May 20, 2010
Monsanto making changes amid farmer complaints
May 20, 2010
By Carey Gillam
NEW YORK, May 19 (Reuters) - Global seed giant Monsanto Co (MON.N) took a humble tone on Wednesday 19 May, laying out a new pricing and product offering strategy following U.S. farmer complaints about the company's practices and a disappointing launch of a new soybean seed.
"Our farmers have spoken and we have listened," Monsanto executive vice president Brett Begemann, who oversees seeds and traits, said in a presentation to investors in New York.
"We have some room to improve in the things we're going to do."
Begemann said Monsanto was examining and adjusting pricing across the marketplace and unbundling some of its stacked seed products to offer farmers lower-cost seed products that offer more of what certain farmers may need and less of what they don't. Monsanto will also stop requiring farmers to use seed treatments, Begemann said.
He said the company would be returning to a past practice of demonstrating the value of new products to its farmer customers first, "sharing" the value with them in the early years of product adoption and raising prices as value is experienced by those farmers.
Monsanto, a leading developer of genetically altered soybeans, corn and cotton, among other crops, is the target of a Justice Department probe of anti-competitive practices, including unfair pricing, in the seed industry. Farmer complaints have become more pronounced in recent months.
Begemann said the company was taking farmer feedback to heart and noted that he was disappointed that Monsanto's sales of its highly touted, next-generation herbicide-tolerant soybean seed, Roundup Ready 2 Yield, were amounting to only about 6 million acres this year in the United States. The company had told investors it would sell well over 8 million acres of the genetically altered soybean seed.
He said the company was also disappointed that sales of its new SmartStax corn amounted to only about 3 million acres. Monsanto had thought sales could exceed 4 million acres.
SmartStax combines an array of biotech enhancements that include above- and below-ground insect protection and weed control.
Monsanto, once a darling of Wall Street investors, has been widely criticized by analysts in recent months for disappointing results in both its glyphosate-based herbicide business as well as its seeds and traits unit.
Monsanto warned last month that full-year results would likely be at the low end of its announced range of $3.10 to $3.30 per share and said it was unlikely to meet its long-promised goal of doubling 2007 gross profit by 2012.
Shares in the global seed company have been in decline in recent months and slid to $53.90 on Monday 17 May, their lowest point in more than three years and a decline of 42 percent from a year ago.
Monsanto shares were up 1.66 percent at $55.92 in afternoon trading.
Monsanto also said Wednesday 19 May that, despite a decline in overall acres, it gained one percentage point in corn market share in Argentina. The company said it sold 5 million acres of its YieldGard Corn Borer in Brazil, which helped push its share up three points in that country. (Reporting by Carey Gillam; editing by Jim Marshall)
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