict agreements with its farmer clients that leave them virtually no choice but to feed at the corporate trough. Plus, the company plans to push through a 42% price increase on its new seeds, and there’s nothing these farmers can do about it.

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Monsanto couldn’t provoke a government inquiry anymore than it already has. The firm seems to have farmers and the seed market in a stranglehold. Monsanto’s reputation is so noteworthy that the company serves as the villain in the new documentary Food, Inc. Cramer thought the movie’s accusations alone might be enough to draw Washington’s ire.

Now, Monsanto blames the expected decline in sales of its premier herbicide, Roundup, as the reason for the price increases. As much as Cramer thought it was a dangerous move given the Obama administration’s renewed focus on antitrust, he knew the catch-22 this company faces: risk the White House’s wrath or risk an earnings shortfall.

MON was the focus of this week’s Sell Block because Wall Street has all but ignored this possibility. Analysts and investors are worried about falling Roundup sales but not the actions Monsanto is taking to make up for them, and that’s a mistake.

Cramer wasn’t telling viewers to dump the stock, but he did remind them that this is not the George W. Bush Justice Department. The government of, by and for the corporation, which ruled the eight years prior to Obama’s inauguration, is long gone. Owners of MON should keep this in mind.

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