"Much of our customers success has been inherent on the seed industry's ability to provide a diverse line of products and services," said Charles S. Johnson, chairman, president and chief executive officer of Pioneer. "We know our customers have some interest in glyphosate resistance in corn, but not if it could limit their ultimate choices for other more valuable traits, both agronomic and end-use, in the future.
"The key point is this," continued Mr. Johnson. "One trait, especially resistance to a herbicide, should never be the sole criteria for hybrid selection. Farmers understand they must look at the total package of traits that make up a seed product before they buy it. A single herbicide resistance is of limited value, especially since there are already numerous effective choices for weed control in corn. The value of many other future traits will far offset any savings associated with resistance to any single herbicide."
Pioneer added that while the terms offered to them for Roundup resistance were unacceptable, the Company does feel glyphosate resistance has some agronomic value to customers. Pioneer would commercialize corn hybrids with glyphosate resistance if it could gain access to the trait under conditions it deemed favorable for the farmer.
"We will continue to explore opportunities to develop or access resistance to glyphosate herbicides," said Mr. Johnson. "That includes a willingness to try resolving the key issues with Monsanto.
"We must take a bigger view when we evaluate the value of resistance to any single herbicide," stated Mr. Johnson." Pioneer is on the verge of opening up the potential for enhanced disease and mold resistance, resistance to a wider range of insects and many other significant agronomic traits. We are most excited about traits that will add value to grain itself, improving nutritional values for feed and food. This work can significantly enhance and expand the markets and value of corn around the world."
Pioneer Hi-Bred International, Inc. is the world's leading supplier of agricultural genetics and is a leading integrator of agricultural technology. Headquartered in Des Moines, Iowa, Pioneer develops, produces, and markets a full line of seeds, microbial products, and services to farmers, grain processors, and other customers worldwide.
Attached is the letter sent by Pioneer to its customers.
November 13, 1997
Dear Pioneer Customer:
After negotiating with Monsanto for more than two years, Pioneer has rejected the terms and conditions Monsanto Co. is currently demanding for access to Roundup herbicide resistance in corn. Pioneer currently has no plans to commercialize corn hybrids with resistance to Roundup.
Pioneer's primary objective is to offer you products that sustainably provide more value to your operation. It is vitally important that farmers have the ability to access appropriate new technologies. In our opinion, Monsanto's demands would limit our customers' ability to access a complete package of product traits and technologies.
Terms outlined by Monsanto for technology rights to develop and commercialize corn hybrids with resistance to Roundup required that we charge a substantial technology fee to our customers. In addition, we concluded that Monsanto wanted to ultimately determine what additional traits could be included in those products and the price to be charged to the farmer for those traits.
After carefully considering this possibility, it is clear this is not in the long-term best interest of anyone in agriculture. Agreeing to Monsanto's conditions could significantly limit the number of traits, genes and technologies that we would be able to provide to you from a wide range of other sources. We felt it would also hamper our ability to effectively invest in future research and other new technologies.
We believe corn growers do not want a single company in a position to control a large number of the new traits, or combinations of traits. There are numerous choices in weed control in corn. The value of many other value-added traits will far offset any savings associated with resistance to any single herbicide. Even if the cost of Roundup herbicide goes down, the potential limitations in product development and future partnership decisions... and the substantial technology fee demanded by Monsanto, quickly erases those savings. Effective and efficient weed control is essential in a good corn growing program. But once a herbicide kills a weed, it offers no other value to the plant or the grain.
Make no mistake, glyphosate resistance does have the potential to provide some agronomic value in corn. We are exploring every reasonable opportunity to develop or access resistance to glyphosate herbicide products. Because of our strong market position we believe we can obtain that access, while retaining the ability to offer farmers appropriate choices in new technology.
Our industry must take a much bigger view when we evaluate resistance to any single herbicide. We are on the verge of opening up the potential for enhanced disease and mold resistance, resistance to a wider range of insects and many other significant agronomic traits. We are most excited about traits that will add value to grain itself, improving nutritional values for feed and food. This work can significantly enhance and expand the markets and value of corn around the world.
We are willing to continue working with Monsanto to resolve these issues. We will continue to expand our offering of Pioneer(R) brand soybeans with the Roundup Ready(1) gene as well as Pioneer hybrids with the YieldGard(2) gene. In fact, we are very open to discussing any opportunity to add value to our products that meets customer needs in seed crops. However, the terms and conditions that come with these traits must allow the flexibility to keep up with constantly changing market conditions, and also be reasonable enough to allow growers to share in the full value that new traits and technologies will offer.
Our position is based on some very basic beliefs:
There is room for everyone to benefit from new technology: growers, companies, sales representatives and dealers, end-users, consumers and stockholders. Pioneer is committed to finding strategies and building relationships that allow everyone a reasonable opportunity to participate, and to compete fairly and openly in the marketplace.
That is what "Technology That Yields(R)" is all about.
Charles S. Johnson
Chairman Pioneer Hi-Bred International Inc.
(R), SM TM Trademarks and service marks, registered or applied for, of Pioneer Hi-Bred International, Inc., Des Moines, IA, USA 1997 PHII.
(1) Registered trademark of Monsanto Company.
(2) Registered trademark of, and used under license from, Monsanto Company. SOURCE Pioneer Hi-Bred International, Inc.