Riding the biotech rocket to profits
Cahokia poses a warning. Its huge earthen mounds east of St. Louis mark an ancient city, one of the largest in the world in the year 1200. Then, a century before Columbus reached America, the mound builders mysteriously vanished, victims of declining corn yields and perhaps disease.
When Cahokia was thriving, the planet had fewer than 400 million people. Today we're at 6.8 billion. By 2050, we'll hit 9 billion, straining the earth's supplies of energy, water, and food. Many more places could follow Cahokia into oblivion.
To Cahokia's west, in a St. Louis suburb, Monsanto Corporation is spending $2.6 million a day to develop drought-tolerant corn, high-yielding soybeans, and traits to help crops thrive on less nitrogen. Monsanto has bet on transgenic research that it hopes will enhance human survival while yielding a profit for the company.
Two days before stopping at Cahokia Mounds in August, I visited Monsanto's research center, with its 108 climate-controlled growth chambers and 2 acres of greenhouses. The next day, I covered the Organization for Competitive Markets (OCM) annual meeting in downtown St. Louis. I landed in the middle of the challenge of our time: balancing the costs of accelerating technology with volatile commodities prices.
At the Monsanto visit (part of Successful Farming magazine's AgInnovator awards program sponsored by Asgrow), Kansas State economist Terry Kastens made the case for adopting fast-moving technologies right away. â€œDon't waste a lot of time pondering,â€ he says. The edge you'll get doesn't last long.
The next day, OCM made a case that farmers pay too much for transgenic seed traits. A factor they say: Monsanto controls 90% of them.
It's a claim Monsanto vehemently disagrees with, saying that its broad licensing of traits has enhanced farmers' choices and that it controls about a third of traits directly. And other seed companies are bringing out competing ones.
OCM's panel of experts on competition in seed makes interesting reading (agriculture.com/competition). Yet lawsuits over seed competition won't change your bottom line soon, if ever.
Meanwhile, here are two survival tips as both costs and benefits of traits rise.
- Try more promising traits as soon as you can, no matter what the brand. If Kastens is right, the time for experimentation will be brief before gains are bid into land values.
- Do ponder -- but do it quickly, with the best field mapping and accounting software. Higher yields don't always mean higher profits. If you set up field-level cost centers that allow a quick evaluation at harvest, your odds of knowing improve. (In 2008 Monsanto sponsored workshops on managerial accounting, a tool for doing just that).
Ultimately, the marketplace must balance the economic needs of companies that make costly high-risk investments in miracle seeds with those of the farmers who plant them.