Sitting here, at one of the world's premier agricultural research centers run by the Monsanto corporation, it's hard to miss the point. World population will outstrip food supply unless crop production increases.
To Monsanto, the solution is equally obvious: Biotechnology will reengineer today's crops to meet the need.
As part of the tour at Monsanto's research facilities in suburban St. Louis, visitors view a strange four-minute film. There is no plot, no dialogue. A black map depicts world population growth while a clock ticks off the years starting in AD 1.
Not much happens for the first 17 centuries. White dots (each representing 1 million people) appear slowly. Then, they begin to pockmark the map with increasing frequency. By the time the clock stops at 2020, the map, once nearly all black, is almost completely white.
To help feed the world, Monsanto and other biotech giants are tearing up a centuries-old farming system and transplanting it in a brave new world where a handful of global corporations, not farmers, set the agenda. In years to come, a single company or corporate network may oversee the entire life cycle of foods, determining which ones get created at the lab and how they're delivered to the dining-room table.
Consumers in the new millennium will likely have enough food at reasonable prices. But no one knows the technology's unintended effects. For farmers, they represent the biggest potential change in agriculture since early man first dropped seeds into the ground.
"We're at the stage that the automobile was in 1900 when the Model T was just coming onto the market," says David Wheat, president of the Bowditch Group, a Boston consulting firm serving agribusiness and the food industry. "We're going to have this tool that will allow us to improve agricultural productivity and thus keep the costs low.... [But] it's hard to know where this is going to go and the impact it will have on society."
Just as the mass-produced car brought unimagined mobility to common people, the biotech revolution in agriculture promises dramatic benefits. Already, farmers are planting corn genetically altered to ward off pests without chemicals and soybeans impervious to weed-killing herbicides. Next to hit farm fields: crops bioengineered to be more nutritious, less fattening, and more readily digestible by livestock so that bad things, such as phosphorous, don't enter the waste stream and pollute the environment (see story left).
Grains that taste like meat
Looking farther down the road, scientists predict grains that taste like meat, cotton that grows in designer colors, and plastic that is biodegradable. Pharmaceutical companies, which are playing an increasingly important role in the seed business, envision medicine-carrying foods that ward off human diseases by the simple act of eating. "The potential is enormous," says Carl Eibl, president and chief executive of Mycogen, an agricultural biotech firm 70 percent owned by Dow Chemical. "You're going to have a very rapid delivery of the technology globally. If Dow develops genes for improved protein expression in plants, you'll have those genetics delivered in Brazil, Asia, and Africa at the same time as in the United States."
Some critics and organizations such as Greenpeace have long worried that by slipping new genes into common plants, scientists will inadvertently create a mutant monster and environmental catastrophe. So far, that hasn't happened.
Now, critics worry about the technology's economic impact. "There will be a few firms that really call the shots on that whole thing," says Bill Heffernan, professor of rural sociology at the University of Missouri at Columbia. "Before long, they'll tell the farmer: 'We won't buy your product unless you use that seed.' " A few big farms will thrive, he predicts, but most of the small ones will disappear.
Land use dramatically changed
"Not only will we eliminate the vast majority of farmers, we're going to eliminate the [small] agribusinesses," Prof. Heffernan adds. "What are we going to do with the land between the cities? Who's going to look after it? What about rural communities? I'd raise those as questions that need to be debated."
Other observers foresee a different scenario. "The larger farms are going to be in a stronger position,"says Dean Cavey, president of AgriCapital Corp., a New York investment-banking firm specializing in agribusiness. "But I think there's still a role for the smaller farmer to play."
As Mr. Cavey sees it, farmers of all sizes will be able to contract to grow specific boutique crops for a network of agribusinesses. A cereal company requiring specific traits in corn would hire Monsanto to engineer it and a grain company to supply it. The grain company would contract with farmers to raise the crop, selling them the seed and buying their harvest.
This type of system would turn today's traditionally independent grain farmers into corporate subcontractors. Subcontracting is already common in animal agriculture. Most of America's poultry is raised that way, and it's increasingly common in pork production. Applying it to the notoriously volatile grain business would all but complete a dramatic transformation in how the United States raises its food.
"We're going to see agribusiness start to look much more like a conventional US industry," Cavey predicts. Indeed, the seed business is already rapidly consolidating around a "Big Three" of the industry. Pioneer Hi-Bred International, based in Des Moines, Iowa, remains the industry leader in the biggest crops: corn and soybeans. Its research and development efforts got a big boost last year when chemical giant DuPont bought 20 percent of the company for $1.7 billion, creating a research alliance and a separate joint-venture seed company.
Monsanto, once an old-line chemical company best known for its Roundup herbicide, has rapidly moved into the No. 2 spot with a flurry of high-profile seed and biotech acquisitions. Its plans to merge with American Home Products, one of the world's largest research-based pharmaceutical and health-care products companies, would create a $96 billion life-sciences juggernaut. (Because that deal is not complete, Monsanto officials declined to be interviewed for this story.) No. 3 Novartis is the result of another megamerger - between Swiss drug and chemical giants Sandoz and Ciba-Geigy.
Analysts expect more consolidation as other companies move in. For example, Dow Chemical plans to buy up the rest of Mycogen. AgrEvo, a German agrichemical company, has made several biotech and seed-company acquisitions. So far, France's Rhone-Poulenc remains on the sidelines, analysts say.
"The players want to be integrated from the lab bench through to the farmer," says Mr. Eibl of Mycogen. That way, they can control the technology and capture the value all the way to the delivery of seed to the farm, he adds.
While Pioneer covers its R&D costs by selling its own seed, Monsanto is licensing its technologies broadly to other seed companies. It makes its money by licensing fees as well as a new "technology fee" that farmers pay with each bag of Monsanto-enhanced seed they buy. Local seed companies grouse about having to collect the fee for the biotech giant, but they're generally upbeat about their business prospects.
Boutique seed farms will flourish
"[The biotech industry] needs the smaller seed companies because of our close relationship to the farmer," says Frank Thorp, former president of Thorp Seed Company in Clinton, Ill. "Our role will be as the ... conduit for their technology."
In fact, despite dire warnings that the giants would trample the small companies, the opposite has happened, reports Bill Freiberg, editor and publisher of Seed & Crops Digest magazine. "Most seed and seed-equipment companies we talk to are booming, having their best years ever." Mr. Freiberg's own magazine notched more ad sales in a June issue than at anytime in its 60-year history.
"Nobody can do this alone anymore," says Dave Knau, Pioneer's sales communications manager. So in addition to buying up companies, the big players are furiously cross-licensing technologies and creating joint ventures to get access to new tools and genetic resources. Pioneer alone has nearly 1,500 working arrangements, joint ventures, and research partnerships with other players. Technology is pushing this corporate realignment. That's because after years of big promises and no profits, genetic engineering looks poised to start paying back huge dividends. (See story, Page B4)
But some observers remain skeptical for two reasons. First, past predictions of food shortages have proved notoriously wrong since Thomas Malthus made his famous predictions of mass starvation. Second, for all its sizzle, biotech has yet to produce solid financial returns. Thus, a biotech boost to production could lead to surpluses in the short term, depressing prices and making it tougher for the biotech giants to recoup their investments.
"Whether or not the big companies will make enough return on the seed sales part of their business is still an unknown," Freiberg says. "I think ongoing low farmer incomes, combined with very fast product obsolescence, competition, and 'commoditization' of these new products may make the high-tech seed business less profitable than they hope. If so, you could well see these big companies spinning off the seed part of their acquisitions...."
Another sticking point is Europe, which is resisting US attempts to bring in genetically altered food. Germany and Austria have banned it outright. Despite industry claims that the technology merely speeds up the traditional cross-breeding process, many Europeans see a huge environmental and health risk, especially after their protracted battle against "mad cow" disease. (So far, genetically altered corn and soybeans are fed to animals almost exclusively.) So the big question is whether other countries will follow the Europeans or the Americans.
If the world takes to these new wonder seeds, this raises other concerns. Will the US and a handful of other companies so dominate the business that the world will become dependent on them for its seed? Novartis (actually a Swiss-based company) already has the approval to sell genetically engineered corn in Argentina and clearly hopes to sell worldwide. Pioneer, with operations in 65 countries, is making similar inroads. But the companies argue that such fears are extreme. The new giants will compete against each other, not work in tandem, they point out. Plus, many governments and international institutions also sponsor breeding programs specifically aimed at feeding poor populations. Those are markets the biotech giants are unlikely to enter. "Anyone who doesn't embrace the new technology will be left behind," says Dan Hinderliter, corn product manager at Novartis US, based in Golden Valley, Minn. "The third world, they're missing out now.... the economy, the government, the history - all these factors that work against the food situation [there]. That's a tough situation. But I'm not sure that means we should not work for improvements in the United States."
In the US, the biotech revolution looks unstoppable. In the three years since the seeds were first available in significant volumes, US farmers devoted a third of the nation's soybean acreage, half of its cotton land, and 15 to 20 percent of its corn land to genetically altered species. Much more is expected.
All crop seeds will be engineered
"Within another 10 years, all crops will contain genes that will be stuck in by genetic engineering," Mr. Wheat says. "You wouldn't create a new product without electricity. It's the same here."
Simple economics is pushing the change. For example, every year the European corn borer invades the nation's corn crop, eating its way into the stalk and weakening the plant. Researchers have found they can make corn resistant to the pest by adding a gene from a bacteria called Bacillus thuringiensis or Bt. In the past three years, Novartis and others have been selling all the Bt corn they can produce. That's because farmers planting the altered corn see 6 to 8 percent bigger yields on average. "The rush to these products is not because someone put a gun to [the farmer's] head," says Wheat. "It's tremendously advantageous."
But increasingly, a few global players will determine where the research and development money goes: whether it will be aimed at well-off farmers, or the world's poor farmers, who can afford virtually nothing. "The big MACC's [multinational agricultural chemical companies] will continue to own most all new technology in this industry, for they're the only ones who can afford the huge costs of this kind of R&D," says Mr. Freiberg."