Monsanto to charge as much as 42% more for new gmo seeds

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Monsanto to Charge as Much as 42% More for New Seeds

 

 

By Jack Kaskey Aug. 13 (Bloomberg) -- Monsanto Co., the world’s largest

seed maker, plans to charge as much as 42 percent more for new

genetically modified seeds next year than older offerings

because they increase farmers’ output.

Roundup Ready 2 Yield soybeans will cost farmers an average

of $74 an acre in 2010, and original Roundup Ready soybeans will

cost $52 an acre, St. Louis-based Monsanto said today in

presentations on its Web site. SmartStax corn seeds, developed

with Dow Chemical Co., will cost $130 an acre, 17 percent more

than the YieldGard triple-stack seeds they will replace.

“Our pricing has the flexibility built in to ensure the

grower captures the greatest return from his seed investment,

irrespective of market volatility,†Chief Executive Officer

Hugh Grant said today in a statement.

Grant is introducing new modified seeds that boost yields

as part of a plan to double gross profit from 2007 to 2012. The

new soybeans, which resist Monsanto’s Roundup herbicide, produce

7.4 percent more soybeans per acre than the older version.

SmartStax kills insects in multiple ways, reducing the amount of

conventional corn that must be planted to deter insecticide

resistance.

“SmartStax pricing is higher than we initially expected,â€

Vincent Andrews, a New York-based analyst at Morgan Stanley,

said today in a report.

Monsanto rose $1.57, or 1.9 percent, to $84.03 at 4:15 p.m.

in New York Stock Exchange composite trading. The shares have

gained 19 percent this year.

Acreage Forecasts

SmartStax corn seed will be planted on as many as 4 million

acres in 2010, its first year on the market, with a potential

for as many as 65 million acres in the U.S. eventually, the

company said. The new seed boosts yields 5 percent to 10 percent

compared with other products, partly by reducing the amount of

land that must be planted with conventional corn to 5 percent

from 20 percent, Monsanto said.

Pricing for SmartStax is at the high end of expectations,

Laurence Alexander, a New York-based analyst at Jefferies & Co.,

said by telephone.

Roundup Ready 2 Yield soybean seeds were planted on 1.5

million acres this year and will be planted on as many as 8

million acres next year in the U.S. with a potential to one day

reach 55 million acres, Monsanto said.

The company is pricing its seeds to share the benefit of

increased yields with farmers, said Mark Gulley, a New York-

based analyst at Soleil Securities. Prices include seed

treatments designed to protect seedlings from pests and disease,

Monsanto said.

“They are in essence splitting the value of the extra

yield 50-50,†Gulley said by telephone.

Monsanto repeated its forecast for earnings in the fiscal

year that ends this month at the low end of a range of $4.40 to

$4.50 a share. The average estimate of 16 analysts surveyed by

Bloomberg was for profit of $4.41 a share.

To contact the reporter on this story:

Jack Kaskey in New York at jkaskey

Last Updated: August 13, 2009 17:14 EDT