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Volume 91 Issue 50 | p. 6 | News of The Week
Issue Date: December 16, 2013 | Web Date: December 13, 2013

Microbes Power Crop Alliance

Agriculture: Novozymes and Monsanto to merge crop biologicals businesses
Department: Business
Keywords: agriculture, seed coatings, microbes
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Microbial seed coatings can help crops such as corn absorb nutrients.
Credit: Novozymes
This is a photo of a corn harvest.
 
Microbial seed coatings can help crops such as corn absorb nutrients.
Credit: Novozymes

Enzymes producer Novozymes and agribusiness giant Monsanto are joining forces in the emerging business of agricultural biologicals. 

Novozymes has been building its microbe business through acquisitions for the past seven years. In contrast, Monsanto launched its effort just last year. By joining forces, the companies say, they can develop better products more quickly than either could alone.

Monsanto is the latest traditional seed and crop chemicals firm to scramble to obtain microbial know-how. In 2012, BASF spent $1.0 billion to buy Becker Underwood for its biological seed treatments. In smaller deals that year, Syngenta acquired Pasteuria Bioscience, maker of a nematode-killing microbe, and Bayer CropScience spent $425 million to buy AgraQuest, another biological pesticide company.

The agreement between Novozymes and Monsanto calls for the two to combine their current products and R&D pipelines. Novozymes will lead manufacturing efforts, and Monsanto will run field testing, registration, and marketing. Novozymes will receive a $300 million payment from Monsanto in recognition of the capabilities it brings.

In a conference call with analysts, Monsanto CEO Hugh Grant acknowledged playing catch-up, but he argued that this deal trumps past ones. “None are as compelling and far-reaching in ability as what we’ve done today,” he said, adding that the alliance “immediately elevates microbials as the next major platform in agriculture.” Grant stressed that microbes can be developed more quickly, and for lower cost, than biotech seeds.

Novozymes sold $120 million worth of microbial products in 2012. An example of the company’s offerings is a line called JumpStart. Made with the soil fungus Penicillium bilaii, it helps crops such as corn increase their uptake of phosphate from soil and fertilizer.

“It’s a small business today, but there is a big market,” Novozymes CEO Peder H. Nielsen said on the conference call. Sales of biological products from all suppliers last year totaled $2.3 billion and have been growing by as much as 16% annually, he said.

 
Chemical & Engineering News
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