Monsanto’s move on Syngenta could mean move away from glyphosate

Reuters — Monsanto, the world’s largest seed company, is also known for the popularity of its Roundup herbicide, beloved by farmers and homeowners alike for its speed and deadly assault on tough weeds.

But Monsanto’s ongoing efforts to try to take over Swiss ag chem firm Syngenta, a rival whose product portfolio offers an array of agricultural chemicals, could spark a sell-off or de-emphasis of a product line that last year brought in roughly US$5 billion, or a third of total revenues for Monsanto, according to industry sources.

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The key ingredient in Roundup is glyphosate, the world’s most widely used weed-killing agent. But glyphosate’s heavy use has led to high levels of weed resistance, and Monsanto, Syngenta and rivals BASF, Dow AgroSciences and others have been developing alternative herbicide options.

“It makes sense for them to do that, to move away from glyphosate,” said Piper Jaffray analyst Brett Wong. “They’ve been doing that internally for awhile. As resistance continues to grow with glyphosate the value of that product is likely going to decline.”

Kerry Preete, Monsanto’s executive vice-president for global strategy, told investors at a conference Wednesday that in addition to selling off Syngenta’s seeds and traits business to make the deal work, the company was open to selling “certain overlapping crop protection chemical assets that exist.”

Wong said China’s state-owned China National Chemical Corp., or ChemChina, is a good candidate to purchase Monsanto’s Roundup business, but Robert Lu, ChemChina’s VP in charge of overseas acquisitions, told Reuters on Friday the company was not considering such a bid.

While Monsanto is known for Roundup, Syngenta has more than 30 herbicides brands using different active ingredients. Syngenta officials publicly noted concerns with glyphosate and a need for alternatives years ago and the company said last year it was actively pulling back its glyphosate-based Touchdown brand to focus on mixtures that address weed resistance.

Monsanto has been moving internally to pivot to a post-glyphosate future for some time, building a biopesticide research pipeline, a farm data business unit and new biotech crops not dependent on glyphosate-tolerant traits.

Monsanto introduced Roundup to the world in 1974, and Roundup is the largest crop protection brand globally.

For fiscal 2014, net sales for Monsanto’s herbicide unit grew 13 per cent over 2013 with a five per cent spike in volumes and a 10 per cent hike in pricing.

Carey Gillam is a Reuters correspondent covering agriculture and agribusiness from Kansas City. Additional reporting for Reuters by Pamela Barbaglia in London.

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