Brazil officials clash with Monsanto over soy seed

Brazilian officials, nudging higher forecasts for the domestic soybean harvest, reopened the debate over Monsanto's Intacta soybean variety, flagging "difficulties in marketing the seed" in some areas.

The Conab crop bureau said that in Rio Grande do Sul, Brazil's third-ranked soybean producing state, it was "common" for farmers to use "modern varieties" of seed, offering a blend of beneficial traits.

This "should influence productivity", the bureau said, estimating a 1.3% rise to 2.64 tonnes per hectare in the state's yield this year, and a 6.3% increase to 3.03 tonnes per hectare in the national average result.

However, the  cutting edge Monsanto-developed Intacta genetically modified variety had been "facing difficulties in marketing", Conab said, citing "the price of the royalties charged by the companies that developed technology".

"In many cases, this is higher than the expenditure on insecticides used to fulfil the same role" in controlling pests.

'Off to a great start'

The comments follow market talk last year that Intacta had not been faring as well as Monsanto hoped, with OTR Global in September cutting its rating on the seed giant's shares to "negative" from "mixed", citing reports from seed dealers in Argentina and Brazil of weaker-than-expected sales of the cutting edge biotech seed.

However, Conab's assessment contrasts starkly with Monsanto's own reports on Intacta, with the group on Tuesday saying that South American sales were poised to beat a target range of, in area terms, 10m-12m acres.

"We are off to a great start with Intacta," Brett Bergemann, the Monsanto chief operating officer told investors.

"Our value proposition held as growers embraced the technology across multiple growing regions in South America."

Hugh Grant, the Monsanto chief executive, said that "the buzz in the market has really lifted interest across the whole range" of Intacta products, which were the first seeds that the group developed specifically for the South American market.

'Farmers surprised'

Conab also offered some reassurance on pests, which have appeared a growing problem for Brazilian farmers, promoting moves against the planting of second-crop soybeans, and keep a bigger intra-crop period, so discouraging caterpillars and diseases.

In Mato Grosso do Sul, soybeans are enjoying a "below-normal" incidence of pests and diseases, "surprising farmers", the bureau said, flagging the role of weather in depressing infestations.

"The biggest problem has been weeds," such as horseweed, or Conyza, against which "chemical control has not been effective".

Monsanto chief technology officer Robb Fraley on Tuesday flagged the potential for continuous cropping to promote infestations.

"Clearly in the South America environment where you don't have the cycle between crops and the winter cycle, the evolution of pests is a key challenge," Mr Fraley told investors.

"That is why I always emphasise our focus on not only the success of Intacta but the second-generation Intacta that has another mode of action.

"Similarly in corn, having multiple above and below ground technologies will be key for durable insect control."

Crop upgrades

Conab's comments came as it nudged higher by 100,000 tonnes to a record 95.9m tonnes its forecast for Brazil's soybean output this year, saying rains last month had been favourable in most major growing areas, with the exception of parts of Parana.

The estimate for corn output was lifted by 400,000 tonnes to 79.1m tonnes, although this assumes 9.19m hectares of the grain sown as a follow-on, safrinha crop, for which the sowing window remains open until late February.

Many observers believe lower corn prices will depress safrinha sowings to levels well below those of last year.

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