Looking Beyond the Headline

August 14, 2009

Based on some of the internet chatter I have seen, people seem to have misinterpreted a wire service headline stating Monsanto was raising seed prices as much as 42% for 2010. There was more to the story beyond the headline.

Some misinterpreted the headline to read we were raising prices over the existing product line price. The reality is that the article compared 2010 pricing on an acre of Asgrow Roundup Ready soybeans to an acre of Asgrow Genuity Roundup Ready 2 Yield soybeans with Acceleron. This 42% reflects the wide range of product options we offer that will meet the needs of our farmer customers. For example, if farmers are interested in our most advanced technology, Genuity Roundup Ready 2 Yield is for them. If they are satisfied with our original Roundup Ready soybean, that is available as well.

There’s a big difference in first-generation and second-generation technologies. Something that makes our business unlike most others is that we have to earn our sale year after year.  The only way to do that is by offering farmers a wide range of products that deliver results.

Despite what some may have taken away from this week’s news, prices for Asgrow soybeans with the Genuity Roundup Ready 2 Yield and Acceleron are increasing marginally for the 2010 growing season.  Increases may vary depending on channel, but the average price increase is 0-7%.

• Roundup Ready 2 Yield goes from a weighted avg. of $69-72 per acre in 2009 to $74 per acre (a 3 to 7 percent increase)

• Roundup Ready goes from a weighted avg. of $49-52 per acre in 2009 to $52 per acre (flat to a 6 percent increase)

For more information on our pricing philosophy, you can check out the For the Record section of Monsanto.com.

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20 Responses to “Looking Beyond the Headline”

  1. dave Says:

    What’s the rationale for any price increase on existing products if corn/soybean prices are down y-o-y?

    • Kathleen Says:

      Great question, Dave.

      Assuming you are wondering about pricing based on commodity pricing, I will answer as such. Let me know if that is accurate. The truth is that we don’t price seed based solely on commodity prices and whether they fluctuate. At the end of the day, it’s based on the value provided to the grower of the seed we offer. Take Genuity Roundup Ready 2 Yield in 2010, for example. We have improved the germplasm in which the trait is offered and enhanced the seed treatment mix, to improve upon the product offered last year. We continue to improve the seed and the technology offered to farmers and that sometimes results in prices raising.

      We improve our products every year to earn the business of our farmer customers. We know that farmers have several choices available for their seed purchase, and if they are not satisfied, we know they won’t come back.

  2. jw Says:

    You may want to select a different analogy, since Apple has consistently introduced new iPods at the SAME or LOWER prices than previous generations.


  3. John Q Says:

    Dave, the price of corn/soybeans to the CONSUMER depends on a lot of factors, including climate, demand, and even politics.

    The price of SEED to the PLANTER is affected by a completely different set of factors, with the exception of politics.

    Monsanto is a publicly traded business, and they have a duty to their investors to make money. If the cost of Monsanto doing business goes up, it is not unrealistic for Monsanto to try to recover that cost from their customers. Of course, their customers are free to buy from Monsanto’s competition. The fact that they don’t speaks to the quality and value of Monsanto’s products.

  4. Amy Grishaber Says:

    Look closer fellow Americans. Monsanto is taking over our food supply and replacing it with genetically modified ‘Frankenfood’ that is proven to be harmful to us. And on top of it, they are going to charge more for it! Fight back with the Millions Against Monsanto!!

  5. Gary Says:

    Kathleen, How about an answer to Dave’s question?

    • Kathleen Says:

      Hey Gary,

      While I am pretty familiar with pricing, I am asking a few of my pricing buddies some questions to make sure I give you the best possible answer. It will be up shortly.

  6. Gary Says:

    John Q, “Of course, their customers are free to buy from Monsanto’s competition. The fact that they don’t speaks to the quality and value of Monsanto’s products.”
    John If this statement is true how do you explain Pioneer gaining 2 and 3 market share points for seed corn and seed beans respectively in North American market share this year as well as sales growth of 17% for the first half of 2009?
    Your statement that Monsanto has a duty to their investors to make money is very true but dont you think that everytime a farmer purchases Monsanto seed thats an investment in them too? I’ve run all the figures for our operation for over 20 years now and while we do plant some Monsanto seed if the proposed price increases are true and Dupont uses their heads on pricing the end result is we can make more per acre by not planting Monsanto products. With all the tech and trait fee’s involved with Monsanto seed I would believe that the increased cost of “doing business” would be more than covered and the seed prices could be kept under better control.
    The bottom line is if the seed costs aren’t kept under control its going to come down to whichever company can provide the most profit per acre and not who can charge us the most for seed and get away with it just to keep the investors happy.

    • Kathleen Says:


      Thanks for the comments. I know pricing is a sensitive issue and appreciate your insight.

  7. Paul Says:

    Just don’t screw it up! for Crying Out Loud! whether you think you are doing it right or not, or whether something has gotten misinterpreted (please, we’re past that, now) just don’t let greed become more important than prosperity for even you yourself…this is a dangerous business when you start manipulating the very food supply which is integral to all civilization for Goodness’ sake get real and quit taking so many GD master’s degree business and marketing classes you smart guys please, don’t f it all up, whether you feel like you deserve to or not it’s not about the money it’s about the eating of the goods, remember that, guys

  8. farmboy Says:

    Hey Amy,

    What’s this rhetoric about genetically modified food being proven harmful to us. Please feel free to share the facts from any research you have seen supporting this statement rather then just trying to scare us by labeling it “Frankenfood.” As for Monsanto’s pricing policies, I’m not going to stand up as a supporter of that.

  9. John Q Says:

    your analysis of the free-market capitalist system is exactly correct.

  10. Ewan Ross Says:

    I think the 42% price increase (on the next generation product over previous generation) is due to the increased end of season profitability of the particular seed as compared to the first product.

    This is comparing roundup ready soybeans (I believe untreated… reading Kathleen’s post it seems this way) to roundup ready 2 yield soybeans with acceleron seed treatment – if I’m not mistaken this upgrade represents an approximate 7-13% increase in yield due to “in the seed” technology (which in this case is a better placed roundup gene which avoids the yield penalty of the original product?) coupled with “on the seed” technology in the form of acceleron (cant remember the yield benefit here, I’m tempted to say 2% but that could be well off the mark) – so you’re looking at between a 9-15% increase in yield for approximately $22 per acre
    (again based entirely on pricing from the post above)

    With an average yield of say, 42 Bu/Ac for soybeans and a price of around $9 per bushel
    (figures pulled from http://www.agecon.purdue.edu/extension/prices/grains/soybean.asp?ID=63 – obviously due to market fluctuations and hybrid performance these figures wont be exact for these particular soybeans, but I think give a decent estimate in terms of making a comparison)

    at the low end (9% increase in yield)
    $378/ac for RR
    $412/ac for RR2Y

    a $34/Ac increase which amounts to an extra $12/Ac

    at the high end (15% increase in yield)

    $378/ac for RR
    $434/ac for RR2Y

    a $56/Ac increase which amounts to an extra $34/Ac

    Which, while I’m sure any sensible farmer would much rather pay RR prices for RR2Y performance (In the same way I’d rather pay a car payment for a 2002 model rather than a 2009 model) the extra outlay is more than compensated by the increase in profit. (obviously dependant on historical yield from the site you’re planting on, and where the market actually ends up at the end of the season – I dont have the patience to work out at what yield or at what price (or combination thereof) it is no longer practical to use the RR2Y beans – although I’d guess that any bean farmer out there has likely done the math and knows exactly at which point it makes sense to use the newer tech.

  11. Jim Says:

    See, but it really is a 42% increase, no matter how you spin it. I know that in 2 years, practically all of Monsanto’s soybean produts will be RR2Y. Monsanto sales reps have told me this. RR soybeans will not exist from Monsanto. Monsanto customers will have to take that big price jump or go elsewhere. That is a huge price increase for Monsanto’s soybean seed.

    So, let’s do some math. Monsanto claims that RR2Y technology yields 7-11% better than RR tech. They claim the price this next year will be about $74 an acre. For a farmer planting RR2Y for the first time this year, his seed cost increase over his RR soys last year is about $25 an acre ($74-$49). Figure a 7% yield increase on 50 bushel beans would yield the farmer an additional 3.5 bushels. At $8.50 cash beans, that’s an additional $29.75 in revenue to the farmer. Subtract the $25 additional seed cost, and your left with $4.75. That’s a really small amount of additional profit compared to the cash that Monsanto is extracting.

    • Kathleen Says:


      You are right, it is a 42% increase from one product to the next. The problem I was seeing is that some people were thinking that we were raising prices 42% on the same product from one year to the next.

  12. Ewan Ross Says:

    Jim – on your calculations that is still a 19% return on investment which I’d love to see on any kind of investment I made.

  13. Josh Says:


    So you use the low end of the yeild increase with a pretty low bean price and still make additional profit and you’re complaining? There is a very wide range of yields for soybeans, so for many farmers it will be worth the premium. For some farmers the numbers won’t add up and they can continue to use RR soybeans. If you’d rather give up profits because you don’t want to pay the price difference, that’s fine but it’s bad business.

  14. Sheila Says:

    Now that a great many growers in Illinois who planted RR2Y soybeans and have had borderline crop failures of only 20+ bushels/acre, how can the extra cost be justified with the very lacking agronomics of many of the varieties sold that could not tolerate any levels of white mold. Don’t forget sound agronomic disease ratings.

    • Kathleen Says:


      We know that white mold has been a challenge for some Illinois farmers regardless of the soybean variety they planted, while other farmers are seeing record yields. Variability from field to field is inevitable with new product introductions. Soil variability, tough weather, insects and disease share the same fields.

      Our data over the last five years has demonstrated increased yields with Genuity Roundup Ready 2 Yield. We’re confident in the trait and its ability to deliver higher yield to farmers. We are still early in the harvest—the weather has been challenging for farmers to even get out to harvest their crop—but we would expect performance to be consistent with prior years.

      In regards to pricing, we set the price in line with the value we expect to deliver to our customers. We’ll know more when the final numbers are in. Stay tuned.

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