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requires major food processors to allow shareholder vote on genetically
enginered foods. 2/25/2000
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Three major U.S. food processors, Coca Cola Co, PepsiCo Inc, & Phillip Morris, will probably allow shareholder proposals restricting the companies' use of genetically modified foods to be introduced at coming annual meetings. The Securities and Exchange Commission has ruled that shareholders be allowed to vote on this issue, since it has become central to corporate policy. Corporate managements would prefer that such questions regarding food and environmental safety not take place in public view. Currently, shareholder proposals requiring major food processors to cease the use of bioengineered crops have been presented to Coke, PepsiCo (owner of Frito-Lay), Phillip Morris (owner of Kraft Foods), Macdonald's Corp, Sara Lee Corp, and Proctor & Gamble. Such shareholder proposals, even if approved, are only recommendations, and managements are not required to implement them. However, publicity surrounding such shareholder actions is certain to deepen even further consumer doubts over the safety of genetically modified foodstuffs. Frito-Lay, who buys over a billion pounds of corn per year, has recently requested that its many contract farmers allot acreage to non-modified crops in case U.S. consumers start rejecting food with bioengeered ingredients. Europeans are already avoiding, requiring the labeling of, or banning outright the sale of such products. The SEC's position is ruling in favor of the dissident shareholders is that this issue is of real economic concern to shareholders, since company profits and share value would be affected by substantial adverse public sentiment.