After several years of corporate consolidation, Monsanto has found itself an agriculture-only company--dependent upon staying in the good graces of farmers and providing ever-increasing value in all of its products.
In a meeting this week at company headquarters in St. Louis, David Rhylander, director of traits, emphasized, "Agriculture is our only market now, and the health of the grower is vital to Monsanto'â€™ success."
His words were echoed by Kerry Preete, in charge of the companyâ€™s North American business, who said: "We are now 100% focused on agriculture. Weâ€™re now 100% publicly owned, and there is no longer food, pharmaceuticals and chemicals in our portfolio. "If the farmer is not making money, they canâ€™t buy our products. We have to focus on the farmer and address challenges in the field and the marketplace," he explains.
Preete says the reinforced focus calls for the following goals in product development:
- Lower costs.
- Enhanced yields.
- Increased value to the grower.
"These are key goals for all of our 3,000 researchers as they work in corn, soybeans and cotton," he adds, noting Monsanto also has purchased Seminis and plans to use that resource to position itself as a leader in seed and traits for the vegetable industry.
Currently, about 75% of Monsantoâ€™s income is from "seed and traits," says chief technology officer Robert Fraley. "The remainder is from the sale of Roundup."
This marks the direction for us going forward, he explains. "Ninety percent of the users of our technology are in developing countries. Europe is opening up to biotech and Mexico and Brazil are opening their doors. This should hearten U.S. growers, because they can be assured what they grow is useable throughout the world."
Cotton a key
Preete says Monsanto believes the United States will continue to grow a "substantial number" of acres of cotton regardless of the outcome of the WTO actions challenging the U.S. Farm Program.
The companyâ€™s recent acquisition of Emergent and the genetics growing under the Stoneville label are examples of investment in the cotton industry, along with Monsantoâ€™s "Cotton States" program which is developing germplasm for at least five varieties to be in public trials for 2006.
"Weâ€™re looking at what we know about corn and soybeans and working to bring that kind of technology to cotton. We think with a retail brand and licensing through other outlets we can get our technology adopted rather quickly," he explains. Itâ€™s this infrastructure the company plans to use to bring Bollgard II and Roundup Ready Flex (RRF) technology to the farm in as short a time as possible after their release.
"Still, our technology must offer good value. Farmers wonâ€™t buy it if itâ€™s not a good value," Preete says, noting technology gains value in a number of ways besides just price and yield. In another address, U.S. Cotton Marketing Manager Chad LeBlanc, explained how RRF technology could easily displace the need for hooded sprayersâ€”allowing producers to use 90-foot ground rig booms or aircraft to quickly apply glyphosate throughout the season. "This, we call non-pecuniary value. It amounts to time saved, less horsepower required, less equipment, etc."
As RRF and Bollgard II are being brought to market, Preete says Monsanto has tried to take all these things into account and keep the "system costs" level in pricing technology fees and Roundup. He also notes steps have been taken to make certain producers in other countries who use the new technology will be paying for it.