BASF collaborates with Monsanto for biotech crop developing

The worlds largest plant biotechnology collaboration just got larger. Yesterday, BASF and Monsanto Company (NYSE: MON) announced an expansion of their joint efforts to develop higher-yielding and stress-tolerant crops to include a fifth crop, wheat. In addition, the companies are increasing their investments in the collaboration, reflecting the strong leads and commercial prospects in the collaborations early work. The collaboration that was established in 2007 includes the following crops: corn, soy, cotton and canola. In the original collaboration, the two companies dedicated a joint budget of potentially $1.5 billion; the new agreement will result in a potential additional investment of more than $1 billion by the companies over the life of the collaboration.

"Our yield and stress collaboration with BASF already has brought forth so many promising leads, the first of which well see on farm in coming years with our first-generation drought-tolerant corn," said Robb Fraley, Monsantos chief technology officer. "When I look at the promise Monsantos unmatched pipeline holds, and the potential for the discovery work in progress at both our companies, todays announcement is excellent news for farmers around the world."

"BASF Plant Science is dedicated to discover genes for maximizing yield in crops that will be brought to farmers through partnerships. The collaboration with Monsanto was not only the first agreement that we entered, it also represents our most significant partnership, covering several large row crops," said Peter Eckes, President of BASF Plant Science. "The expansion of our partnership reflects the fit between the two companies. The yield increases that we have achieved together in the field so far give us confidence that we can do more in our collaboration crops, which now include wheat."

The terms of the original collaboration continue, with each company maintaining independent trait discovery programs, nominating from those programs specific candidate genes to advance for accelerated joint development. Projects will be jointly funded through each phase of development, and products that emerge from the joint development will be commercialized by Monsanto. The profits associated with commercialized products will be shared, with Monsanto receiving 60 percent of net profits and BASF receiving 40 percent of net profits.

With regard to the addition of wheat to the collaboration, the partners will initially focus on developing biotech products for the North American and Australian markets. The first enhanced yielding wheat product is expected to reach the market after 2020. This product will be followed by successive generations of higher-yielding wheat varieties.

Wheat is the worlds second largest commodity crop after corn and demand is expected to grow as millions of people in developing countries such as China and India become more affluent and increasingly add bread to their traditional rice-based diets.

According to some estimates, the worlds booming demand for food, feed, fibers and fuel will require a doubling of the worlds agricultural production. BASF and Monsanto are strongly committed to providing farmers with plant biotechnology solutions that allow them to increase output while remaining good stewards of their land. After three years of jointly developing products that, in field testing, have shown significant yield increases in corn, soy, cotton and canola, the companies are confident that they can also help farmers meet the growing long term demand for wheat.

Around 2012, the companies expect to introduce the worlds first genetically modified drought-tolerant corn, pending regulatory approvals. Drought-tolerant corn, the first product emerging from the companies joint pipeline, is designed to provide farmers yield stability during periods of low rainfall by mitigating the effects of water scarcity on corn plants. Field trials for drought-tolerant corn conducted in the Western Great Plains met or exceeded the target yield enhancement – an increase of roughly 7 to 10 bushels per acre over the average yield of 70 to 130 bushels per acre in some of the key drought-prone areas in the United States.