Is GM running out of steam?

03 Aug, 2015 02:00 AM
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Between 2011 and 2014, seed sales growth slowed to 10pc

THE huge genetically modified (GM) crop steamroller is showing distinct signs of running out of steam.

While still a big and growing contributor to global grain production output, particularly in categories such as the corn, cotton and oilseed markets in North and South America, growth in GM crop acreages is flattening.

During the past 15 years, global GM seed sales surged from less than $US5 billion a year to more than $20b, thanks largely to typical average increases of 18 per cent and 22pc in the respective three-year periods of 2002-05 and 2007-10.

But between 2011 and 2014, seed sales growth slowed to 10pc, just as the total GM market caught up with conventional seed variety sales.

"All the low hanging fruit in genetically modified technology that's been invented has already been plucked," conceded Michael Mack, chief executive officer of global crop protection and seeds business Syngenta.

He said while new markets may emerge over time, they were "not going to come soon" given the strength of the current tide of public acceptance of GM crops and the current regulatory environment in many parts of the world, notably Europe.

"For those of you who romanticise about the extent of growth in GM (plant) traits, these are the facts you need to look at," he told a recent half-year profit results briefing.

The GM seed sales business was now reaching "saturation point" with between 93pc and 100pc of soybean crops in Argentina, Brazil and the US now planted with GM varieties and 80pc to 93pc of corn varieties grown in those leading field crop producing countries.

More than 95pc of cotton in the US, India and Argentina was also GM, although only 66pc in Brazil.

But while GM canola was grown in the US (94pc of the total crop), it was still not approved in Brazil, Argentina or India, and GM soybeans and corn were also not available in India.

Europe, Japan, Russia and Australia were notable as restricted major markets where GM crop production was limited, with GM cotton and canola only allowed in some Australian states.

'Lightening rod' technology

Although a "perfectly safe technology" which Syngenta was actively developing further and also licensing out to other seed companies, GM issues were a lightning rod for protest and division within the community and facing continuing scope for regulatory hurdles, Mr Mack said.

While 10 years ago, many pundits had forecast a shrinking market for crop protection chemicals because of the rise and rise of GM plant varieties with built-in herbicide, fungal and insect resistant traits, he said Syngenta's crop protection business was now bounding ahead with more sophisticated products and new releases driving more sales.

More than $US3.6b in new sales opportunities were expected from "blockbuster" chemical products being released by the company in the next five years.

Swiss-based Syngenta has a leading 20pc share of the global crop protection market - up 2pc in the past decade.

It is also pinning a lot of faith on non-GM hybrid cereal seed sales.

The company's steady gains with hybrid barley in Europe are to be followed by the launch of a hybrid wheat in the US by 2019, with the release spreading into other major wheat seed markets and likely to be worth at least $US3b in sales by 2032.

Mr Mack's sober assessment of the GM market conveniently coincided with the company firmly reiterating its rejection of takeover overtures worth an estimated $45b by US chemical and GM seed giant Monsanto.

"Monsanto has a strategic problem - it's primarily limited to markets in North and South America and they are limited to technology in the corn cotton and canola seed markets," he said.

In comparison, Syngenta had a diverse set of assets including wide international market penetration, particularly in emerging markets.

"They see potential for our seed business to grow, they know we are the best in crop protection and they want to buy Syngenta on the cheap," he said after announcing better than expected half-year sales of $US7.63b.

Total sales figure was down 10pc from a year earlier, but up 3pc when adjusted for currency swings.

Syngenta's half-year earnings before interest, tax, depreciation and amortisation (EBITDA) of $US2 billion fell 12pc on US dollar terms due to a depressed global grain market mood, notable drought conditions in Canada and Thailand, and particularly tough trading conditions in Eastern Europe, however, were still up 21pc when adjusted to a constant exchange rate value.

Andrew Marshall travelled to Switzerland as a guest of Syngenta.

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Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

Deregul8
3/08/2015 6:13:45 AM

Simply farmers reacting to falling grain prices by trimming their cost regimes. Not to mention in this country, it has been a far more compelling case to grow wheat, barley or oats this year. If there is indeed an El Nino spring ahead then you want to be producing cereals as the domestic basis has a history of going crazy when our crop is short. Oats has had a 3 in front of it all year and up until around 3 weeks ago noodle wheat was the feed grain of choice in WA? Crazy things can happen in cereal markets these days.
Mug
3/08/2015 6:38:09 AM

This is a brilliant science that has been abysmally managed. Greed and lies took over in the hunt for the mighty $. Each new strain is a new challenge to test to get it right . VERY expensive. So far resistant weeds is the biggest problem, that is apart from buyer resistance. The potential for a hideous mistake in the future is so huge that it should be taken out of private hands.
John Newton
3/08/2015 7:40:21 AM

Can't unravel fast enough
Jessica - Victoria
3/08/2015 11:22:44 AM

Yes ! In Europe, Hungary, Ukraine and Poland now grow GMO-free crops. Danube Soya promotes European non-GMO soya rather than imported GMO soy, which resulted in widespread health problems in Argentinian and Brazilian rural communities, due to mass spraying of glyphosate, now classed as a probable carcinogen by the World Health Organisation.
Hick from the sticks
3/08/2015 11:25:02 AM

Uptake in Australia has been more measured and not the frenzy that occurred in the North and South America. We have seen the problems caused in the US by an over reliance on one herbicide for in and out of crop weed control. RR Canola has been a very effective tool for farmers in our area to combat weeds resistance to Group A and B herbicides. We know that it will only remain an effective tool if used judiciously. So market dominance by GM in food grain markets is an unrealistic target.
Farmers friend
3/08/2015 1:56:46 PM

Watch Neil Young's 10 min documentary of a Farmer v Monsanto while US House of Reps votes on the Dark Act. Listen to the music which says it all! http://www.rollingstone.com/music /news/see-neil-youngs-monsanto-th emed-mini-documentary-seeding-fea r-20150723
wtf
3/08/2015 2:57:33 PM

So what % of research dollars public and private are getting directed towards GM? I'm guessing most of it. I just love it when the companies who develop a product get to test its safety and tell us its perfectly safe. How many undiscovered harmful proteins that "omics" miss? where are the epidemiological studies to validate claims of safety? I could go on, but our gov't hasn't got the fortitude to fight this battle.
newbroom
3/08/2015 3:58:23 PM

Looked at Monsanto today and shares show a 200% return over 10 years and regular dividends. I do not think that many people who are shareholders are stupid. Lots of scare campaigns; zealots and unproductive sector spend all their waking hours on it and forget that if we do not produce we go down the gurgler.
Bob Phelps
3/08/2015 10:45:12 PM

Most claims for future genetic manipulation - e.g. drought and salt tolerant crops, nitrogen fixation in grains, longer shelf-life food, food biofortified with micro-nutrients, etc. - will fail. Cut-and-paste GM techniques cannot transfer traits that depend on several genes. "GM technologies are generally only suitable for the single gene traits (RR & Bt) not complex multigenic ones,” says CSIRO's Dr Richards. Spending on GM R&D mis-allocates scarce public resources. After 30 years of waste, let's to move on to areas of farm and food research that show better prospects of success for all.
Geronimo
4/08/2015 7:46:46 AM

Newbroom, if you don't produce profitably you'll go down the gurgler.
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I went to the State barrier fence coastal - end yesterday - and was appalled at the state of
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The days of DAFWA having the bulk of GRDC funding in WA are long gone, they can't even
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In a domestic market situation I can see why this would be supported but in a 90% export market