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On the Udder Hand

RSS By: Chris Galen, AgWeb.com

Chris Galen is the Senior Vice President of Communications for the National Milk Producers Federation .

Bye-Bye BST?

Aug 06, 2008

It’s been well-documented that an increasing number of dairy processors and retailers have asked their farmers not to supply them with milk from cows treated with Monsanto’s recombinant bovine somatotropin, or rBST, marketed as Posilac™.  The trend has picked up steam in the past two years, and in most major markets across the country, at least one fluid milk supplier (if not all of them) displays a “no artificial growth hormones used” pledge on its products.

 

The question in my mind, lately, is whether this trend would inexorably make its way from the fluid milk business, to where the real volume is in the dairy industry:  cheese.  Cheese represents more than 40% of where the nation’s milk supply goes, while bottled milk is only about 25%.  Cheese also differs in that it’s more often a commodity product, frequently served as an ingredient in a foodservice item (pizza, cheeseburgers, Tex-Mex).  So I’ve been wondering if the “BST-free” label will have much traction in the cheese category.

 

That question was answered, in part, by this announcement earlier this summer that Glanbia, an Irish company with a big presence in high-volume cheese production in Idaho and New Mexico, is going rBST-free in 2009.  If Glanbia is joined by other cheese processors in its decision – and this also appears to be a trend – then my question won’t have to wait long for an answer.

 

As it turns out, however, regardless of what individual processors or retailers decide further down the road, the sole manufacturer of rBST, Monsanto, has asked the same questions, and has already arrived at a logical conclusion:  selling dairy growth hormones isn’t a very good business to be in any longer.  And Monsanto announced today it plans to “divest” itself of Posilac.

 

Now, the announcement is rather cryptic.  I put parentheses around divest because that is a verb open to interpretation about the marketplace implications.  Does Monsanto wish to divest itself solely from manufacturing the product?  From also selling and/or distributing it?  From the patent itself?  Time will tell, but the terse statement didn’t (although it did mention that farmers will still have access to the product; how and from whom remains the question).

 

But because the trends I mentioned earlier are clear, and because the real money these days (and it is really, really big money, even with the recent downtown in corn and soy prices) is in agronomy inputs, it’s obvious that to keep its shareholders happy, Monsanto wants to focus on a field that is green and growing, not one that is stressed by drought.  So the company has made a clear strategic decision to disassociate itself somehow, to some degree, from a product that it has worked hard over the past 20 years to bring to market.  This is a huge verdict.

 

There will be much more to write about this in the future, but it’s clear that we have turned a significant page with this decision, and a new chapter in dairy will be written from here out.

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COMMENTS (2 Comments)

Anonymous
I sense a bit of anti-BST bias, here.

Companies (divest) - that's parenthesis - themselves of products all of the time. It makes perfect sense for Monsanto to focus on agronomic products. I envision that the factory in GA will be sold (that's what divestiture is), and possibly other segments, as well. How it happens will depend on the suitor. Remember, much BST was coming from a factory in Europe, just a few years ago; and it wasn't owned by Monsanto.

The other issue is that of the patent. I'm sure someone can tell me when the patent expires. Pharmaceutical companies routinely change strategies as key products come off of patent.

I don't see the US or global consumer rejecting BST as it will lead to higher dairy prices, which will lead to less abundant food, and social unrest. My personal opionion is that the rejection of BST in places like Dallas, TX, and Michigan almost entirely, has led to decreased milk production (or at least restrained growth) which has brought us to $21 milk futures. This has, in turn, reduced fluid milk consumption.

We need to stand up and fight for profitable technology's that have been proven to be safe.
8:23 AM Aug 16th
 
Mark Varner
You're right, there will be much written about this in the future. One of the news items indicates that the plant in Georgia that manufacturs the rbST product, Posilac, is for sale too. I have links to those articles in my Dairy Farm Adviser's Coffeeshop blog posting on the topic (http://dairyadviser.blogspot.com/2008/08/monsantos-posilac-to-be-sold.html).

DairyScienceMark
7:33 AM Aug 13th
 
 
 
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