Print This PageQ&A with Kevin Eblen
Transcript: Q&A with Kevin Eblen
Why is Monsanto purchasing Delta and Pine Land Company?
We’re excited first of all that this day has finally come together, where
we get the opportunity to bring Delta and Pine Land and Monsanto together. What
I think a lot of your listeners may not realize is that today Monsanto is 100
percent focused on agriculture, as is Delta and Pine Land. So we have great
capabilities around technology, particularly in biotechnology and breeding,
and the chance to combine that with the cotton expertise and genetic pool that
Delta and Pine Land has is very exciting to us as we look to the future.
We’re very excited to finally have the opportunity to bring our two organizations together. If you look at it from Monsanto’s perspective, we are a company today that is 100 percent focused on agriculture. That’s all we do. As well, if you look at Delta and Pine Land, they’re a company that’s 100 percent focused on agriculture in what they do. So, it’s a natural fit to bring the two together. From Monsanto’s standpoint, for about the last 10 years we’ve declared cotton as a very strategic and core crop in our business, and that’s where a lot of our research and development investments have gone. So bringing the two together makes complete sense from our standpoint to marry their leading genetics in cotton with our biotechnology capabilities.
How will the US cotton grower benefit?
We have for about the last 10 years focused as cotton being one of our core,
strategic crops for Monsanto. We have great capabilities in biotechnology. Delta
and Pine Land has a tremendous germplasm pool of cotton genetics, and what
it really means for growers at the end of the day is, as we work on our second,
third and fourth generations of biotechnology traits, it’s really about
speed and efficiency with which we can get those products into the hands
of the cotton producer. So there’s a given level efficiency that,
when we combine the genetics of Delta and Pine Land with our biotechnology
traits, will mean faster and quicker for the grower.
Any time you have a genetics company separate from the biotechnology provider, there’s a given level of inefficiency that exists in bringing new products to the market. So fundamentally what it means from a producer’s standpoint is it’s all about speed and efficiency, and as we look at our second, third and fourth generations of biotechnology products like drought-tolerance, ligus protection, the list goes on and on, to have those and the genetics the grower wants faster and quicker is certainly an efficiency that we need to bring to the industry.
Explain how this acquisition shows Monsanto's commitment to the cotton
industry.
The focus really that we need in the U.S. industry is on where is this industry
going in the future, and as I’ve been around and talked with a lot of
cotton producers in the U.S. right now, growing cotton is certainly a challenge
for the U.S. producer today. So we need innovation in cotton in a big
way. We need to get focused on what the needs of our foreign markets
are, and combining Delta and Pine Land with Monsanto and our technical capabilities
is going to allow us to get focused on what the needs of those foreign consumers
are.
How can this help US growers be
more competitive in the global market?
If you go back about 10 years ago, about 70 percent of the cotton that we produced
in the U.S. was actually spun in the U.S. Today that’s a complete inverse
from where it used to be, and 70 percent of the cotton we produce is going
to mills outside the U.S. market. We need a whole lot of technology and
focus on the output side of cotton as a fiber, and we need the opportunity
to combine the genetic side with the biotechnology side to see what we can
produce from a lint-quality standpoint that the consumer’s ultimately
going to want.
We absolutely believe in the long term this is going to make the U.S. cotton producer more competitive in a global market. If you go back 10 years ago, about 70 percent of the cotton we produced in the U.S. was spun in the U.S., and that is completely inverted today. Delta and Pine Land Company is a company, 90 percent of the earnings of that business is right here in the U.S. A lot of what we’re motivated by here is keeping U.S. cotton competitive in that global system.
The listeners to this program know better than I do about how challenging it is to be a cotton producer in the United States in this current environment. We really believe that from an industry perspective we need a lot more focus and attention on the output side of cotton from a fiber perspective. About 70 percent of the cotton that we produce today in the U.S. is being exported, and we need a lot of investment on research and development on taking our capabilities in biotechnology and breeding and applying that on Delta and Pine Land’s germplasm pool from a fiber development perspective. And we believe for the grower sitting in the U.S., that’s going to be a positive thing for us to work on in the years ahead.
Tell us about the drought relief program.
Drought relief was a program that we actually piloted as part of our Roundup
Rewards program in 2006, and we made a commitment that we’re going
to pilot it again in 2007. It’s really for the West Texas, Oklahoma,
Kansas producer who is having a lot of trouble with drought. The way
it works is that a farmer plants our technology, and if in that geography
they do not receive 150 pounds of lint or more per acre, then we refund their
technology [fees]. Now, the real thing that we are looking at longer
term is, is there a way to expand that concept beyond just that geography
in the west to the rest of the Cotton Belt?
How about the issue of only launching new traits in countries where
Monsanto can be compensated for use of its technology?
We’ve done probably no less than about 20 listening sessions in the last
five months with growers, and this is an issue that continues to come up. We
made a commitment to the U.S. cotton producer at the Beltwide Conference that
when we look at launching new technology traits in the future, there’s
really three criteria for foreign markets, three criteria that have to be met
before we release those technologies. First is that we have to go into
a situation where there’s a scientific-based regulatory system to review
our trait technologies. Second, those foreign markets have to respect
our intellectual property rights and then, third, we want to be paid every
time that a grower in those foreign market uses our technology and have the
capabilities to fairly set our price based on the value our traits are delivering
to those foreign markets.
How can this acquisition help deliver the next generation of trait
technologies faster for producers to help them be more competitive?
Delta and Pine Land is the world leader from a genetics standpoint in cotton. Monsanto
is the world leader, undoubtedly, from a biotechnology standpoint. Anytime
those two organizations, or those two pieces, are separate, there is a bit
of inefficiency that exists. Bringing them together and using our technology
capabilities, both breeding as well as biotechnology, to mine their germplasm
for the fiber characteristics that we need to enhance U.S. cotton globally
is certainly going to be a benefit of bringing the two together.
How will this acquisition affect D&PL growers this planting season?
Number one business at hand for all of us is that we’re right on top
of the planting season, and the last thing that we want to do is disrupt
our grower customers in the planting period. We have given clear direction
to the Monsanto organization and Delta and Pine Land organization that it’s
business as usual for now. We also made a commitment to our own internal
organization that within 30 to 60 days we’re going to come back and give
them more information about what it’s going to look like moving forward.
How will D&PL operate as part of Monsanto?
Delta and Pine Land is a company that has a rich and very long heritage and
presence in Southern agriculture, and from a Monsanto perspective, we recognize
that and want to capitalize on that. They have great customer relationships,
and we believe that there is a lot that we as an organization from Monsanto’s
perspective can learn from Delta and Pine Land. More details will be
coming in 30 to 60 days, but our plans are to name our business in the Southern
U.S. Delta and Pine Land, and we will actually manage the business out of
their Scott, Mississippi, and Memphis, Tennessee, locations.
First of all, Delta and Pine Land is a business that has been operating for nearly 100 years in Southern agriculture, and from Monsanto’s perspective, we want to capitalize on the relationships that Delta and Pine Land has in agriculture with producers in that Southern part of the U.S. They have great customer relationships, and there is a lot we feel we can learn from that. Additionally, from a standpoint of where are we going to run and manage the business, we will maintain their operations in Scott, Mississippi, and Memphis, Tennessee, and essentially run our Southern business from there under the name Delta and Pine Land.
Explain the issue of technology pricing and what Monsanto is doing
to address that concern.
That is one of the key concerns that growers have brought up to us as we’ve
gone around to about 20 different sessions with them over the last several
months. The commitment that we made at Beltwide was that we were going
to be a lot more transparent in the way that we go about our pricing, how it
works and essentially why we do it the way that we do it. Key to that,
where we’re at today, is a very different state to where we’re
going to be at in 10 to 12 years when we have five or six technology traits
on a bag of cotton seed. From a pricing perspective alone, we want to
have great dialogue and a lot more dialogue with our U.S. cotton producers
about how we do it and why we do it that way.
How does Monsanto reinvest in terms of further R&D for new traits
and technology?
We’re as a company investing about 700 million dollars in research
and development. Part of our equation on pricing is that we want growers
to broadly adopt our technology traits, and we do price for the value that
they deliver the geography where they’re sold. Second to that is
an equitable return on the investments we’re making continue to fuel
that research and development pipeline.
