Monument Circle Acquisition Corp (MON)

[Democritus_of_Abdera]

Limited hybrid diversity is slowing SmartStax introduction...

The efficiency of technology used to introduce new traits into a diverse array of hybrid germplasm will continue to be a rate-limiting step in the realization of the full economic potential of new bioengineered traits. The technology for speeding hybrid incorporation of new traits will become more and more important as the traits relate to factors that affect yield under different environmental stresses. That is because the individual farmer’s initial experience with a new seed will depend not only on the presence of the trait-specific stress, but also other local factors that are optimally addressed by specific hybrid selection.

The importance of hybrid diversity was emphasized in Brett Bregemann’s presentation at the Goldman Sachs Agricultural Biotech Forum on Feb 10, i.e.:

Let’s start by taking a look at SmartStax. SmartStax is really the opportunity for our farmer customers to plant a product with the benefits of Triple on 95% of their acres instead of 80% of their acres. And as I sat here today looking at where we are in our order book, and I sat here looking backwards to what we said in November we expected for this year of somewhere around four million acres of SmartStax, I still feel good about somewhere around four million acres of SmartStax, albeit it hasn’t been easy with the challenges that we faced in the market.

Some of those coming, for example, when you think about a portfolio of products that we offer to the farmer, as with any launch, we don’t have the full portfolio of hybrids available to us to capture the farmers full farm because it’s critical that he use a diversity of genetics across that farm, and given the handful of hybrids we have, that’s difficult to do. But we understood that going into it, and we will not push hybrids beyond their means just to try to capture a farmer’s farm. We will position those hybrids one at a time with those key farmers to make sure that they get the experience that they’re expecting from SmartStax.

Limited hybrid diversity was also used to explain the “challenging” comparison of last year’s Roundup-Ready-2 yields to those of Pioneer Hi-Bred’s soybean seed yields.

<Q>: Brett, what did you learn from the experience with Roundup Ready 2 soybean last year that might refine the way you’re going to market with SmartStax this year? How do you ensure you don’t have to describe the SmartStax launch as challenging?

<A – Brett Begemann>: Yes I think there is – I think there are things that I would look back on with Roundup Ready 2 Yield that we have learned that we are taking into account in SmartStax. For example, as you’re positioning, and we only had 15 varieties in the marketplace, and we can’t control where every one of those bags of seed goes. That’s the farmer that makes that choice and they can buy it freely and openly in the marketplace, and they can plant them wherever. But what I will tell you is we’re putting a lot more rigor into our sales focus, helping the dealers work with the farmers to make sure we put the right hybrids in the right fields. Now that said, part of last year’s issue was variety position. Part of it was unique weather year and for example, disease where you wouldn’t typically see disease. Those are hard things to prevent. But at the same time, there are clearly learnings from that. The other thing that’s been reinforced with Roundup Ready 2 Yield as we are trying to implement in SmartStax is something we already knew. Broad-based trial is far more important in the early years than broad-based adoption. You get a lot of people trying it, they’ll have those good experiences as reflected in Roundup Ready 2 Yield where we’ve got a significant number of Roundup Ready 2 Yield users from last year had a good experience planting up to three times as much as they did the year before. So it’s getting broad distribution and getting the products positioned specifically on the farm with the farmer.

The importance of the hybrid varieties that include new traits when introducing the product to the marketplace was also emphasized when Pioneer recently delayed its introduction of Optimum GAT seed (see #msg-44228263).