Ag giants will team up in 'game-changing' alliance - Omaha.com
Published Wednesday, December 11, 2013 at 1:00 am / Updated at 3:31 am
Ag giants will team up in 'game-changing' alliance

Two international agricultural giants are forming a cross-Atlantic alliance to speed the use of bacteria, fungi and other “biologicals” by farmers.

The two partners in the proposed BioAg Alliance are Novozymes, a Danish company with an enzyme factory in Blair, Neb., and Monsanto Co., the St. Louis-based agricultural corporation. The partnership is subject to anti-monopoly review by international regulators.

Together, the two plan to find, produce and sell naturally occurring microorganisms aimed at making grain, fruit and vegetables more bountiful and agriculture more sustainable. The alliance is intended to boost the companies' research and commercialization of biology-based farm products.

To meet world demand, farmers must produce more food in the next 50 years than they have in the last 10,000 years, said Novozymes CEO Peder Holk Nielsen, while using the planet's land, water and other resources wisely.

Harnessing the beneficial effects of microorganisms has “an untapped potential for biological solutions for agriculture,” Nielsen said. “These products do work. ... I believe we are rewriting agricultural history.”

The alliance will have a “jump start,” he said, because both companies have been working in the field and have products already in the market.

“This is an exciting day for farmers around the world,” said Robb Fraley, Monsanto's chief technical officer, during a conference call with reporters. “I really think it's game-changing.”

Farmers need advances in breeding, biotechnology, agronomy and farming systems, he said, to meet the needs of a world that adds 200,000 people a day and is expected to reach 9.6 billion by 2050, while preserving the land's ability to produce food.

The alliance is to provide a platform to advance biologicals as an added boost to production, Fraley said.

Novozymes' work in the field is more advanced, with seven years of research experience. Once the regulators approve, Monsanto would pay Novozymes $300 million to even out the value that the two companies will bring to the alliance. They will share 50-50 in its profits.

Both Novozymes and Monsanto have research divisions that will work to find beneficial organisms, testing them to see what properties they can bring to the field. Novozymes brings to the alliance small-scale fermentation and large-scale production capability, while Monsanto has world-class field testing systems and marketing networks.

Novozymes' main business is making industrial enzymes that enhance such processes as fermenting grain into alcohol for fuel. The company's plant in Blair will continue its focus on enzymes and won't be affected by the new alliance.

Novozymes' biologicals production facilities are in Wisconsin, Virginia, Canada and Argentina and can handle the expected increase in volume, company officials said.

But Nielsen said farmers in Nebraska, Iowa and elsewhere in the world stand to benefit from biological advances that increase yields and preserve resources.

For example, one existing Novozymes product coats seeds with a fungus that grows along the plant's roots and produces phosphates, promoting growth and saving chemical fertilizer.

Another microbe triggers a molecule inside the plant that helps its roots take up water and nutrients, making the plant stronger and healthier.

Thomas Videbæk, executive vice president and head of business development for Novozymes, said that because the organisms occur in nature, biologicals can be used in parts of the world that restrict genetically modified organisms.

“Microbes are being moved around the world all the time,” Videbæk said. “To the best of my knowledge, there has not been any adverse effect that's been described today.”

In some cases, biologicals can replace chemicals such as herbicides, pesticides or fertilizer, and in other cases work alongside them, he said. In any case, he said, the goal is to increase yields and improve nutrition through sustainable production.

Contact the writer: Steve Jordon

steve.jordon@owh.com    |   402-444-1080    |  

Steve covers banking, insurance, the economy and other topics, including Berkshire Hathaway, Mutual of Omaha and other businesses.

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