Monsanto sees water shortage issues growing Sat Jun 7, 2008 6:35am IST By Euan Rocha
NEW YORK (Reuters) - Monsanto Co, the world leader in biotech crops, sees water shortages as a growing issue in the years ahead and expects its drought-tolerant corn seed to play a role in easing pressure on this key resource, said Chief Executive Hugh Grant on Friday.
"We've been in an energy squeeze and a food squeeze, but I think the water one is going to be even more dramatic, (and the) water one is coming," said Grant, in an interview with Reuters.
St Louis-based Monsanto has just announced plans to double yield in its three core crops of corn, soybeans and cotton by 2030, compared with a base year of 2000.
"It is the same everywhere in the world. Agriculture is generally limited at some point by access to water," said Grant, adding that drought-tolerant crops would be key to increasing yields.
Monsanto and Dow Chemical Co's AgroSciences unit are partnering to develop the first-ever eight-gene stacked combination in corn, which should start adding to revenue by 2010.
The seed offering would contain eight genes that protect the corn crop against above- and below-ground insects. It also would guard the crop from being damaged by some weed control chemicals.
The company intends to add its own proprietary drought-tolerant trait to this offering by 2012.
Monsanto has been steadily growing its corn seed market share in the United States at the expense of DuPont Co and other smaller players. The U.S. is by far the biggest corn grower.
Doubling the yield of corn in Brazil, India and Mexico would be a key factor in the years ahead, said Grant.
Average corn production per acre in these three countries is 50 bushels an acre, on average. In comparison, the average yield in the U.S. is 150 bushels per acre.
If the average corn yield in Brazil, India and Mexico were doubled to 100 bushels per acre, that would create 4.25 billion new bushels of corn per year -- roughly equivalent to all the globally traded corn in 2007, said Grant.
The company expects to double the average corn yield in the United States to 300 bushels per acre by 2030.
"If acres are finite or shrinking, which they are, then optimizing yield on that scarce resource is going to increasingly become crucial," said Grant.
The company also expects its vegetable seed business to post revenues of over $1 billion by 2012, driven by a growing demand for fresh vegetables and fruit.
Monsanto has been steadily growing this business, and earlier this year it bought Netherlands-based De Ruiter Seeds Group for $860 million.
Grant believes that the industry still has a long growth curve ahead, with much uncharted territory to cover.
"I think we are on the ground floor. If you look at the average corn plant it has about 45,000 genes," said Grant, "The industry used to be one biotech gene and now we are all the way up to three."
"There is plenty of headroom. I think we are limited only by our imagination," he added.
Grant criticized some of the recent restrictions on grain exports that have been implemented by countries like India, Vietnam and Cambodia.
"You can hold back rice and you can limit trade, but that isn't going to get you anywhere over a five-year run," said Grant.
The discussion in five years is going to move away from protectionism and more toward production improvements, he said.
"If in five years' time Brazil, India and Mexico are still producing 50 bushels of corn per acre, the world's in trouble," said Grant.
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