Analyse the possible impact of genetically modified seeds on the price of Monsanto shares

Question

Monsanto extract

Monster is an MSc with over 21,000 employees spread across many countries. It produces agricultural and vegetable seeds, plant biotechnology traits (e.g. genetic modification) and crop protection chemicals.

Monsanto.com states that the business is focused on empowering farmers to produce more while conserving natural resources. With continuing global population growth and growing environmental pressures, Monsanto sees itself working with farmers to face the challenges of the future. Some of the chemicals used for crop protection (herbicides) are controversial.

Answer 1

It would really depend on which of the two main variables has a larger impact. On the one hand, the tastes and preferences of the potential buyers are harmed due to the controversial nature of such herbicides that the company has chosen to use. This would cause a decrease in demand, causing a shift to the left. On the other hand, there is an improvement in technology in the growth of these vegetables through them being genetically modified. This could mean that there would be an increase in the number of vegetables that the company can produce at the same cost for their inputs which would cause the supply to increase and a shift to the right. If both the demand and supply curves shift as I expect, the price of the vegetables will fall while the quantity will become indeterminate.

I personally expect the supply increase would be more impactful than the demand decrease due to the controversial nature of GMOs not being an international issue and the company would be able to sell more vegetables nonetheless and I think they might make a larger profit too. Because of that, I think the share price would go up despite the decreased price of the vegetables and the decrease in demand due to people's preferences for non-GMO foods.