Feb. 4, 2015
In the battle to license the next generation of genetically modified soybeans, Dow Chemical Co. is losing out to Monsanto Co. before either company's product is available to U.S. farmers.
Dow's Enlist soybeans, slated to go on sale next year, are engineered to survive being sprayed with both 2,4-D and glyphosate herbicides, a sought-after feature as farmers battle weed resistance. The company is counting on Enlist to help add $1 billion of agricultural revenue by 2018.
Despite operating in a fiercely competitive industry, it's established practice for seed companies to license competitors' genetics. Now, in a blow to Dow, two of its biggest rivals, DuPont Co. and Syngenta AG, say they don't plan to sell Enlist seeds.
DuPont's Pioneer unit, the largest soybean-seed supplier in the U.S., has ended its agreement with Dow to commercialize Enlist seeds, Jane Slusark, a spokeswoman for Wilmington, Delaware-based DuPont's Pioneer unit, said Friday.
"The implied loss of such a large potential customer could make it harder for Dow to achieve its ambitious Enlist targets," Robert Koort, a Houston-based analyst at Goldman Sachs & Co., said in a report Monday.
Monsanto, the second-biggest seller, and Switzerland's Syngenta AG, the No. 3, also won't add Enlist to their soybean-seed lines, company spokesmen said. Without those licensing accords, Dow's market opportunity shrinks to at most 25 percent of U.S. soy acres, according to Jeffrey Zekauskas, a New York- based analyst at JPMorgan Chase & Co.
In contrast, DuPont Pioneer is licensing Monsanto's Roundup Ready Xtend soybean seeds, which are engineered to tolerate dicamba weed killer and glyphosate. Syngenta doesn't plan to license Enlist, but is evaluating whether to use Xtend technology, Paul Minehart, a U.S. spokesman for the Basel, Switzerland-based company, said in an e-mail Monday.
St. Louis-based Monsanto is poised to get as much as 90 percent of U.S. acres with Xtend, Don Carson, an analyst at Susquehanna Financial Group LLLP, said in a Jan. 15 note.
Monsanto and Midland, Michigan-based Dow plan to begin selling their respective new seeds in 2016, pending Chinese import approval.
Dow wasn't counting on DuPont to license Enlist when it laid out its plan in November to double agriculture earnings in five years, said Tim Hassinger, president of Dow AgroSciences.
"Our enthusiasm for Enlist remains high," he said by phone Friday.
Two Iowa-based soybean-seed companies, Stine Seed Co. and Merschman Seeds Inc., have agreed to license the seeds, and Dow plans to market Enlist in South America, Hassinger said.
Dow also plans to begin selling Enlist corn and cotton, which the company predicts will eventually generate $400 million in combined annual revenue, compared with $600 million for Enlist soybeans, Chief Commercial Officer Joe Harlan said in a November presentation.
Ending the Enlist accord with Dow was "strategic," said DuPont Pioneer's Slusark said in an e-mail. Pioneer doesn't need Enlist because the seed company can help farmers with hard-to- control weeds by adding soybean traits licensed from Monsanto and Bayer AG, Slusark said. Pioneer also can use its own STS technology, she said.
Monsanto is focused on Xtend and has no plans to commercialize Dow's Enlist soybeans, said Danielle Stuart, a spokeswoman.