Monsanto, Pioneer Fight for Seed Market
Friday, December 8, 2006; 2:47 AM
ST. LOUIS -- Winter months are quiet on the farm, but it's crunch time for seed companies Monsanto Co. and Pioneer Hi-Bred International Inc. While farmers place their orders for next year's crop, the companies are fighting for market share in the multibillion-dollar market for genetically engineered seeds.
Pioneer is developing new strains of biotech seeds, while Monsanto has been aggressively buying up small seed-dealing companies to get better access to farmers.
The result seems to be a tight competition this year, with Monsanto possessing an edge, according to a recent report from analyst Kevin McCarthy with Bank of America in New York.
Monsanto has vastly improved its network of seed dealers and taken market share away from Pioneer in the crucial market for U.S. corn seed, McCarthy said.
"We think Monsanto will continue to gain market share in the U.S. corn market, as it has done for at least five years running," McCarthy said.
But Pioneer "poses a long-term threat to Monsanto because it is seeking to develop independent technology," he said.
Spokespeople for Monsanto and Pioneer pointed out the overall share of cropland being planted with biotech seed is rising, so both companies stand to profit. Total plantings of biotech corn jumped from 42.5 million acres in 2005 to 48.4 million this year, according to the Biotechnology Industry Organization.
Pioneer President Dean Oestreich said Monsanto's recent gains won't offset Pioneer's long-term plans.
"Monsanto has been on a buying spree," Oestreich said. "The way we've competed _and the way we compete today and will in the future _ is that we're investing our dollars in research."
For years, Pioneer and Monsanto had a symbiotic relationship when it came to selling biotech seeds.
In the 1980s, Monsanto first developed genetically modified organisms _ or GMOs _ and sold them through old-school crop companies like Pioneer. Monsanto charged Pioneer a licensing fee to sell the crops and gained access to Pioneer's broad-based sales network.
But Des Moines, Iowa-based Pioneer changed the arrangement in 2003, when it released a strain of genetically engineered corn it made on its own. President Dean Oestreich said the company could make higher profits by selling its own biotech seeds and narrowing Monsanto's access to Pioneer's broad sales force.