How Monsanto turned the tide over GM crops - Business Week cover story

Business Week Cover Story December 6, 2007, 5:00PM EST
Monsanto: Winning the Ground War
How the company turned the tide in the battle over genetically modified crops
by Brian Hindo

When Hugh Grant took the top job at Monsanto (MON) in May, 2003...A growing chorus of critics warned that Monsanto's genetically modified plant seeds would wipe out the monarch butterfly, give people virulent new allergies, and reduce the planet's agricultural diversity. Author Jeremy Rifkin predicted that genetically modified organisms (GMOs) would turn out to be "the single greatest failure in the history of capitalism." Paul McCartney urged the world to "say no to GMO." Prince Charles wrote an editorial arguing that genetic engineering takes "mankind into realms that belong to God and to God alone."

During the 12 months preceding Grant's elevation, Monsanto's stock price fell nearly 50% to $8 a share. In 2002, the prior fiscal year, the company lost $1.7 billion. "We were pretty financially fragile," recalls Grant, 49, who speaks with the lilt of his native Scotland.

Fewer than five years later, Monsanto is thriving. The St. Louis company's net income leaped 44% last year, to $993 million, on $8.5 billion in revenue. Monsanto shares, which closed at $104.81 on Dec. 5, have risen more than 1,000% during Grant's tenure. At 58.6, the company's price-to-earnings ratio is about two points higher than Google's (GOOG). These numbers reflect a broader story: that Monsanto has quietly turned the tide in the war over genetically modified foods.

While a vocal band of opponents is still protesting biotech crops, a growing multitude of farmers around the world is planting them. The reason is no mystery: Monsanto seeds contain genes that kill bugs and tolerate weed-killing pesticides. So they are much easier and cheaper to grow than traditional seeds. More than half the crops grown in the U.S., including nearly all the soybeans and 70% of the corn, are genetically modified....Brazil can barely build roads fast enough to get all of its biotech soybeans from the fertile interior Mato Grosso state out to ports. Farmers in China and India, meanwhile, planted more than 17 million acres of biotech crops last year. These three countries are now three of the six largest GMO-planting nations in the world, as measured by area planted. ...about 7% of the world's entire farmland acreage is now planted with genetically modified crops..."When you're more than 1 billion acres planted," says Grant, "I think the conversation moves from what if' to what is.'" ...continues at Business Week