ST. LOUIS, Missouri, March
20, 2005, Jim Suhr for The Associated Press, Lincoln Journal Star
via CropChoice.com: When Monsanto Co. scrapped its plans
last May to market genetically modified wheat, its most-anticipated
product in years, even biotechnology's most ardent supporters complained
about the company's lackluster pipeline.
The lucrative European market, meanwhile, remains closed to the
company's wares and Monsanto has posted losses for the past two
quarters. The company also has agreed to pay $1.5 million in penalties
for bribing an Indonesian government official, a scandal its opponents
eagerly are exploiting to keep Monsanto's wares out of southeast
So why is the stock trading near its all-time highs?
Despite the high-profile resistance to genetically engineered products,
biotech crops continue to sprout on more of the world's arable acreage
every year. And despite its losses, Monsanto's financial forecasts
for this year and next are rosy.
In 1996, about 4.3 million acres were under biotechnology cultivation;
that number has swelled to some 200 million acres.
Wall Street has rewarded Monsanto chief executive Hugh Grant's
risky decision two years ago to distance the company from its chemical-making
roots and refashion the St. Louis fixture as a biotechnology outfit.
Monsanto is using its grip on the small but growing niche of genetically
engineered agriculture to push into markets outside the United States.
At home, it controls almost all the nation's entire soy crop and
half the corn seed supply.
(Earlier this month, Monsanto bought NC+ Hybrids of Lincoln, a
familiar and venerable Nebraska agricultural seed company.)
The company has also begun to tame a flourishing black market for
its products in South America, while more of its cotton seed is
bought and sown in India each year.
With one-tenth of the world's high-value farmland growing biotech
crops, "this is just the beginning," said Robb Fraley,
the company's chief technology officer. "What gives me comfort
is that we're seeing the momentum really across the world."
Wall Street has noticed. Monsanto's shares rose a blistering 93
percent for 2004 after a 49 percent jump the previous year.
Though the company has posted losses in the last two quarters,
mostly associated with the bankruptcy of the chemical concern it
spun off, it has boosted its financial forecast for the next two
years. That's because its genetically engineered seed sales are
booming -- a 20 percent increase last quarter -- and the company
expects the growth to continue as it expands outside the United
Still, there's concern that that growth is driven by three products
that benefit consumers little.
Critics complain that Monsanto and its rivals have failed to deliver
on the promise to revolutionize agriculture with plants genetically
engineered to be healthier, drought-resistant and tastier.
Monsanto's best-selling seeds remain soy, corn and cotton genetically
engineered to resist weed killers and bugs, and the prospects for
introducing new biotech crops to the market are at least two years
"Monsanto has done a good job of cornering the biotech market,
but it has a very narrow focus on a very few products," said
Greg Jaffe, who wrote a report last month lamenting the industry's
lackluster immediate future for the Washington D.C.-based Center
for Science in the Public Interest. "They seem to be coasting
on the products that they developed in the mid-1990s."
Addressing that issue, Monsanto last month agreed to pay $1 billion
cash for Seminis Inc., the Oxnard, Calif.-based supplier of more
than 3,500 seed varieties to commercial fruit and vegetable growers,
dealers, distributors and wholesalers in more than 150 countries.
It also has turned its attention to conquering the cotton sector
-- now dominated by Bayer CropScience and Delta and Pine Land --
with its $300 million acquisition last month of the nation's third-largest
cotton seed provider, Emergent Genetics.
Last week, Monsanto said it got U.S. regulatory approval for its
next-generation of Roundup-resistant cotton, which among other things
allows growers to use the herbicide later in the season, reduces
tillage and is less dependent on some spray equipment.
Monsanto expects the cotton to be offered in time for the 2006
growing season, with regulatory approval in other countries to follow
later this year.
This month, India -- a reluctant entrant in the world of biotech
-- approved cultivation of six varieties of genetically modified
cotton based on Monsanto technology in its fertile northern region,
thwarting anti-biotechnology activists. Monsanto's pest-resistant
cotton is the only genetically engineered crop allowed in India.
In Brazil, meanwhile, lawmakers this month cleared the way for
regulators to approve biotech crops, opening a big door for Monsanto
to sell its popular modified soy seed in a country where farmers
have used pirated versions of the company's Roundup Ready variety
for years. Brazil's president, Luiz Inacio Lula da Silva, is expected
to soon sign that into law.
The country's soy market has boomed over the past decade and the
new law would double use of Monsanto's soy seeds in Brazil over
the next several years to about 50 percent of the market.
Monsanto insists its inroads into Brazil are just a start.
"Where we are is still at the very beginning of the cycle,"
said Fraley, the company CTO, "like betting at the beginning
of the computer revolution."
AP Biotechnology Writer Paul Elias contributed to this report.