Good timing, as biotech acreage and sales are expected to grow

ANN THAYER

Monsanto and DuPont have decided to let bygones be bygones, agreeing to dismiss all agricultural patent disputes and pending lawsuits between them. The companies are cross-licensing technologies for use in major crops such as corn, canola, and soybeans. Both also are anticipating that the markets for their products will continue to grow.

"This agreement sets a new, constructive tone that allows both companies to focus their energy and talents on what they do best," namely, making and marketing products to increase farm productivity and efficiency, says Hugh Grant, Monsanto's chief operating officer.

Monsanto has led the development of crops that have been genetically engineered for herbicide tolerance and insect resistance. DuPont, meanwhile, spent more than $9 billion between 1997 and 1999 to acquire Pioneer Hi-Bred, the world's largest seed firm. Although Pioneer was a much-needed early licensee that helped commercialize Monsanto's new technology, the two companies became adversaries when Monsanto decided the license agreements undervalued it.

Now, after years of trying to restrict Pioneer's access to the technology, Monsanto has agreed with DuPont to drop about a dozen lawsuits--some dating back to the mid-1990s--including DuPont's antitrust allegations against Monsanto. But Pioneer will pay royalties to Monsanto to use certain technologies.

The agreement comes at a time when both firms are optimistic about their agricultural businesses. DuPont based its recent upbeat first-quarter earnings estimate in part on its crop unit (see page 12). Monsanto reports that acreage planted with products containing its traits grew 14% in 2001. Believing the trend will continue, it predicts double-digit earnings growth by 2004.

Recent surveys by USDA and the International Service for the Acquisition of Agri-Biotech Applications anticipate expanding global acreage for agbiotech crops. ISAAA reports that farmers in 13 countries planted a combined 130 million acres in 2001, and it expresses "cautious optimism" that acreage will rise again this year. In the U.S., which plants about 68% of the world's biotech crops, USDA recently predicted that biotech crop acreage will rise about 10% this year.

In late March, India, one of the world's largest cotton producers, approved insect-resistant cotton after a six-year assessment program. Monsanto still is hoping to get European approval for herbicide-tolerant corn and Brazil's buy-in on herbicide-tolerant soybeans. Already, about 91% of all biotech-planted acres contain Monsanto traits.

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