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Monsanto's back in the wheat business

Monsanto is getting back into the wheat business.

This week, it bought the assets for $45 million of WestBred, LLC, a Bozeman, Montana, company that specializes in wheat germplasm.

Earlier this decade, Monsanto had invested heavily in developing Roundup Ready wheat for the spring wheat market. However, it abandoned the project in 2004, citing declining spring wheat acreage and marketability concerns cited by some wheat growers and end users.

This announcement follows a move last month by Dow AgroSciences' collaborative agreement with World Wide Wheat (W3) LLC, Phoenix, to develop and commercialize advanced germplasm and traits in wheat.

The wheat market has changed, says Carl Casale, executive vice president of global strategy and operations for Monsanto. When Monsanto was developing Roundup Ready spring wheat, it was trying to launch it into a declining market.

"That market declined so dramatically due to the introduction of soybeans," he says. "From 1994 to 2008 in Cass County, North Dakota, soybean production grew 212%, while (spring) wheat production declined 58%," says Casale.
Monsanto's purchase of WestBred encompasses multiple classes of wheat, rather than just spring wheat. "We can create more robust products across so many more acres."

Industry and farmer support has also changed over the past several years. Opposition from millers and wheat growers helped put the kibosh on Roundup Ready wheat. This time, support by a joint biotechnology committee of U.S. Wheat and the National Association of Wheat Growers is key, says Casale.

"One reason we decided to move forward in wheat right now is we saw what came out of the joint biotechnology committee of U.S. Wheat (Associates) and the National Association of Wheat Growers," says Casale. "They laid out the need for biotechnology in wheat.

"Increased price and supply shocks also play a role. "In 7 of the last 10 years, global demand for wheat has outstripped production," he adds. "Running a supply deficit in 7 out of 10 years brings a significant value over the long term."

Monsanto will use a two-pronged wheat strategy. It will first develop new wheat varieties using its breeding tools like molecular markers. Developing wheat varieties first is key, says Casale. "You can't bring traits to market unless you have underlying genetics behind them."

Monsanto won't pursue the Roundup Ready trait in this venture. Instead, it plans to take the trait technology it's used for corn and apply it to wheat. It will target wheat traits revolving around drought tolerance, improved nitrogen fertilizer efficiency, and higher yields.

It also will explore herbicide-tolerant and disease-resistant biotech traits. However, Monsanto's main focus will key in on major challenges wheat faces, such as drought.

"Wheat acreage today is in areas that are chronically short of water," he notes.

Casale expects new varieties from the venture to be developed within a five-year horizon. New traits will take longer.

"Realistically, when you start from scratch with biotech, there is an 8-to 10-year horizon," he says. He adds it's also a $100 million investment to deliver such a trait.

Casale says it hasn't been determined if Monsanto will charge a breakout tech fee for any new traits. "There will be mechanisms to receive value (for the technology) from farmers," he says.

Monsanto is getting back into the wheat business.

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