Competition and the ag industry in 2010

Another winter season of agricultural industry meetings has come to an end.

I've got to admit that I didn't learn much earth-shaking news that will change 2009 cropping. There was another batch of new products, mainly new combinations and formulations of previously discovered active ingredients.
Companies were doing a lot of set-up about what they'll be introducing once regulatory clearance occurs in 2010, 2011 and 2012.

I'm not much on reporting what companies will accomplish three years from now, although I do like to point out interesting products in the mill. If the volatility that has recently hit agriculture continues, it will be a different industry and the competitive companies will have changed by 2012.

Pioneer and Monsanto are examples of companies in the head-to-head battle of "educating" about their future products, and it has peaked my interest.

There is a lot at stake in Pioneer and Monsanto's struggle for supremacy. It reminds me of the computer and electronics business - IBM - or Apple-based computer, Blue-ray disc or HD DVD, SD storage card or Memory Stick. The technology that comes out ahead controls the future for many associated companies and ultimately earns a fortune for the winning tech licensee.

Refuge-in-a-bag is a major change that could be approved by the Environmental Protection Agency in 2009. Pioneer expects approval because it reports submitting tons of data. Planting 20 percent of a Bt rootworm control field with a non-rootworm trait corn is an inconvenience to farmers. Reducing a field's refuge to only 5 percent is the competitive alternative presented to the EPA-the Apple versus IBM scenario except that the government can give one or the other a foot up.

We've all seen how farmers go for convenience in crop production. Having the non-rootworm control seed go through the planter along with the Bt rootworm control seed should be an easy sell. Even if EPA approves the science and technique as providing sufficient resistance management prior to the end of the 2009 planting season, there would only be enough Pioneer refuge-in-the bag seed for large-scale demonstration planting to prove yield comparison to other refuge options.

As I mentioned, I don't like to go too far into projecting the future. But it appears there will be head-to-head fights between Monsanto and Pioneer for introduction of major genetics and traits in the next three years including nitrogen utilization corn, reduced water-use corn, healthier fat composition soybeans and new herbicide-resistant corn and soybeans.

Not pointing to the seed business but referencing the ag industry in general, the future doesn't always appear as logical or as bright as presented by executives of every ag company during their various presentations to the media. I hesitate to report anyone really knows what the next three years will bring.

Look at the unexpected drop in commodity prices and fertilizer prices. I remember Aventis being formed from the combination of AgrEvo and Rhone Poulenc and then two years later being bought by Bayer.

If a diversified parent company, with an agricultural division, is performing poorly during a prolonged worldwide recession, would it look to divest itself of a division that has value-its agriculture division? We can only wait and see how different 2012 might look than the optimistic presentations at this winter's meetings.