Friday, February 01, 2008

Software for Seeds

One of the highlights of the SARL Conference was getting a chance to tour Monsanto’s main research facility in St. Louis, its headquarters. I’d see a demonstration of their cutting-edge technology at the Farm Progress Show this summer in Decatur, IL and wanted to learn more about what they have in the pipeline.

The St. Louis facility is one of only 14 that they have in the world. It was built in 1984 as a pharmaceutical center but when Monsanto exited that area 7 years ago they kept part of the facility for their ag research. They sold the pharmaceutical part of the business to Searle which eventually sold to Pfizer.

With 8.5 million farmers using Monsanto products on 220 million acres, the impact of Monsanto’s biotech research is being widely felt, especially when you realize that in 1995 there were zero acres planted with biotech seeds.

Our tour guide stressed that Monsanto’s focus is upon improving the “software for seeds” and that each gene that it inserts into a seed to improve it is not unlike what happens with computers. Some of those genes will fight drought, use less fertilizer, improve cold tolerance for quicker germination and provide for nutrients. An example of the latter is the development of Omega 3 (from algae) from soybeans and lessening transfats with its new Vistive soybean.

The St. Louis research facility boosts 125 PhDs out of 400 employees. They have more growth chambers in that one building than all of the U. S. Land Grants Colleges have combined! With an R&D budget of $780 million, Monsanto is spending about 10% of their annual sales on research, 95% of which is spent in the area of seeds and biotech and only 5% on chemicals. Half of that budget is focused upon one crop: corn.

A new trait typically takes from 8 to 10 years to reach market at a cost of from $50 to $100 million. The one that I’m anxiously awaiting is their drought resistant one that is going to revolutionize where crops are grown and at a major economy for irrigation water.

One of the most interesting comments made was that China is Monsanto’s biggest competitor, rather than other seed companies like Syngenta or Pioneer (DuPont). That competition is government based and concerns them a great deal.

As to higher commodity (and food) prices, Monsanto’s take is that it is demand led from China and India and not from energy (ethanol), “China is adding the equivalent to the entire population of Germany to its middle class each year.”

It is a fun time to be in agriculture. Hopefully, this rally will last for many years into the future.

1 comment:

fishing leaders said...

Aw shucks, I should have bought Monsanto when it was in their low 20s.