Monsanto Co is facing major threats to its historic dominance of seed and herbicide technology for the $40 billion in the U. S. soybean market.
Rivals BASF SE and DowDuPont are preparing to push their own varieties of genetically modified soybeans.
At stake is control over seed supply for the next generation of farmers producing the most valuable U.S. agricultural export.
The market has opened up as Monsanto’s Roundup Ready line of seeds – engineered to tolerate the weed killer glyphosate – has lost effectiveness as weeds develop their own tolerance to the chemical.
Compounding the firm’s troubles is a national scandal over crop damage linked to its new soybean and herbicide pairing – Roundup Ready 2 Xtend seeds, engineered to resist the chemical dicamba.
The newly competitive sector has sown confusion across the U.S. farm belt, particularly among smaller firms that produce and sell seeds with technology licensed from the agrichemical giants.
Many of these sellers told the Media that they were amassing a surplus of seeds with engineered traits from multiple developers – at substantial extra cost – because they could only guess which product farmers would buy.
“Our job is to meet our customers’ needs, and we don’t know what those are going to be,” said Carl Peterson, President of Peterson Farms Seed near Fargo, North Dakota.
“I don’t think I’ve ever seen anything quite like this.”
Monsanto has much to lose. Soybeans are the key ingredient in feed used to fatten the world’s cattle, pigs, chickens and fish.
Net sales of Monsanto’s soybean seeds and traits totalled almost 2.7 billion dollars in fiscal 2017, or about a fifth of its total net sales.
Gross profits from soybean products climbed 35 per cent over 2016, beating 15 per cent growth of its bigger corn seed franchise.
The firm faces multiple lawsuits, along with regulatory restrictions in some U.S. states, because dicamba has drifted onto neighbouring farms and fields and damaged crops not genetically modified to resist it.
BASF and DowDuPont, however, have their own obstacles to overcome, fueling unprecedented uncertainty among farmers over which seeds they will plant on an estimated 90 million acres of U.S. farmland this spring.
“Our competitors’ success could render our existing products less competitive, resulting in reduced sales compared to our expectations or past results,” Monsanto said in an annual report filed with the U.S. Securities and Exchange Commission last year.
The name of Monsanto’s new dicamba-based herbicide – XtendiMax with VaporGrip – reflects the problem it tries to solve: the chemical’s tendency to vaporize and drift to neighbouring fields, damaging crops.
But last summer, after farmers planted Monsanto’s new dicamba-resistant seeds en masse, the herbicide damaged an estimated 3.6 million acres of soybeans, or four per cent of all U.S. plantings.
Monsanto maintains its new formulation of dicamba reduces drift effectively.
It blames farmers for not following spraying instructions and for illegally applying older versions of dicamba on Xtend seeds.
In spite of the controversy, Xtend soybeans have sold briskly, spanning 20 million U.S. acres in 2017.