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WSJ: Seed Giants Join Forces

Corn Made by Dow, Monsanto to Fight Insects and Weeds

By ANA CAMPOY
September 15, 2007

Seed giant Monsanto Co. and Dow Chemical Co. are teaming up to create corn seeds crammed with traits to fight off weeds and insects.

The companies have signed a cross-licensing agreement to stack, or insert into a seed, eight different genes that kill off bugs and make plants resistant to herbicides. They expect to be able to sell several types of the corn seeds under the brand SmartStax by 2010. Corn is the most planted crop in the U.S., with 93 million acres under cultivation, according to Department of Agriculture estimates. Seeds on the market today have only as many as three stacked genes.

Monsanto and Dow will pay royalties to each other for any seeds they sell using the other's traits.
The deal underscores the mounting competition in the sector, with even the biggest players teaming up with others to get ahead. Last year, Syngenta AG and DuPont Co., two major players in the seed business, signed a cross-license agreement to compete against Monsanto.

Under the deal, Monsanto and Dow will pay royalties to each other for any seeds they sell using the other's traits. Monsanto said the agreement will allow it to expand its market share by broadening the products it can offer. "It's an environment where you can add things you wouldn't have independently and create new products that the industry would not have seen," said Carl Casale, executive vice president of strategy and operations for Monsanto.

For Dow, which holds around 3% of the corn-seed market in the U.S., the agreement will provide access to many more farmers and give a substantial boost to its agriculture unit. "This is game-changing technology," said Dow Chief Executive Andrew Liveris. "It puts Dow Agrosciences on the map," he said, referring to Dow's agriculture unit.

Dow and Monsanto will contribute four traits each for the new seeds. Some of the genes that will be included fight the same pests, although using different strategies.

With the genes from competing companies in the same seed, farmers don't have to pick what they want to use based on which gene works better, because the seed will contain both, said Mark R. Gulley, specialty chemical analyst at Soleil Securities Group Inc. Instead they will focus on which seed has the highest yields.

Ken McCauley, president of the National Corn Growers Association and a corn farmer in White Cloud, Kan., agrees. The new seeds will allow the farmer to go with the seed that he likes the most, while having access to the biotech advantages of both companies, he said. "It's a good deal for farmers," he said.

Dow and Monsanto also will be able to separately add genes to the eight-gene corn seeds, creating new seeds that they can then market under their own brands.

Some critics question the wisdom of cramming so many genes in one plant. Studies show that crops that contain genes that act as insecticides reduce the variety of bugs -- some of which are beneficial for the soil and plants -- compared with crops that don't have the gene and haven't been sprayed, said Doug Gurian-Sherman, senior scientist at Union for Concerned Scientists, a group that monitors the agriculture industry.

"The soil and plant systems are complicated," he said. "When you put in a couple more genes, unexpected things can happen."

Write to Ana Campoy at [e-mail]

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