Biotech Values

[DewDiligence]

Monsanto Resurrects Biotech Program for Wheat

[As previously posted (#msg-38256058), I think MON is a cheap stock relative to its expected growth rate during the next 5-10 years, and it is worthy of being a core biotech holding. Moreover, the expected growth rate is based almost entirely on two crops: corn and soybeans; if GMO wheat finally becomes a reality, the growth rate could be substantially higher.]

http://online.wsj.com/article/SB124758781309939557.html

›JULY 15, 2009
By SCOTT KILMAN

Monsanto Co. is resurrecting its efforts to genetically engineer wheat five years after resistance from the food industry led it to drop its work on the world's most widely planted crop.

The move eventually could help slow or reverse the decline in the size of the wheat harvest on the Great Plains, where many farmers have abandoned their traditional crop to grow plants -- such as corn and soybeans -- genetically engineered to be easier to grow. But it also could reignite opposition to biotechnology among makers of bread, pasta and cake, particularly in foreign markets that are dependent on U.S. wheat.

Even though more than 85% of all of the corn, soybeans and cotton grown in the U.S. are already genetically modified to resist pests or tolerate weed killer, the St. Louis biotechnology company is starting from scratch with wheat, long a major crop in Plains states such as North Dakota, Montana and Kansas.

Monsanto plans to create wheat that can tolerate drought and consume less fertilizer, among other things. But any genetically modified seeds probably won't reach farmers for at least eight years, time that Monsanto executives hope they can use to smooth over any concerns within the wheat industry.

Monsanto's plan came to light Tuesday when it announced that it had definitively agreed to buy WestBred LLC, a small, closely held Montana wheat-breeding outfit, for $45 million. Monsanto will probably have to spend another $100 million on research and development to bring its first genetically modified wheat plant to market.

Monsanto's new GMO wheat push is much broader than its original effort in 2003, which involved a Northern Plains spring wheat variety that had been genetically modified to tolerate exposure to the company's Roundup herbicide. Now, Monsanto is interested in genetically modifying many varieties of wheat with several traits.

The U.S. wheat industry -- from farmers to exporters -- originally put up more resistance to biotechnology than other major crops, such as corn and cotton. The wheat industry feared that consumers would be more leery of tinkering with wheat because that crop is more easily recognized by shoppers since it is a known ingredient in staples such as breads, pastas and cakes.

Part of what has changed is that many wheat farmers have started growing genetically modified corn and soybeans in their fields, helping reduce wheat production to levels that concern buyers of wheat ingredients.

In October, for example, North American Millers' Association adopted the position that genetically modified wheat should be commercialized. In May, organizations representing wheat farmers in three of the biggest wheat-exporting nations -- U.S., Canada and Australia -- backed the simultaneous commercialization of genetically modified wheat.‹