Transgenic Seed Demand Increases Despite Consumer Concerns

06 May 2002 00:00  [Source: ICB Americas]

Plantings for biotech crops such as soybeans, corn, cotton and canola continue to rise despite consumer concerns and ongoing controversy about genetically modified (GM) products. With the season for seed sales in North America coming to a close, biotech seed producers are projecting higher biotech seed sales revenue for 2002 as farmers continue to see greater profit potential and convenience in planting transgenic seeds.

Monsanto Company, the largest developer of biotech seed traits, reported a strong gain in first quarter revenues from its seed and genomics segment because of a shift in the timing of trait fees, increased branded corn seed sales, and higher biotech traits revenues. Net sales for the segment increased to $585 million, up 18 percent from last year. "Branded corn seed sales were up largely because of the expectations for increased corn plantings this spring," says a company official.

Plantings for biotech corn in 2002 are expected to increase 6 percent compared to last year, according to the US Department of Agriculture (USDA). Plantings for transgenic corn is projected to account for 32 percent of the 79 million acres of total corn acreage planned for this year. Twenty-two percent of the biotech corn crop will be sowed with insect resistant corn varieties containing bacillus thuringiensis (Bt) and 8 percent with herbicide resistant varieties. The remaining 2 percent will be accounted by stacked gene varieties, which contain both insect and herbicide resistance.

Plantings for transgenic soybeans will also increase 6 percent with Roundup Ready soybeans accounting for 74 percent of the 73 million acres of the total US soybean crop to be sowed this year, says the USDA. For transgenic cotton, 71 percent of the 14.8 million acres of total US cotton crop will be planted, with herbicide-resistant cotton accounting for 36 percent of the acreage, Bt cotton 12 percent, and stacked gene varieties 23 percent. Meanwhile, canola producers intend to plant 1.55 million acres this year, up 4 percent from 2001 with North Dakota and Minnesota intending to plant 1.32 million and 115,000 acres of canola, respectively.

"Farmers see values in transgenic seed products," says a spokesperson from Pioneer Hi-Bred International Inc., a wholly owned subsidiary of DuPont. "Crop yields increase through pest management traits. Costs for pesticides are reduced, and transgenic traits also help create a more environmentally compatible way of controlling pests."

Like Monsanto, Pioneer's biotech seed sales for corn and soybeans were said to be up because of stronger demand especially for corn where Pioneer has a 40 percent market share. "Bt corn sales are doing very well especially when the damage from the European and southwestern corn borers increased last year due to second-generation European corn borer which impacted corn later in the growing season. A lot of farmers turn to Bt corn as an insurance policy for the next planting season," says Pioneer.

Demand for transgenic soybeans has also gone up every year. "Farmers are continuing to expand their purchases of Roundup Ready soybeans for the most part because of the convenience factor. It is a very simple, cost-efficient program to use, and it alleviates the need for multiple herbicides sprays to control weeds," says the Pioneer spokesperson.

Monsanto, DuPont/Pioneer, Syngenta, Dow AgroSciences and Aventis, soon to be owned by Bayer, are the top five major players in the biotech seed industry, according to analysts. In 2000, total biotech seed sales revenue for the five companies was estimated at $5 billion. For biotech soybeans, Monsanto dominates the field through its Roundup Ready traits, which the company licensed to seed marketers such as Pioneer, Syngenta and Dow AgroSciences.

Syngenta, on the other hand, recently reported lower first quarter earnings on its seed sales business, which was hurt by the intense competition in the US corn market that is dominated by Monsanto and Pioneer. The company's seed sales declined 4 percent to $372 million from $378 million last year as US competitors appear to be more aggressive on seed prices, says one analyst.

"Crop prices are still under pressure due to relatively high world foodstuff surpluses," says a Syngenta spokesperson. "However, in terms of volume, sales for our Bt corn, which accounts for 70 percent of our total biotech corn sales, are still fairly stable. Except in 2000 where it dropped a little bit, Bt corn demand has been growing significantly, more so this year as prospective plantings for biotech corn in the US have increased."

The US, Argentina, Canada and China are the four major GM-producing countries accounting for 99 percent of the total global transgenic crop area. Global biotech crop acreage in 2001 reached 130 million acres, according to the International Ser-vice for the Acquisition of Agri-biotech Applications (ISAAA). The US accounts for 68 percent of the total biotech crop area, with 88.2 million acres of transgenic crops. Argentina follows with 22 percent, Canada at 6 percent and then China at 3 percent. China had the highest year-on-year percentage growth with a tripling of its Bt cotton area from 1.2 million acres in 2000 to 3.7 million acres last year.

"The number of farmers that benefited from GM crops increased from 3.5 million farmers in 2000 to 5.5 million in 2001," says ISAAA. "More than three-quarters of the farmers that benefited from GM crops in 2001 were resource-poor farmers planting Bt cotton, mainly in China and also in South Africa."

Industry observers also note that despite uncertain consumer acceptance, the popularity of GM crops is slowly undermining the resistance of major importing markets such as the European Union (EU). In Brazil, even though it is illegal, GM crops have made their way inside the country as it debates whether or not to accept biotech soybean seeds. China has also started issuing GM safety permits for soybeans, and India has recently approved its first transgenic cotton from Monsanto, which could open more doors for GM seeds in Asia. Meanwhile, biotech seed companies are also pressuring the EU to end its moratorium on GMO approvals, implemented over two years ago.

"The EU will have a hard time to keep transgenic products out in the long run," says one industry observer. "As long as its cost-efficient to use the GMO varieties, they will be hard to stop, and every year it will get harder to find identity-preserved, GMO-free crops anywhere in the world in large quantities. Non-GMO crops will probably become a niche market although for direct human consumption, the situation may be a little different as people are still concerned about eating them."

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