Monsanto cutbacks hit Plant Health Care

Annual losses at Plant Health Care (PHC) have soared elevenfold to $7.6 million (£4.75 million) as an overstocked customer slashed purchases. The AIM quoted company which develops natural products to boost crop yields and combat plant diseases, saw turnover plunge 57 per cent to $7.1million last year. Chief executive John Brady blames much of the shortfall on problems at US agrichemical group Monsanto, which heavily overstocked in 2009 and drastically cut purchases in 2010.

This hit sales of Harpin, one of PHC's flagship products, which improves agricultural yields by provoking plants' own defence mechanisms against blights and other assailants. Brady says Monsanto has sold half its excess stock to a leading US seed treatment distributor, Direct Enterprises, which has undertaken to buy the rest by the end of the year, thus enabling Monsanto to come back into the market, where he argues Harpin should be able to make 30 to 40 US cents an acre profit in soya beans alone.

PHC manufactures Harpin mostly in China, where it also makes much of its Myconate product, which works through fungi in soils to expand plants' roots by up to 1,000 per cent, thus renabling them to find water and thrive in arid or drought conditions. Brady, who cites 20 to 40 per cent crop yield gains from Myconate, cites fungicide deals the company has done with multinational sustainable agribusiness Syngenta and other groups.

According to Brady, PHC has £11.3 million cash, enough for three years' development, and is developing a new, more 'crop-specific', generation of products. He argues Monsanto will be able to start buying again by the first half of next year and says PHC expects to start chalking up profits in 2013.

PHC shares have plunged over the past year from 239p to 62p, up 2.28p today and valuing the company at £32.8 million. Given current concern over future food supplies, they could reward a strong-nerved recovery punt.

According to Brady, PHC has £11.3 million cash, enough for three years' development, and is developing a new, more 'crop-specific', generation of products. He argues Monsanto will be able to start buying again by the first half of next year and says PHC expects to start chalking up profits in 2013.

PHC shares have plunged over the past year from 239p to 62p, up 2.28p today and valuing the company at £32.8 million. Given current concern over future food supplies, they could reward a strong-nerved recovery punt.