Reflection on Earnings

April 9, 2010

On Wednesday morning, I sat with my coffee cup in hand and listened via Webcast to our CEO Hugh Grant talk with investors and analysts about Monsanto’s second quarter earnings. At the same time, I had my Tweetdeck and Google Reader up to scan and follow the latest comments from our farmer customers. It was refreshing to hear what our execs said in that call, because it matched what I’ve been seeing online from our customers.

What Monsanto executives said this week—including CEO Hugh Grant—was the result of feedback they picked up from meeting with farmers across the U.S. for the past several months. What we heard consistently from these farmers is that they find value in our products and in our technology. But we also heard that our pricing methods on new products such as Genuity Roundup Ready 2 Yield and Genuity SmartStax can be an obstacle for customers who want to try new technologies.

This feedback is partly why we reset our financial goals yesterday, acknowledging that the goal of doubling gross profit from 2007 to 2012 was unlikely.

As Mr. Grant told analysts yesterday:

“We refuse to achieve our growth objectives to the detriment of our customers….we can either make a stubborn push for the targets we’ve set for ourselves and strain those valuable customer relationships – or, we can do more to work with our customers and let the growth come more naturally. That will change some things.  I’d like to say it’s pure altruism, but the reality is it’s the right thing to do for the business – today and tomorrow.”

Moving forward, we’ll be looking at ways we can provide customers with more options to evaluate the technology and then decide the right combination of products for their farm.

**Please note: The comments section has been shut down temporarily until Monday, April 12 due to some maintenance on the site. If you’d like to leave a comment on this post, please check back on Monday.

The patent for the original Roundup Ready (RR1) soybean trait is set to expire in 2014. That fact has raised all kinds of interest and questions, starting first with what it means for farmers.

Late last year, Monsanto worked to explain our intentions. Lately, several groups, including the American Farm Bureau Federation, have asked about the regulatory issues involved, because the scientific and export regulatory “estate” for a genetically modified trait like this one has to be maintained. If the estate is not maintained, farmers won’t be able to use the trait. We said last fall that we’d continue to maintain the “estate” for RR1 for at least three years after the patent expired.

Recently, we sought industry leadership to develop a comprehensive process for patent expirations for technologies like RR1 (there are a number of them going off patent after ours does in 2014). Early in February, the Food & Agriculture section of the Biotechnology Industry Organization (BIO), a trade association, agreed to take this on. We presented a draft concept on how we thought this could be achieved, involving both how to maintain the regulatory estate for technologies post-patent and guidelines for adding or “stacking” new traits to ones whose patents have expired.

But it’s still very early in the process. We think it’s a great idea to involve both farmers and government in this process at BIO, for two reasons. They both have a critical stake in the outcome, and their perspective and involvement is vital to achieving a comprehensive and balanced solution.

By Dan Goldstein (aka Dr. Dan)

Recently, a paper was released claiming three Monsanto corn varieties cause organ damage in mammals. This simply isn’t true.

In the current paper (de Vendomois et al., 2009) as with the prior publication (Seralini et al, 2007), Seralini and his colleagues use non-traditional statistical methods to reassess toxicology data from studies conducted with MON 863, MON 810 and NK603 corn varieties, and reach unsubstantiated conclusions.

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This weekend’s Associated Press article on Monsanto’s licensing agreements with companies missed the mark on the real facts behind our business and our licensing approach, including:

  • Our business has grown tremendously over the years thanks to a number of factors – an early investment in biotechnology, adding new approaches to historic breeding, and a decision to broadly license the results of those investments to anyone who wanted them, including our biggest direct competitors. We understand this scale of success brings scrutiny.
  • The growth of our business cannot be attributed to any forced use by customers or to blocking any competitors. Our licenses enable the use of our traits; they do not require the use of our traits.  Seed companies and farmers are free to move completely away from Monsanto traits at any time. It’s a choice they make every single season. If competitors invented a more attractive option, the industry could move to it immediately.  Monsanto works hard to offer better and more valuable products because that is the only way we keep anyone’s business.
  • A depiction that somehow our actions are hurting small companies is just plain wrong. The facts are no seed company has invested more in the last ten years to bring new seed products to farmers than Monsanto, and no company has done more to broadly license those inventions than Monsanto. This includes licensing both seed genetics and trait technologies. Monsanto led the way in making its inventions broadly available to other seed companies, while DuPont’s Pioneer Hi-Bred seed company historically followed a path of keeping all of their inventions to themselves and distributing them though dealers who are contractually prohibited from selling any competitive products.

By Tyne Morgan

Tyne preparing for her video shoot during harvest in Missouri.

Tyne preparing for her video shoot during harvest in Missouri.

 

I remember as a little girl driving to Grandma’s house one weekend and seeing some of my family members out of the window working in the field. I remember specifically asking my mother what they were doing, and she simply told me pulling weeds out of soybeans. She also told us how she used to do that, as well.

Driving to Grandma’s house today, I don’t see a single person pulling weeds out of their soybean fields. Why? Because the Roundup Ready technology has made it possible to have soybean fields “clean” of weeds.

 

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GMO vegetables - Frankenfood

I have a handful of friends and some family members that are vegetarians and, although I’ll take a pork chop over a leafy salad any day, I’ve got no qualms with vegetarians or vegans. It happened that a couple days ago I was having a conversation with some old friends who happened to be vegetarians. As with any old acquaintances catching up on each others’ lives we talked about our jobs. They had never heard about Monsanto so I described what the company did, mainly, our development of genetically modified (GM) seeds.

The responses I received were surprising.

“Doesn’t that mean you guys put fish DNA in tomatoes and make potatoes with spider DNA?” and “I just eat organic veggies because GMO vegetables have animal DNA.”

This is not the first time I’ve heard statements like this but it’s still astonishing to me that people think that this is true. It was further proof to me that there are a lot of misconceptions about GMO vegetables and crops.

I should first explain that vegetables are typically not genetically engineered.

Primarily, traits in vegetables are accomplished through breeding technology. Breeding is more cost effective than genetic engineering given the amount of time and research it takes to develop biotech traits. So, most vegetables you run across are, in fact, not genetically engineered.

However, there are a few vegetables and fruits that do have biotech traits and have been on the market for quite awhile now. Biotechnology is generally used when a trait is needed but breeding can’t accomplish the development of the trait fast enough.

One example is virus-resistant papaya which was released in 1998. Papaya is a major commodity produced in Hawaii and, before the release of this product, Hawaii was at risk of losing one its major industries since the papaya ringspot virus (PRV) was wiping out all papaya grown on the islands. Since the release of virus-resistant papaya, it has been widely adopted and has saved the papaya industry in Hawaii.

Another example would be virus-resistant squash which has made it possible to grow squash in areas that would have had crops wiped out by viruses. For those who grow squash in virus-populated areas it was the difference between having a healthy crop or no crop at all. Interestingly, virus-resistant squash was actually not developed by Monsanto but rather was acquired through an acquisition.

Now, onto the bigger issue – there are no commercial biotech products owned or produced by Monsanto that have animal DNA. I’m not sure how this rumor got started but it’s just not true.

Most biotech or GE crops (maize, soy, cotton…) are actually developed with agrobacterium which acts as a transfer agent. The most common traits in GE crops are herbicide tolerance (HT) and insect resistance (IR). HT plants contain genetic material from common soil bacteria. IR crops contain genetic material from a bacterium that attacks certain insects. One example is Bacillus thuringiensis (Bt), an IR trait. Bt is expressed in the plant and targets specific insects–and is not harmful to humans. BT is actually used in organic farming too, but it’s sprayed on the plants.

So, again, there is NO animal DNA in GMO vegetables, fruits or grains. Zero, none, zilch! If you’re a vegetarian and don’t want to pay a premium for organic, don’t worry, biotech foods are vegetarian friendly.

Side note: Biotech has even made cheese vegetarian friendly. Previously, cheese was made with rennet, coagulate harvested from a calf’s stomach, but biotechnology has developed a ‘genetically modified’ version that contains no animal DNA. Kosher cheese often uses GM rennet.

Kate works on the corporate website for Monsanto in the public affairs department. She graduated with a bachelor’s degree in Business Administration from Truman State University. Kate grew up in an Air Force family and has lived in sevaral states and countries but spent the majority of her childhood growing up in Iowa. Kate enjoys art and photography as well as horseback riding.

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A couple of months ago, reading an article about world hunger, I found out that someone dies of starvation every 3.6 seconds. Can you imagine that? I tried to understand how we can let that happen but I couldn’t. So, I started wondering what are we–and specifically the scientific community–doing to help stop or even diminish a pandemic problem like hunger.

GM Food nutritionAccording to the World Health Organization, hunger and malnutrition are the single gravest threats to the world’s public health. Malnutrition is by far the biggest contributor to child mortality, present in half of all cases. So, world hunger is not only a quantitative issue, it is also a qualitative matter. People do not die only because they are not able to eat enough food, but because they do not consume some vital nutrients required to subsist.

As a biotech company employee, it was pleasant to know that–for the last two decades–crop biotechnology has been used in two major ways to enhance human nutrition: improving global food security by making more food available and by enhancing the nutritional composition of food.

Maureen Mackey’s article, The Application of Biotechnology to Nutrition, acknowledges, in the next several years, we will see the application of biotechnology to enhance major global staples–such as rice, wheat, corn and cassava grown in Asia, Africa and Latin America, which will be needed to feed the expanded populations in these continents.

Scientists around the world agree about the particular relevance biotechnology will have to ease hunger and malnutrition in developing countries, increasing the nutritional value of food. Gene technology will enable the production of new crop varieties that will produce essential vitamins and micronutrients. This is especially important in regions where access to food is limited and balanced diets are difficult to achieve.

In the last decade, scientists have genetically modified fruits and vegetables to offer higher levels of anti-oxidant vitamins that help ward off cancer and heart disease, and vitamin A to prevent blindness. As other biologically active components in food plants are discovered to have disease-fighting nutritional value, their levels may also get a genetic boost.

Even these achievements are still in a development stage, they indicate a relevant and important role for biotechnology in improving food quality and developing functional foods, particularly those targeted for needy populations in developing countries–such as children and pregnant women.

Nevertheless, great efforts have been made to demonize biotech industry since its inception. I genuinely respect and appreciate the work of many organizations concerned about the implementation of biotechnology improvements in the food chain, even when the U.S. government developed a Coordinated Framework for the Regulation of Biotechnology in 1986 to provide for the regulatory oversight of organisms derived through genetic engineering.

What really keeps me up at night is that even when the scientific community, authorities and experience demonstrate the safety of GMO, some people’s personal agendas keep reducing the chances of survival of 15 million children that die every year of hunger.

10 Reasons We Do Need GM Foods

Santiago is a Manager of Public Affairs at Monsanto. He was born and raised in Buenos Aires, Argentina. He holds a bachelor’s degree in Public Relations, post-graduate studies in Social Communication & Media and an MBA in Marketing Management. Prior to working at Monsanto, Santiago taught PR for almost seven years while working as a Communications Advisor for several organizations and industries. He also worked for a multi-national IT company and an Oil & Gas company as PR Manager.

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