Cargill's admission is fast turning into an international scandal in the once-staid seed business, which has been seized upon by major biotechnology companies as the delivery channel for genetically engineered food inventions.Cargill, a closely held Minneapolis commodity-processing giant, also faces big problems over the 1998 sale of its overseas seed business to Monsanto Co. for $1.4 billion. Monsanto says it suspects that some of the foreign seed lines it acquired are worthless to it because they are laced with plant material misappropriated from Pioneer. In a lawsuit filed Thursday in federal courtin Des Moines, Iowa, Pioneer accused arch-rival Monsanto of stealing trade secrets. The accusation infuriated Monsanto executives. "We are an innocent purchaser," said David Snively, assistant general counsel for Monsanto. Cargill and Monsanto, which are partners in a crop biotechnology joint venture, are now discussing how to resolve the matter.

AgrEvo executives were worried that consummating their deal with Cargill would also make the company a target for an expensive trade-secrets lawsuit by Pioneer, which is based in Des Moines and is the biggest U.S. seed company. Pioneer sued Cargill and several seed companies last October, claiming they are using stolen corn plant material. Armed with new genetic fingerprinting technology, Pioneer is also screening the products of many other rivals.

Pioneer is alleging that one of its former employees brought corn breeding material with him when he joined Cargill's seed business in 1989. Cargill initially vowed to fight the trade-secrets lawsuit filed by Pioneer.But after its own investigation, Cargill acknowledged on Tuesday that at least one line of corn seed it sells in the U.S. contained Pioneer material.The admission is a big blow for Cargill. It's far from clear how much of Cargill's seed business is improperly laced with Pioneer material, but AgrEvo's move signals that the business could be worth far less than originally thought. Cargill decided to sell its domestic and foreign seed operations last year in large part because a race among the crop biotechnology companies to buy seed businesses had greatly inflated the value of the units. Cargill's seed unit is a small player in the U.S., controlling only 4% of the US corn-seed market and generating about $100 million in annual revenue.

AgrEvo initially offered to pay a huge premium because Cargill's domestic seed business was one of the few ways left for it to get a foothold in the US market; just about everything else had been bought. AgrEvo, which has been spending heavily to develop a genetic engineeringcapability, needs to own a seed business in order to deliver its genes to farmers.

AgrEvo's plans for the U.S. market now aren't clear. AgrEvo executives couldn't be reached for comment in Europe late yesterday. Thursday's move has U.S. industry officials wondering whether AgrEvo's strategy has changed since one of its parent companies, Hoechst, agreed in December to combine its agrochemical and pharmaceutical businesses with France's Rhone-Poulenc SA.

Hoechst owns 60% of AgrEvo. As part of the pact, which is still subject to regulatory and shareholder approvals, Rhone-Poulenc would be in charge of crop biotechnology.