Show Me Momentum

July 29, 2011 09:56 AM
Show Me Momentum

Mega seed giant Monsanto battles back

Brett Begemann is proof you can take the boy out of the country, but you can’t take the country out of the boy. Monsanto Company’s executive vice president and chief commercial officer fully intended to return to the west-central Missouri farm of his youth upon graduation from the University of Missouri in 1983. A tepid farm economy coincided with drought and a lucrative Monsanto internship to reroute his career path.

"You can sit on both sides of the desk," says Begemann, who today co-owns his childhood homestead with a brother. He also owns another farm near Perry, Mo. "A crop share lease on that farm is valuable perspective on what farmers need and want from a seed company," he says.

Perspective is something the agricultural biotechnology powerhouse needs after a bumpy past two years. The 2009 season delivered some lower than expected yields on first-generation Roundup Ready 2 Yield soybeans, and one family of SmartStax faltered in the central Corn Belt in 2010.

Farmers also balked at higher seed prices associated with the high-tech, multiple-trait products. After several years of growth, Monsanto’s corn market share flattened in 2010. Soybean market share has kept climbing slightly.

"We haven’t grown as much as we wanted over the last couple of years," Begemann admits. "But we didn’t lose, either. Numbers for the 2011 season show upward growth."

Picking it up. More conservative pricing and more choices of genetic packages are yielding new momentum in the market and resonating with customers, Begemann believes.

"Sales have been strong for 2011, and RIB [refuge-in-the-bag] is going to be a driver in 2012," he predicts. Monsanto is testing the first biotech trait to fight drought conditions in the western Corn Belt.

"We’re not planning to brand native drought resistance as a trait," Begemann explains. "Those kind of changes are what we do as a company every day. We put a brand on it when we see a step change in performance."

Begemann points to vegetables as a strong growth sector. International business is also booming. "We have 40% of the genetic market in Brazil and traits are getting approved so fast, we can’t keep up with the trait integration," he says.

Founded in 1901, Monsanto Company first produced saccharine. The agricultural division, founded in 1960, brought innovations such as Lasso and Roundup to the farm. Monsanto scientists engineered the first biotech plant as early as 1982, but acquiring Agracetus and Calgene in 1996 helped launch the gene revolution.

Then and now. Seed entered the picture in the late 1990s with the acquisitions of Asgrow, DeKalb, Holden’s Foundation Seeds and Corn States Hybrid Service. Pre-2000 days are now referred to as the "original Monsanto."

In-seed herbicide and insect protection coupled with seed sales created the Monsanto of today. From 1998 to 2001, the company picked up six regional seed companies that were shuttered or melded into mainline brands. From 2004 to 2007, the company purchased more than 20 regional companies—this time allowing many of them to retain their brand.

Begemann says those brands add 10% to Monsanto’s current seed market share. "I’m proud of the fact that they’ve grown with us to add to our market share," he says.

Licensing is a cornerstone of Monsanto’s philosophy. "What would the industry look like if we had not purchased Holden’s or not licensed Roundup Ready traits?" Begemann asks. "The day we introduced RR2Y soybeans and SmartStax, they were also made available to our licensing partners."

Begemann flinches at Monsanto’s bad-boy image. "We’ve changed some things, including pricing, more product choices and giving back more to communities. Fortunately, we have a friend in the field. Yield monitors don’t lie," he notes.

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