Bionic Growth For Biotech Crops; Gene-Altered Agriculture Trending Global
12 January 2006
The Washington Post
Copyright 2006, The Washington Post Co. All Rights Reserved
Since genetically modified crops were first planted a decade ago, the acreage devoted to them worldwide has been growing at double-digit rates, and it did so again last year, jumping 11 percent to 222 million acres, according to a new report.
The crops are gaining popularity in middle-income countries such as China, India and Brazil, the report says, with small cotton farmers in particular embracing a technology that allows them to grow more cotton while reducing the use of chemical pesticides.
The report notes that the world's most important food crop, rice, could be on the verge of a transformation. Iran has already commercialized gene-altered rice and China appears nearly ready to do so, the report says. Widespread acceptance of such rice could put crop biotechnology into the hands of the tens of millions of small rice farmers who grow nearly half the calories eaten by the human race.
Commercialization of rice that has been genetically altered to resist insects "has enormous implications for the alleviation of poverty, hunger and malnutrition, not only for the rice-growing and -consuming countries in Asia, but for all biotech crops and their acceptance on a global basis," says the report, compiled by the International Service for the Acquisition of Agri-biotech Applications. The group publishes an annual review, funded partly by the Rockefeller Foundation, that is considered the definitive global analysis of trends in crop biotechnology.
Proponents of the technology welcomed the findings, saying the spread of biotech crops demonstrates their usefulness for farmers and society. But two advocacy groups preemptively attacked the new report before it was published, putting out reports of their own this week that questioned industry "hype" and disputed the impact of gene-altered crops.
The Polaris Institute, an anti-globalization group in Ottawa, acknowledged that biotech crop acreage appears to be increasing but noted that the technology is still concentrated in a handful of countries, with the United States, Argentina, Canada and Brazil accounting for 90 percent of the world's biotech acreage. The group pointed out that the technology is widely used in only a few crops -- mainly cotton, corn, soy and canola.
Industry claims that the technology would help alleviate poverty in Africa have proven illusory so far, the group said, a point echoed by a report from environmental group Friends of the Earth. And the groups said growing biotech crops can hurt farmers' export markets in countries that are skeptical of the technology.
"Instead of wholesale adoption, we are seeing at most experimentation," David Macdonald, a Polaris Institute analyst, said in a statement. "Worldwide farmers have good reason to be wary."
It's clear, in fact, that even after a decade of growth, biotech crops are grown on only a small fraction of the world's arable land -- well under 1 percent. But the trend is also clear: When they were first commercialized in 1996, biotech crops were planted on 4.3 million acres in six countries, but the report says that by 2005 farmers were planting them on 222 million acres in 21 countries. "Biotech crops deliver substantial agronomic, environmental, economic, health and social benefits to farmers and, increasingly, to society at large," the report says.
Almost a third of the agricultural land in the United States is planted in gene-altered crops, and more than half in Argentina and Paraguay, the report shows. Brazilian farmers had been illegally planting biotech crops for years, but that country has now legalized them and the acreage there is growing rapidly, the report says.
The report says China stands to become a major player in the field. Clive James, chairman of the group that published the report, estimated that 2,000 scientists in China are working on numerous gene-modified crops. "If we look at the investment in China in biotech crops, it is very significant," he said in a conference call yesterday from Sao Paulo, Brazil.
Agricultural companies, led by Monsanto Co. of St. Louis, created the first biotech crops in the 1990s by moving genes from other species into plants. Bacterial genes give some plants the ability to resist worms, and others gain the ability to survive heavy applications of herbicides that kill nearby weeds.
But a controversy erupted over the technology in Europe in the late 1990s, with advocacy groups saying the crops posed unnecessary environmental risks and much of the European public agreeing.
The United States has been trying to pry open the European market, with some recent success. The new report notes that five of 25 European countries are now growing at least small quantities of biotech crops, though only Spain has embraced the technology in a big way.
The United States filed a complaint against Europe over the issue with the World Trade Organization, and a ruling is expected soon. The European Commission in Brussels has been battling resistance by individual countries and this week ordered Greece to permit a variety of gene-altered corn.
Monsanto faces biggest challenge yet from old-time corn company
By CHRISTOPHER LEONARD
12 January 2006
05:00 am GMT
(c) 2006. The Associated Press. All Rights Reserved.
NEW LONDON, Mo. (AP) - When it comes to buying soybean seed, Tracy Quinlin has connections. Her brother is a local dealer for Monsanto Co., the biggest seed company in the world.
But family ties weren't enough to win Quinlin's business this winter when she shopped for seeds to plant on her 200-acre farm. She was won over by Tim Flowerree, a salesman for Pioneer Hi-Bred, one of Monsanto's biggest competitors.
"Tim made us a better deal for beans," Quinlin said.
Standing behind the counter of a small farmer's co-op where she works, Quinlin said there were no hard feelings from her brother. After all, business is just business in this farming town of 1,000 people.
"You can't be cutthroat because everybody knows everybody," she said.
The same might not be true at the corporate level, where Pioneer and Monsanto are competing more fiercely than ever for a share of the multibillion dollar market in genetically engineered crops. About 123 million acres of U.S. farmland were planted with biotech seed in 2005, according to the Biotechnology Industry Organization. Just a handful of companies control the market because they can produce the high-tech crops.
Pioneer represents some of the stiffest competition ever faced by Monsanto, which has been the undisputed king of biotech crops since introducing the first strains 10 years ago. Companies like Pioneer got into the market largely by riding Monsanto's coattails, paying fees to incorporate the company's patented genes into their own lines of seed.
Pioneer is trying to change that. The company is developing and selling its own biotech products and has many more slated for release with the hope of eventually taking market dominance away from Monsanto for the first time.
"It's no longer about a single dominant player providing biotech tools to the marketplace," said Pioneer President Dean Oestreich. "We are competing head to head."
In this David and Goliath battle, Pioneer is clearly not the giant. Its total revenue in 2004 was $2.6 billion, up 13 percent, but still less than half of Monsanto's $5.42 billion. Monsanto's revenue grew 16 percent in 2005 to $6.29 billion; Pioneer will report later this month.
Analysts say Pioneer won't seriously upset Monsanto soon, but its long-term plans might pose a threat as it rolls out more of its own biotech crops in coming years.
"It's certainly something for investors to factor into their thinking, that Pioneer could certainly be a tough competitor," said Frank Mitsch, an analyst with Fulcrum Global Partners in New York.
For now, Pioneer has narrowed its line of attack to what it knows best: corn.
Maize was the first crop Pioneer developed when it was founded in 1926. Since then, it's grown to control about 31 percent of the U.S. market in corn seed, according to analysts at Bank of America.
In 2003 Pioneer introduced the Herculex line of corn, genetically engineered to resist the corn borer insect, and is building on the technology with new varieties that resist root worms and other pests.
Corn could be considered Monsanto's Achilles heel. The company dominates the soybean market leaving little room for growth there, according to analyst Kevin McCarthy with Bank of America. The company is rolling out new corn breeds, and penetrating that market could account for 48 percent of Monsanto's overall value during 2006, McCarthy calculates.
McCarthy cited DuPont's competition when he downgraded Monsanto's stock in early December. But he applauded Monsanto this month when it reported an 18 percent boost in corn sales for the first quarter of its fiscal year.
Chief Executive Officer Hugh Grant told investors recently that Monsanto has gained market share for corn seed every year for since 2001.
"When you do this for five years in a row, it's no longer luck. It's a trend line," Grant said. His message hit home with investors, who have sent Monsanto's stock from $54.47 a share to $80.30 over the last year.
Monsanto plans to eventually dominate the corn market by exploiting a head start it garnered in 1984, when it opened its first biotech research lab in Chesterfield, Mo., where it now develops experimental crops that won't see the marketplace until 2012 or later.
Oestreich pointed to one Pioneer advantage that seems decidedly low tech: Sales calls. The company has about 5,500 sales representatives and dealers throughout the Midwestern crop-belt. When biotech crops were first introduced 10 years ago, this sales team helped their quick adoption nationwide, he said.
"At that time, Monsanto was not a seed company. We were their route to market," he said.
Fifteen years ago, Pioneer decided it didn't want to simply distribute Monsanto's genes, he said. Pioneer could keep more profit by selling its own patented crops, he said.
To match Monsanto's Chesterfield facility, Pioneer upgraded its global network of plant research centers, some of which date back to the 1950s, Oestreich said. More importantly, the company hired 1,700 researchers during that time to play catch-up in the gene splicing race, Oestreich said.
The battle to win seed business is largely played out during the winter months, when farmers like Elmer Martin buy supplies to plant in the spring. A tall and burly man with hands like farm implements, Martin doesn't seem easily swayed by a sales pitch.
"I don't get pushed very well. I lead a lot better," Martin said recently. He was sitting in the office of Pioneer saleswoman Pat Stemme, who like many Pioneer representatives also helps run a family farm.
Stemme invited Martin to her office at a reporter's request. He's a longtime customer, but had some disappointing news: He was buying Monsanto's brand of Asgrow soybeans to plant on his farm near Centralia, Mo.
Martin said he's thinking of every penny this year. Prices for fuel and fertilizer are up; prices for crops are flat. Salespeople for Pioneer and Monsanto have been working hard for his business, making it a tough decision, he said.
"It almost comes down to personalities," he said.
"So who do you like over at Asgrow?" Stemme asked.
"She must be good looking," Martin's wife Julia chimed in.
Martin demurred. For farmers like him, the corporate seed battles will be decided one season at a time.
"You need to plant a little of everybody's," Martin explained. "To do your own research on your own land."