BASF sees strong growth tied to GMO crop traits

Reuters / Global conglomerate BASF is rolling out a series of new plant science and plant protection products for farmers in the United States as it aims to increase its share of fast-growing markets, executives of the German chemical giant said.

South America is also a target as BASF shifts its agricultural emphasis — and millions of dollars in research and development — away from Europe to markets more accepting of the genetically modified crop technology it says will be key to food security as world population grows.

The plant science division is racing to identify new genetic traits for crops and catch up with rivals that already have a strong foothold in U.S. and Latin American agriculture. Though essentially starting from zero, the unit is partnering with others in the industry and projects it can capture “gross trait sales before partner share” of $1.8 billion by 2020.

“(Plant science) is still a young industry,” Peter Eckes, president of BASF Plant Science Co., told Reuters this week. “This is still a growth industry.”

Eckes said the global market for genetic traits for crops was pegged at $50 billion by 2025.

“Our responsibility is to grow this field,” Eckes said. “If we do, we’ll make a very meaningful contribution to BASF’s bottom line.”

Small share

BASF had 2011 sales of 74 billion euros. Roughly six per cent of that came from the agricultural solutions businesses, the smallest contribution of the various BASF operations.

But BASF, whose chief businesses are in chemicals, plastics and oil and gas, is spending about 36 per cent of its research and development budget on plant biotechnology and crop protection.

And BASF executives said they were using the company’s broad scientific base in ways that should help increase gains from both plant science and crop protection units.

As part of that effort, BASF is moving the headquarters for its plant science unit from Limburgerhof, Germany, to Raleigh, North Carolina. The unit will focus on the North American, South American and Asian markets.

Moving headquarters

BASF has no plans to enter the seed market, focusing on traits only. The company has tightly aligned itself with U.S.-based Monsanto Co., the world’s largest seed company. The two are developing genetic traits to improve the yield ability and stress tolerance of key crops like corn and soybeans. In the near term, the partners are focusing on a drought-tolerant corn that is in field testing in the United States this year and due for commercial release in 2013.

One of the company’s most high-profile partnerships with Monsanto is the development of a new herbicide-tolerant cropping system that features a dicamba-based herbicide that can be sprayed over soybeans, corn, cotton and canola genetically modified to tolerate the herbicide. Soybeans will be introduced first, probably by 2014, company officials have said.

BASF made its application to the U.S. Environmental Protection Agency in April for the “Engenia” herbicide it has developed. The herbicide is effective on more than 100 annual broadleaf weeds, the company said.

The project comes when Monsanto’s Roundup Ready cropping system is failing as millions of acres of farmland are overrun with weeds that have grown resistant to Roundup.

Critics say the new dicamba cropping system will only make weed resistance worse in the long run by increasing the amounts of dicamba used.

Dicamba has a history of volatile dispersement into the environment, and has been known to drift on to neighbouring farms and unintentionally harm crops. Critics fear that damage will rise as well.

But BASF has “high confidence” the new dicamba herbicide formulation will be approved and will help farmers control weeds, said Markus Heldt, president of the crop protection division, which reported sales of 4.1 billion euros in 2011.

The newly formulated herbicide has minimized volatility, Heldt said in an interview this week.

“We are a responsible company,” said Heldt. “Dicamba is well known. It has been on the market 50 years. We are not playing with a chemistry that is dangerous.”

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