Replies to post #83392 on Biotech Values

[genisi]

It is a tough job and still requires a very long research. People are gaining understanding about some of the genes involved but it is still too early to guess what would be the best approach. I believe that in the meantime standard breeding, with genetic markers, will continue to be the best approach.

[DewDiligence]

(DE) This is a rare write-up from the SeekingAlpha blog that
says something worth reading. It makes the point that Deere’s
sophisticated farming equipment is part of the solution to the
worldwide shortage of fresh water. MON’s program to develop
biotech seeds that require less water is another approach to
the same problem (#msg-41324910).

›Agriculture: Out of the Box Efficiency Plays

June 29, 2010
By Aaron J. Levitt

Sometimes we forget, but the earth is a finite resource. As the populations and economies in developing nations explode, demand will increase for energy, food, metals and other "essentials" — which will have dramatic effects on the planet's ability to provide such needs.

With that in mind, it makes sense for the long-time-lined commodity investor to think outside the box a little, as some of the best opportunities lie outside the traditional broad-based bets on energy or gold. Instead, it may be time to get back to basics: farmland.

Agriculture's Demand

By 2050, the planet's population is estimated to reach nearly 9.1 billion residents, which is nearly 2.3 billion more than our population now. To keep up, food producers will need to grow nearly 70 percent more food in 2050 than today. Grains alone will account for a large portion of that; according to a 2009 United Nations Food and Agriculture study:

Demand for cereals (for both food and animal feed) is projected to reach some 3 billion tonnes by 2050.

Unlike fossil fuels, where alternatives do exist, or metals, where recycling is common, in agriculture, the impacts will be substantial. After all, we can forgo driving a giant SUV, but we all have to eat.

And these impacts are already being felt. This month, the United Nations' International Panel for Sustainable Resource Management released a new report titled "Assessing the Environmental Impacts of Consumption and Production." The research paper weighed the overall effects of production of various commodities against global environmental concerns, and when it came to food production, the results were quite shocking.

Achim Steiner, head of the UN's Environment Programme, told Reuters: “Agricultural production accounts for a staggering 70 percent of the global freshwater consumption, 38 percent of the total land use and 14 percent of the world's greenhouse gas emissions.”

Focusing on Water and Farmland

Given such staggering numbers, the current agricultural model bodes well for investors in the water space. After all, while the Earth is covered by water, only an extremely small portion is fresh water, and a smaller portion of that is still freely available to end-users.

Water becomes even more of an interesting play when you look at where that population expansion is expected to occur. Sub-Saharan Africa, for example, one of the driest places on Earth, is expected to experience 108 percent population growth through 2050. The population of Southeast Asia — already so large — will grow another 11 percent over the same time period. Naturally, agricultural water usage will also grow 11-12 percent to keep pace. This means that by 2030, 47 percent of the world's population will be living in "high water stress" areas, according to the Stockholm International Water Institute.

But water issues are already having their effect today without the added population stress. About 60 percent of India's crop land is wholly dependent on rainfall. Last year's devastating droughts affected 246 of the country's 600 districts, and 235 million Indian farmers saw their yields on staple crops, such as rice and sugar, plummet.

The tough times aren't just in India. In China, 13 percent of its total farmlands experience some sort of droughtlike conditions each year. Even the developed world faces similar prospects, with Australia suffering from cycles of severe drought and floods.

Despite modern genetically modified seeds accounting for 90 percent of the growth in crop production, arable land will need to expand by nearly 300 million acres in emerging nations, and by 125 million in the developed world to keep pace with the coming population boom. Yet several countries, particularly in North Africa and Southern Asia, are nearing, or have already reached, the limits of their available arable land.

So how can investors take advantage of this theme?

ETFs such as the PowerShares Global Water (PIO) or the First Trust ISE Water (FIW) make ideal broad-based investments. But in light of the coming freshwater crisis, it may make more sense to zero in on water efficiency — particularly with regard to irrigation, as a play on the "threat" agriculture poses to global water supplies.

There are a few US firms devoted to water efficiency and irrigation, albeit in some instances tucked inside other firms. Take John Deere (DE), an obvious general ag play. But what many investors fail to notice behind the bright green and yellow tractors is that John Deere is world's third-largest irrigation company. The company has recently added to its arsenal new systems that use specialized drip methods to increase crop yields in hot and dry climates while reducing water usage.

Another American play is Toro (TTC), which also has a very interesting and profitable micro irrigation unit. The company also functions in large-scale irrigation markets as well, and even provided the systems used for the Beijing Olympics.

There's also the Lindsay Corporation (LNN), which receives about 80 percent of its revenue from its pivot-arm irrigation systems. These GPS and computer-guided systems are ideal for large-scale and developed market farms in the United States, Canada and Australia. While the company doesn't have any micro-drip exposure, Lindsay's efficiency products do help improve efficiency in water management in places such as California, where the Sierra Nevada snowpack and the Shasta Lake reservoir are 57 percent and 42 percent below their normal ranges, respectively.

As for the investor looking to play rising food prices with a direct investment in farmland, the Argentinean company Cresud (CRESY) offers one such opportunity. Cresud operates 17 farms and 100,000 heads of cattle, and it has been purchasing land in other Latin America countries, including Bolivia, Brazil and Paraguay.

Unavoidable Outcome

The United Nations' global projections for population growth and pressures caused by agriculture suggest we'll need to invest significant dollars to augment how we produce food. According to the previously cited 2009 UN study, if agriculture doesn't become more efficient, as many as 370 million people could go hungry in 2050 — or nearly 5 percent of the estimated emerging population.

That's why water efficiency investment on a micro-irrigation scale could be a saving grace for the world's ever-growing populace. Investors with long enough timelines may want to position themselves accordingly, to take advantage of the unavoidable.‹

[DewDiligence]

Drought-Tolerant Biotech Corn Offers Hope

[See #msg-41324910 for a related story.]

http://www.washingtonpost.com/business/economy/corn-varieties-engineered-to-withstand-drought-offer-planters-hope/2012/08/14/cb5eb766-e2f1-11e1-a25e-15067bb31849_story.html

›Since the 1920s, crop scientists have focused on breeding improved strains to provide ever bigger yields. In the past decade, the emphasis has been on developing crops that can also withstand extreme weather events…

By Brad Plumer
14-Aug-2012

In western Kansas, the corn looks unsalvageable. The landscape is rife with curled brown leaves, an unmistakable sign of severe drought.

Yet beneath those wilted leaves, some of the corn shows promise. The kernels have held up surprisingly well in a few places given this summer's swelter. At hundreds of sites across the Great Plains, seed companies such as Monsanto and Pioneer are testing a slew of corn varieties engineered to withstand drought. As the harvest approaches, they're anxious to see the results.

This year, the worst U.S. drought in half a century could cause $18 billion in damage to corn, soybean and other key crops. On the heels of a Texas drought last year that cost nearly $8 billion, farmers are more interested than ever in innovations that could make crops more resilient. That includes improved farming practices, better plant-breeding techniques and genetic engineering.

Given the severity of this year's drought, many crops will wither no matter what. Still, some planters remain cautiously optimistic.

"I've been surprised so far. The plants are responding well," said Clay Scott, a Kansas farmer who planted two plots of Monsanto's genetically engineered DroughtGard Hybrids among his 3,000 acres of corn. The experimental strain, which carries a gene that helps it draw water more gradually from the soil, is scheduled for wider release in 2013.

"The ear size, kernel counts, the ear weights look good," Scott said. But, he cautioned, "pretty corn doesn't always result in yield."

For Scott, who lives in a region prone to dry spells, where irrigation water from the nearby Ogallala Aquifer needs to be conserved, these crops could prove indispensable.

It's a pitched battle between nature and human ingenuity that will only grow more difficult. Earth's population has soared past 7 billion. Climate models suggest that drought will become more frequent in North America. Water will become increasingly precious. Feeding the world will require wringing as much food as possible from every last drop of water.

It's far from assured that human ingenuity will win out.

"This is perhaps the biggest challenge that we face," said Mark Edge, who's in charge of marketing DroughtGard for Monsanto, the world's largest seed company. "And there's so much complexity to it that it's one of those things you dive into with humility."

Since the 1920s, crop scientists have focused on breeding improved strains of corn and wheat to provide ever bigger yields. In the past decade, however, researchers at private companies and land-grant colleges have put a renewed emphasis on developing crops that can also withstand extreme weather events. Like drought.

"Ultimately, plants need water," said Thomas Sinclair, a crop scientist at North Carolina State University. "If they don't have the water, then farmers are going to take a yield loss. But our work is to minimize that yield loss."

Traditionally, this has been accomplished by breeding hardier crops. Scientists might look for genetic traits that allow corn to adapt to drier areas. These traits could include roots that burrow deeper in the soil or stomata that close earlier in the growing cycle to retain moisture. By interbreeding these varieties with high-yield corn, scientists create crops that use water more efficiently or withstand dry spells.

The process involves plenty of trial and error. Yet recent genomic techniques have enabled breeders to track traits more efficiently.

A slew of drought-tolerant hybrids are hitting the market. In 2011, DuPont's Pioneer released eight versions of AquaMax corn, which was found to boost yields by up to 7 percent. The company is introducing 17 varieties this year.

Then there's genetic engineering. Seed companies such as Monsanto have taken crop science to a new level by manipulating a plant's genes directly or transplanting genes from unrelated organisms. DroughtGard, for instance, contains a bacterial gene that enables it to retain water. It's the only genetically engineered crop bred for drought tolerance that has been approved by the Agriculture Department.

Scientists caution that there are huge challenges in breeding — or engineering — these crops. For one, there's no such thing as a single drought.

"A genetic trait that expresses itself well for early drought tolerance may not be a solution for a drought later on in the season," said Tony Vyn, an agronomist at Purdue University. "And something that expresses itself well as being drought tolerant under normal temperatures may not help when temperatures are extremely high."

Also, climate change could lead to more extreme variation in weather — say, a drought one year and a flood the next.

"The big challenge with climate change is that I can't just work on drought," said Mitch Tuinstra, a corn breeder at Purdue. "It's the variability of all these different stresses that makes this so difficult."

Long-term project

Companies such as Monsanto have genetically modified crops that are resistant to pesticides or pests, such as Bt corn. But that often involves manipulating a few genes. Drought can prove more complicated.

"The reality is that drought impacts every process in the plant," Sinclair said. "There's not one magic gene out there that's going to make the plant perform better under drier conditions."

In June, a report by the Union of Concerned Scientists noted that developing and testing such crops can take 15 years. The seeds are often more expensive, and the benefits appear modest so far — the report estimated that DroughtGard would boost U.S. corn productivity by just 1 percent.

"There's little to suggest that genetic engineering will make a major contribution to drought tolerance and water-efficiency use in the next five to 10 years," report author Doug Gurian-Sherman said. "But 20 years down the line? I don't know."

The slow pace of biotechnology is one reason experts say it's crucial not to overlook less-flashy techniques.

"I sometimes worry we put too much emphasis on the genetics," said Larry Wagner, an agronomist at South Dakota State University. "Certainly the genetics are getting better. But farming practices are getting better every year, as well."

Sustainability

The practice of no-till farming — in which seeds are planted without churning up the soil — has become more widespread, Wagner said. Modern equipment enables farmers to plant seeds through old crop residue, enabling the soil to hold more moisture. Computer technology allows farmers to analyze their soil and calculate how much fertilizer to use.

These techniques add up. One 2009 study estimated that a combination of improved practices and conventional breeding had boosted the drought tolerance of U.S. corn by 1 percent a year in the past few decades.

Drought anxiety has also revived interest in organic practices, such as covering the soil with compost or cover crops to hold more moisture. Amid the current drought, Iowa State University's Kathleen Delate has been studying these farms.

"Overall, the organic plots seem to be faring better," she said, "but we need to quantify this."

Other experts contend that the United States may need to rethink its dependence on corn, a lucrative, much-subsidized crop that is especially susceptible to drought. Planting a wider variety of crops, such as alfalfa or sorghum, could prove more sustainable.

"All of these agro-ecosystem approaches that build soil fertility are extremely valuable," Gurian-Sherman said. "But they don't get nearly as much money or attention from the big companies."

He added that the U.S. government spends just 2 percent of its agricultural-research budget on sustainable farming.

Climate change has given the task a renewed urgency. Recent modeling work by Aiguo Dai of the National Center for Atmospheric Research suggests that droughts could become far more frequent in the next 20 to 50 years due to rising temperatures and natural variations in ocean cycles.

"These two factors lead to a very dire outlook for the U.S., especially the West," Dai said.

The advances may not come fast enough. "There's more investment now in drought-tolerance than there was 20 years ago," Purdue's Vyn said. "But is that enough? I'm hopeful that the science will continue to improve. But I'm also mindful of the ticking clock."‹

[Pro-Life]

One might ask the question - what proliferating factories:

In many areas, lack of water is the biggest limiting factor, and supplies of water for irrigation could be reduced further in coming years in order to supply more water to growing cities and proliferating factories.

The drought tolerant product mentioned in this article and many others since is set to come to market and should be available for 2013...

[DewDiligence]

Good news for MON (and also SYT and DD):

http://www.reuters.com/article/2012/09/18/usa-drought-corn-idUSL1E8KEAX420120918

Plant breeders say final data will be in within the next six weeks as harvest wraps up. But so far, test plot yields and farmer harvest reports are encouraging enough that seed sales for next season should expand dramatically, both in the western corn belt, and into eastern areas of the Midwest, where drought tolerance once was not seen as a big need.

…Monsanto is launching commercial sales of its licensed genetically modified Genuity "DroughtGard" hybrids for the 2013 growing season after testing the corn with 250 farmers this summer. Some farmers were finding a 6 bushel per acre advantage over other hybrids, Monsanto officials said. For Kansas farmer Clay Scott, one of the farmers testing Monsanto's corn, the experimental varieties yielded about 10-15 bushels above the plot average.

[DewDiligence]

Chile’s twofaced stance on GMOs:

https://www.bloomberg.com/news/articles/2017-01-27/seven-year-drought-ratchets-up-long-running-gmo-debate-in-chile

…researchers led by Ruiz at the Universidad de Talca are working on a new drought-resistant variety of corn. The university will no doubt sell the rights to a big multinational, such as Monsanto or Syngenta AG.

And what’s crazy…is that the company will create a product for farms elsewhere that will grow corn Chile will end up importing. “We’re clearly losing money -- all of the seeds we produce come back to Chile in the form of soy flour or other products that people don’t know they’re eating.”

The country can’t produce enough corn on its own: Imports jumped 79 percent between 2012 and 2015, government data show. The reason is what scientists at the Universidad de Chile have called a mega-drought, which by their reckoning started in 2010.

…A bill that would allow all farmers to sow transgenic seeds for domestic use has been languishing in Congress for 10 years.

See #msg-41324910 for a related story.