Monsanto Plans to Part with Posilac

The dairy supplement business will be sold in the next few months.

Published on: Aug 7, 2008

On Wednesday Monsanto made the announcement that they were going to be shopping for a buyer of the Posilac bovine somatotropin division. Posilac is an FDA-approved supplement that increases production and efficiency in dairy cattle and has been on the market since 1994.

"We feel that Polisac is a solid and successful product that provides significant value to dairy farmers," said Christie Chavis, the commercial development and strategy head for Monsanto's animal agriculture organization. "However; we feel that repositioning this business with a strategic owner in the animal agriculture industry will allow Monsanto to focus on the growth of our core seeds and traits business. Our long-term growth platforms are focused on corn, soybeans, cotton and vegetables."

Chavis says the divestiture of the Posilac business will ensure dairy producers of being able to continue to obtain the value of the product in their operations. Wednesday's announcement is merely the first step by Monsanto to reposition the division and production and there are no plans to stop production or sales of Posilac.

"We'll continue to maintain all of our operations in this ongoing period," Chavis said. "The announcement today was merely an intent that we will divest this business at some point, but there is no change in the business; it will be business as usual."

So far there is no timeline set for sale of the business. Earlier this year Monsanto closed the production facility it had in Europe and all Posilac is manufactured in its Augusta, Ga. plant, which will be included in any deal for the business.

Chavis emphasized the strength of Posilac in the marketplace, citing better sales of the product this year than ever before. However, she was questioned about the fact that many retailers are moving away from milk produced with the product, and asked how the continued growth was being achieved.

"It's important to keep in mind that only 25% of the milk that is produced in the country is sold as fluid milk," Chavis said. "More than 50% of the production today is used in cheese, so the fluid positions that have been taken by retailers are affecting only a quarter of the market."

According to Chavis, the sustainability pressures on animal agriculture and being able to produce more milk with less cows and the overall carbon footprint implications of that will allow Posilac to have a significant place in the dairy producer's toolbox. A recent study released by Cornell University cited Posilac as an on-farm dairy tool that can reduce the environmental impact of dairy operations.

"This product has very compelling value propositions to dairy producers," Chavis said. "Dairy producers will continue to use this product as a tool to increase and enhance the overall productivity of their herds and make their farms more efficient. I think the environmental consequences of this will be very well received and shows that dairy producers will continue to be stewards of the environment."