Daniel Schramm

March 23, 2007

The Monsanto Company, based in St. Louis, Missouri, and BASF AG, a German biotechnology firm based in Ludwigshafen, Germany announced plans on March 22 to form a $1.5 billion partnership to streamline development of new varieties of genetically modified (GM) crops. Development and marketing of the so-called "second generation" of GM products (the first generation hit the market in the mid-1990s) will have an emphasis on benefits for food processors and consumers and not just farmers. These benefits include higher nutrient levels for consumers, but the primary goal of these new products will be crops that produce higher yields with less input, that are resistant to environmental stresses such as drought and pests.

The two companies have differing strengths which both have recognized will serve to complement one another as development and marketing of the new products moves forward over the next decade. BASF has focused its efforts into the development of computer modeling and robotics in order to track chemical make-up of various crops and to provide for easier manipulation of gene structure to bring out desired traits. The development of new GM crops has been hampered in the past by the time-consuming process of testing various genetic arrangements to achieve optimal desired traits while ensuring that no negative side-effects are also produced. But BASF needs Monsanto's expertise on actual seed development, commercialization, and navigation of the regulatory approval process, which is quite burdensome in several countries, particularly in the EU.

There also appears to be a political calculation underlying the new arrangement. Monsanto hopes that linkage with BASF, a European firm, will improve its public image in Europe, where popular resistance to GM crops remains high and those products garner the label "Frankenfood." Environmentalists and European farmers who have not yet bought into the technology-heavy, industrialized method of agriculture that has come to dominate in the United States remain adamant that genetic modification of crops poses ecological risks of soil degradation, corruption of native species, and the rapid evolution of pests that will develop immunities to the biocides being built into GM crops. There are also social concerns about the effect of industrialized forms of agriculture in regions that have farming traditions going back centuries and which have evolved in particular ecological and historical frameworks.

The companies' clear intention is to crack open the door to European agricultural markets for their GM products. Peter Oakley, a member of BASF's board of directors, says, "It will become very, very difficult long term for European farmers to remain competitive without access to these technologies. . . . It's a door-opener in Europe." The companies' representatives insist that the realities of crop demands in the 21st Century—the need for new crops for biofuels, and the plight of the undernourished in developing countries in particular—leave little choice but to invest in technological innovations to boost crop yields. Such contentions are heavily disputed by environmentalists and farmers' advocates in many parts of the world however. They suggest that large biotech firms in the West, such as BASF and Monsanto, are driven less by humanitarian concerns and more by the desire to maximize profit and establish profitable networks of control over agricultural production throughout the globe.

Sources:

Rachel Melcer, Monsanto and BASF: Feeding world is aim of new duo, ST. Louis Post-Dispatch, Mar. 22, 2007, available at http://www.stltoday.com/stltoday/business/stories.nsf/story/ED917E7FE6444A99862572A6000FC662?OpenDocument.

"10. BIOTECH: BASF, Monsanto to share costs of $1.5B crop development research deal," Greenwire, http://www.eenews.net/Greenwire/2007/03/22/#10.

Reuters, BASF and Monsanto in Crop Research, NY. Times, Mar. 22, 2007, available at http://www.nytimes.com/2007/03/22/business/worldbusiness/22fobriefs-BASFANDMONSA_BRF.html?_r=1&oref=slogin.