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Deadline looms in $750 million rice settlement

By Chuck Bartels
AP Business Writer / November 18, 2011

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LITTLE ROCK, Ark.—Rice growers who lost sales after genetically modified rice seed mistakenly entered the U.S. market five years ago have until Monday to sign on to a $750 million settlement proposed by the company blamed for the problem.

More than 10,000 farmers in Arkansas, Louisiana, Mississippi, Missouri and Texas sued the German conglomerate Bayer CropScience after the modified strain of long-grain rice got loose in 2006. The mistake led to lost sales in major markets, such as the European Union, and left many growers with huge losses.

Matthew Davis, a rice grower from Almyra, Ark., is among farmers hoping to settle. He recalled hearing the news that the crop was contaminated and then watching prices plunge.

"Everybody was in shock ... but you get used to bad news when you farm," Davis said. "It sure messed us up in 2006."

Bayer proposed the settlement but set a threshold of 85 percent of rice acreage involved. Bayer can opt out of the deal if not enough farmers sign up for the settlement, but the company doesn't have to.

"Bayer CropScience is hopeful that the 85 percent of acreage threshold of grower participation will be met," Bayer spokesman Greg Coffey said in a written statement.

Farmers filed the lawsuits after a strain of genetically modified rice was mistakenly released from a Louisiana test plot and made its way into the stream of commercially marketed rice.

The proposed settlement applies to long-grain rice, often used in pilaf or mixed with beans. Farmers who grow medium-grain rice, often used in sushi, or short-grain rice, found in cereal, weren't affected.

The long-grain rice variety wasn't approved for human consumption at the time, but no health problems became associated with the rice and the trait has remained in the food supply.

It will take about a month for claims adjustors to review filings by farmers to ensure they are valid. Once that process is complete, farmers will start receiving checks, assuming enough chose to participate.

The settlement would pay $155,000 to a farmer who planted 500 acres of rice annually from 2006 to 2010, a rate of $310 per acre. Farmers can collect more if they switched to crops that typically offer lower profits, such as wheat or soybeans.

In Arkansas, which produces half the nation's rice, Davis said he knows some farmers who quit because they couldn't endure the financial toll.

After the mistaken release, the U.S. Food and Drug Administration ruled that the genetically modified rice is safe to eat, but that didn't bring back the European market.

"I don't think we're ever going to be made whole, but you get what you can," said farmer Jonathan Hillman of Stuttgart, Ark.

Hillman said the effect was immediate when word came out in 2006 about the genetically modified rice.

"We didn't do anything wrong. Bayer lets this happen and it affects us more than it does Bayer," Hillman said.

Bayer was accused of knowing there was contamination, but the company has not admitted fault and stated when announcing the settlement that "Bayer CropScience believes it acted responsibly in the handling of its biotech rice."

The settlement is open to affected growers even if they haven't filed lawsuits.

Arkansas is first in rice production, followed by California and then Louisiana.

Attorney Don Downing of St. Louis represents a number of growers in the settlement. He said he doesn't expect a rush of farmers to suddenly decide Monday that they want to sign up.

"The vast majority of farmers made that decision a long time ago," Downing said, though he added that there have been a few stragglers.

Separately, Bayer and a group of farmers from Lonoke, Ark., are awaiting a ruling by the Arkansas Supreme Court on whether a $50 million verdict against Bayer will stand.

A jury awarded the farmers $5.9 million in actual damages and $42 million in punitive damages, an award Bayer argues is excessive.

Downing said he's optimistic the 85 percent level will be met and doesn't think the outcome of the Lonoke case is weighing on their decisions.

"I've talked to hundreds of farmers ... and not one indicated that was a factor for them," Downing said.

Attorney Richard Coffman of Beaumont, Texas, expressed a similar sentiment and said farmers want to resolve the matter by agreeing to the settlement with Bayer.

"For my 600 farmers, we're not watching the Arkansas case. We're filing claims," he said. "They decided it's time to settle rather than risk what can happen down at the courthouse."

Lawyers have held meetings in cities across rice growing areas, letting farmers know what their options are.

Bayer's proposal is based on jury awards already made in lawsuits that weren't part of the settlement.

The Monday deadline affects the majority of farmers who grow long-grain rice. Two categories have later deadlines: farmers who planted certain varieties and farmers who feel they have greater damages than average and have to file greater documentation.