| 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
Asia.
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
States.
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 away.
"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.
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