March 3, 2006

 

Rising competition between Monsanto, Pioneer in GM seed production

 

 

Competition between Monsanto and Pioneer Hi-Bred heated up this week, with both companies moving to strengthen their hold in the multibillion-dollar market for GM seeds.

 

Des Moines, Iowa-based Pioneer Hi-Bred announced Thursday (Mar 2) that it will release its own brand of "Roundup Ready" pesticide-resistant corn and soybean seeds by 2009. The seeds would allow Pioneer to compete head-to-head with Monsanto in a product line that is a pillar of Monsanto's business.

 

On Wednesday, St. Louis-based Monsanto said it paid US$8.7 million for two regional seed-dealing companies. The acquisition could help Monsanto compete against Pioneer Hi-Bred's national network of about 5,500 sales representatives.

 

Monsanto is the biotech seed leader by far, said Frank Mitsch, an analyst with BB and T Capital Markets. Pioneer Hi-Bred trails as a distant second in the marketplace, even though it is a division of the chemical giant DuPont.

 

Pioneer's new GM seeds are the first to be wholly owned and developed by Delaware-based DuPont, said Bart Baudler, a senior marketing manager for Pioneer Hi-Bred. Their release is part of Pioneer Hi-Bred's broader plan to quit paying Monsanto licensing fees to use genetically engineered traits.

 

"We're quite excited that this is the beginning of several products ... that will allow us to go head to head with Monsanto," Baudler said.

 

Pioneer Hi-Bred's new strains of corn and soybeans still have regulatory hurdles to clear before they can be sold in the US, Baudler said. The vast majority of tests have been passed, with some field trials remaining, he said.

 

Pioneer would not reveal the brand name of the new product before Thursday's announcement, but the seeds are broadly called GAT, or glyphosate ALS tolerant seeds. Glyphosate is the scientific name for Roundup, while ALS refers to another family of herbicides.

 

So-called Roundup Ready plants are genetically engineered to survive exposure to Monsanto's Roundup herbicide. Baudler said Pioneer's new seeds will be resistant to Roundup as well as other herbicides.

 

Monsanto has no shortage of new products coming down its research and development pipeline, Chief Technology Officer Robert Fraley told investors during a recent presentation. Monsanto plans to release a new generation of Roundup Ready plants that are also resistant to common pests.

 

Monsanto is beefing up its sales force to pitch new products. In 2004, it formed a holding company called American Seeds Inc. with the goal of buying up regional seed dealers.

 

Fisher said ASI is just one of three avenues that Monsanto uses to sell its seeds. The company also sells through its own brand names Asgrow and Dekalb and licenses its genes to companies like Pioneer Hi-Bred.

 

In an interview late last year, Pioneer Hi-Bred President Dean Oestreich said the company's broad network of sales representatives was an advantage in competing against Monsanto, which is a relative newcomer to the seed business.