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DuPonts Pioneer Hi-Bred Looks to Grow in Africaqrcode

Sep. 16, 2010

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Sep. 16, 2010

The head of E.I. DuPont de Nemours & Co.s agribusiness division sAId Wednesday that a deal to purchase a majority stake in South Africa-based Pannar Seed Ltd. will expand the companys footprint in sub-Saharan Africa and is key to increasing global food output.

Pioneer Hi-Bred, a DuPont subsidiary, announced the deal Wednesday. The biotech seedmaker sAId the deal should close in early 2011. Terms of the deal were not disclosed.

The sharing of biotech seed technology will ultimately boost yields, and the deal will allow Pioneer to reach more farmers on the continent, Pioneer President Paul Schickler sAId in an interview. He sAId that global agricultural productivity must double in the next 40 years to meet rising demand.

"The greatest contributors to that doubling will be those areas of the globe [that] are least efficient in productivity today," he sAId.

Schickler sAId that while some corn growers in South Africa can attAIn yields approaching U.S. levels, African yields generally are only 20% of those in the U.S.

The companys focus with the deal remAIns primarily on corn and soybeans, Schickler sAId, though he added that the company continues to invest in research on wheat biotech crops and also see great potential for higher rice yields in Asia.

Pannar was the first company to introduce corn hybrids into South Africa, in the 1960s. It has opened operations in the U.S. during the past 10 years, but Schickler sAId the deals greatest opportunities are in Africa.

Pioneer, based in Des Moines, Iowa, has gAIned U.S. market share each of the past two years, Schickler sAId. Its chief rival, St. Louis-based Monsanto Co., has struggled amid a farmer backlash of pricing of its premium products.

Pioneer has not seen that backlash, Schickler sAId, as the companys strategy has been to "price for value."

He added that backlash agAInst Monsanto has been less a pricing issue than a "product performance issue." Monsanto has announced its rolling back the premium on its top seed products in an effort to win over farmers.

Schickler sAId Pioneers products are "meeting expectations" in the current growing year.

Overall, U.S. corn yields have been below expectations so far this year.

"If theres any disappointment, its weather-related," he sAId.


Source: bloomberg

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