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Monsanto Says Biotech Just Beginning

By CHRISTOPHER LEONARD 01.17.08, 10:10 AM ET

 

 

CREVE COEUR, Mo. - Monsanto Co. executives told shareholders Wednesday

that record profits in 2007 are just the beginning, with growing

acceptance of genetically engineered crops expected to deliver new

business opportunities in coming decades.

 

" It's still like being back in the '60s with computers, " Chief

Technology Officer Robb Fraley said. " This is an industry that is very

much in the beginning of its cycle. "

 

Such predictions might have seemed far-fetched just five years ago,

when Monsanto (nyse: MON - news - people ) faced tough global

resistance to its engineered crops - derisively called " Frankenfood "

by critics. Trade barriers kept the seeds out of many European

countries and important foreign markets.

 

But in a sign of the times, the world's largest seed company is

developing its first strain of biotech crops for a foreign country,

with pest-resistant soybeans for the Brazilian market. Robust sales in

the U.S., where a majority of corn and soybean crops are genetically

engineered, pushed Monsanto to upgrade its 2008 outlook and predict

that annual gross profit will rise from $4.29 billion in 2007 to more

than $8 billion in 2012.

 

Chairman and Chief Executive Hugh Grant told investors at the

company's annual shareholder meeting here that growing demand for food

and crop-based fuels will put ever-greater challenges on farmers to

grow more crops per acre - and present Monsanto with more chances to

sell its patented seeds that ward off pests and resist herbicides.

 

" It's going to be a really different place for our children and

grandchildren by the year 2030, " Grant said, noting that demand for

energy is expected to double while the world population is expected to

grow 33 percent by then.

 

He said Monsanto's pipeline of new products is geared to help farmers

grow this feed and fuel by boosting the amount of crops they can

produce on a per-acre basis.

 

While drought-tolerant corn and pest-resistant soybeans might not be

the kinds of products that consumers can directly appreciate, Monsanto

is betting such crops will be in high demand from farmers around the

world. Fraley said Monsanto's research and development pipeline could

generate new products that increase sales by $5 billion a year by

2020.

 

Fraley said Monsanto and other companies are just beginning to unlock

the power of genetically engineering plants. In the mid-1990s, the

company's blockbuster products were Roundup Ready crops, which

contained a gene that made them resistant to Monsanto's popular

herbicide. The trait made it easier, and cheaper, for farmers to

control weeds.

 

But the days of a single-gene product seem over. By 2010, Monsanto

plans to release a strain of corn with eight engineered traits, Grant

said.

 

At the shareholder meeting Wednesday, Monsanto elected three directors

to its board, rehired its accounting company and struck down two

provisions that would have stripped legal protection from board

members and forced Grant to give up his role as chairman of the board.

 

As the crowd filed out of Monsanto's auditorium, shareholder Carlos

Berger said he couldn't be happier with the company's stock. A

resident of nearby Olivette, Berger said he's owned the stock for

years. Back in 2002, the stock was trading around $5 a share. This

year it has traded around an all-time high of $129.28 per share. The

stock fell $10.64 Wednesday to close at $112.70.

 

 

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Real knowledge is to know the extent of one's ignorance.

Confucius