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.

Monsanto News Lowdown

January 20, 2010

There is a lot of news at Monsanto this week. Here is a quick read of everything that is going on.

  • Corn Farmers Saved $50M in Insurance Premiums by Planting Biotech
  • And on it goes…Monsanto vs. DuPont
  • Roundup Ready® Alfalfa Goes to the Supreme Court
  • Calling All Rice and Wheat Breeders Read the rest of this entry »

The world’s most widely adopted biotech trait, Roundup Ready® soybeans, is set to go off patent soon in the U.S. – the last applicable Monsanto-owned patent is expected to expire in 2014. Although it’s still several years off, we’ve been discussing our thoughts about a post-patent environment for the past several years. These discussions culminated in communications with our seed licensees at the American Seed Trade Association annual meeting, held the first week of December.

As the company that first introduced biotech soybeans to the market, we’re also the first company to deal with figuring out what to do next. This is a big responsibility, and we’ve given it serious consideration. The first generation Roundup Ready soybean trait (sometimes referred to as “RR1”) was launched in 1996.  Farmers rapidly began using the technology on their farms because of the improved weed control benefits. We sold soybeans with the Roundup Ready trait in our own seed brands, but also made the decision to license the technology broadly to other seed companies so that they could use the technology in their own varieties of soybean seed that they sell under their own brands. This approach made Roundup Ready technology more widely available, and at the same time gave farmers the option to buy seed from the company of their choice.

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I called Dave Morris to learn about his farm and dealer operations. He returned my phone call from his tractor. This season, the weather won’t wait. If you get a few good days, you grab them and hit the fields – a story that’s still being repeated all over the Midwest and central plains in the U.S.

Dave and his family live in southeastern Minnesota, farming corn and soybeans. His two brothers and two nephews farm as well. And Dave is a second-generation DeKalb dealer.

“My dad Gene started the dealership in 1988,” he says. “He called it Morris & Sons, because all three of us boys worked in the business from time to time. At the time, we farmed all the land together; my brother Danny also milked the cows and by brother Mark and I had the pigs.”

By the middle 1990s, however, Gene Morris was thinking about getting out of the seed dealer business. Sales were down, and the family could see that the seed business was moving increasingly to the computer. Dave volunteered to buy a computer and order the seed for his father. “That was the first time you could order seed online,” Dave says. “And from then on, each year Dad did a little bit less and I did a little bit more.” By 2000, Dave had built his shop and storage shed, had the DeKalb seed delivered to his place, and began supplying the customers of a small dealer some miles away who had quit the seed business along with their original customers.

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