Clash of agribusiness rivals will determine who dominates
farmland
By Jacob Bunge
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 7, 2020).
DECATUR, Ill. -- Before it was targeted by tens of thousands of
plaintiffs in lawsuits, Roundup was the king of the field -- the
world's most heavily used weedkiller. Now it's mired in court over
claims it caused cancer and viewed as a major liability for its
parent company, Bayer AG. On top of that, some weeds have evolved
to survive Roundup.
That has left an opening for a new contender to cover for
Roundup's failings, kicking off a clash of agribusiness rivals as
fierce as Pepsi's showdown with Coca-Cola on store shelves.
At stake are billions of dollars in herbicide and seed sales,
and influence over how farmers manage crops for decades.
Bayer, the German inventor of Aspirin, was already a leading
supplier of pesticides when it took control of Roundup as part of
its acquisition of Monsanto Co. in 2018. The merged company is the
largest seller of seeds and crop chemicals.
Bayer's big rival, seed and pesticide maker Corteva Inc., is
making moves to woo farmers away from the giant. On a sticky August
morning, Corteva field specialist Dan Puck stood before dozens of
farmers in an air-conditioned tent with screens flashing a green
thumbs-up logo of a new weed spray named Enlist.
Corteva erected the tent to help promote the weedkiller at the
late-summer Farm Progress Show. Following a magician performing
Enlist-theme tricks, farmers recounted losing battles against
Roundup-tolerant weeds like marestail, waterhemp and palmer
amaranth.
The Enlist spray, Mr. Puck told them, was a watershed in their
war on Roundup-resistant weeds. "People want a weed-control system
they have confidence in," he said. "We're filling a void right
now."
Roundup revolutionized farming when, combined with seeds
genetically engineered to tolerate the spray, it vastly simplified
weed control and helped farmers expand.
It is still No. 1, by most estimates. Many in the industry
expect it to stay there for the time being, because it still kills
a wider range of weeds than most other herbicides. It is used on
65% of major U.S. crops and is the biggest global herbicide brand,
according to research firm Phillips McDougall.
Roundup's dominance is waning, though, as U.S. farmers are
forced to supplement Roundup with other herbicides to dispatch
evolved weeds. That's where Corteva is taking on Bayer.
Corteva, formed following Dow Chemical Co.'s 2017 merger with
DuPont Co., is striking while its chief rival is vulnerable.
Bayer's weedkiller business, with 2018 sales of $5 billion, is
contesting lawsuits claiming Roundup causes cancer. Bayer argues
scientific studies prove Roundup's safety, a position backed by
regulators such as the U.S. Environmental Protection Agency. Though
some farmers have filed cancer lawsuits against Bayer, most remain
confident in the spray's safety and continue to use it.
Corteva aims to exploit another concern around its rival:
Bayer's new herbicide for Roundup-resistant weeds, XtendiMax, has
drawn complaints for damaging neighboring crops because its active
ingredient is susceptible to evaporating off plants, drifting on
wind and shriveling other crops. Bayer says its formulation of the
herbicide is less prone to drifting than older versions and that
complaints have declined as the company has trained farmers to
spray safely.
Corteva is dispatching representatives like Mr. Puck -- along
with a network of seed sellers, agronomists and others -- to sow
doubt about Bayer's newer spray among farmers and agricultural
retailers and win them over to Corteva's weedkiller.
The battle is on two fronts: weedkillers and seeds. For seed
suppliers, it is a chance to loosen Bayer's grip on lucrative
crop-gene licensing. Seed developers insert genes that let crops
resist specific herbicides -- creating, for example "Roundup Ready"
seeds -- and other seed companies must pay to license the genes
that provide that resistance. An estimated 85% to 90% of soybean
seeds sold in the U.S. contain Bayer's Roundup-tolerant genes,
agricultural-industry officials estimate. Rivals including Corteva
pay Bayer hundreds of millions of dollars a year to license those
genes for their own seeds, analysts estimate.
For consumers, the weedkiller war has implications because
herbicide-resistant weeds require farmers to spend more to keep
fields clean, adding expenses that can push up food costs.
Hard-to-kill weeds also threaten parks and wilderness areas.
Corteva and Bayer are pitching families of products --
weedkillers, along with the seeds and genetics that survive them --
under the brand names Enlist and Xtend, which includes the
XtendiMax spray. About 50 million U.S. acres last year were planted
with Bayer-developed soybean seeds resistant to XtendiMax, the
company estimated -- about 65% of U.S. soybean acreage. Corteva
sold a relatively small quantity of Enlist-resistant soybeans after
receiving regulatory approvals earlier last year.
By next summer, predicted Corteva Chief Executive James Collins,
one in 10 U.S. soybean fields will be planted with varieties
tolerant of its Enlist weedkiller. "Nothing would make me happier
than to be aggressive, " he said.
Brett Begemann, chief operating officer for Bayer's agricultural
business, said farmers and crop sprayers are getting better at
keeping XtendiMax under control and that Bayer's seeds produce
superior soybeans. "We're never afraid of competition," he said,
"or farmers having a choice."
The World Health Organization's International Agency for
Research on Cancer, which classified Roundup's active ingredient as
a probable carcinogen in 2015 -- Bayer has contested the
classification -- doesn't see the same risk in the new weedkillers.
In 2015, it classified so-called 2,4-D, Enlist's active ingredient,
as "possibly carcinogenic to humans," one step below the risk it
assigned to Roundup's active ingredient, glyphosate. The EPA says
2,4-D has low toxicity for humans and isn't a cancer risk.
The WHO agency hasn't evaluated the cancer potential of
XtendiMax's active ingredient, dicamba. While some studies have
linked dicamba exposure to non-Hodgkin lymphoma and birth defects,
the EPA doesn't consider dicamba likely to cause cancer in humans
and hasn't found evidence of chronic health problems from its
use.
Roundup's reign
Roundup is ubiquitous thanks to its ability to wipe out dozens
of weed species and to the debut of crops genetically engineered to
survive the weedkiller. Inserting those genes into corn, soybean,
cotton and other crops allowed companies to breed Roundup Ready
plants that could survive being sprayed with Roundup while plants
around them died.
Corteva's top seed brand, Pioneer, helped spread Roundup Ready
crops after it gave the new technology a stamp of approval among
farmers in the 1990s by licensing biotech genes from Monsanto. The
relationship soured as both companies expanded and launched
competing technologies, even as licensing deals kept them mutually
reliant.
On U.S. soybean fields, Roundup and other glyphosate-based
weedkillers rose from 15% of farmers' herbicide use in 1996 to 89%
in 2006, according to U.S. Agriculture Department data. By then,
about two-thirds of soybean fields were being sprayed solely with
glyphosate-based herbicides.
Roundup's power faded as weeds evolved. By 2002,
Roundup-resistant weeds were identified in Missouri, Tennessee and
some other states, according to the International Survey of
Herbicide Resistant Weeds. Six years later, resistant weeds were
popping up across the Midwest. In 2020, about 70% of U.S. soybean
fields will harbor Roundup-resistant weeds, estimates pesticide and
seed maker Syngenta AG.
Farmer Lynnet Talcott for years has fought Roundup-resistant
marestail and waterhemp weeds in her family's eastern Nebraska
fields. Extra herbicides required to kill them increased expenses,
but she was afraid to try Bayer's XtendiMax or other dicamba-based
weedkillers after nearby spraying damaged her soybeans, she
said.
"Your liability you're looking at is a major issue," she told
attendees in the Corteva tent at the Farm Progress Show, where she
joined other farmers on a panel discussing Enlist. Corteva covered
her travel and lodging for the event.
She and the other farmers described how the Corteva spray killed
weeds but didn't harm nearby crops and wildflower patches. "Peace
of mind," Corteva's Mr. Puck told the audience. "Such an important
benefit."
Studies and field work by university agricultural researchers in
Arkansas, Missouri, Tennessee and North Dakota have found 2,4-D,
the ingredient in Corteva's Enlist, to be less prone to evaporation
than dicamba, the ingredient in Bayer's XtendiMax.
Bayer has said its XtendiMax version of the herbicide holds
closer to where it is applied, that most crop damage has arisen
from farmers not following spraying instructions and that XtendiMax
doesn't drift when applied in the right conditions and with the
correct equipment. Ty Witten, Bayer's director of North American
crop-protection strategy, said complaints last year declined even
as XtendiMax-tolerant soybean acres expanded, showing farmers were
improving their control of the herbicide.
Weedkiller fistfight
Bayer's herbicide has divided farmers in some farm states since
it began selling the Xtend herbicide-and-biotech-seed combination
in 2017. There have been fistfights and even a murder over alleged
crop damage, according to Arkansas law-enforcement officials and
farmers. State and federal regulators have placed restrictions on
how it can be sprayed.
Farmers fear weeds more, and dicamba has proven effective
against weeds that can spread rapidly and choke out crops. Bayer's
biotech soybeans secured final regulatory approvals in 2016,
getting a jump that enabled the new seeds to capture a majority of
U.S. soybean fields.
Corteva's rival soybean products were held up for years by a
regulatory review in China, the biggest soybean importer, over
whether to approve their importation. China granted approval in
January 2019, and Corteva is racing to catch up, growing more
Enlist soybeans in its seed-production fields in Argentina, Brazil
and Chile.
To match Bayer's success, Corteva aims to also license out its
Enlist-tolerant crop genes to other seed companies, which pay fees
to insert those genes into their own soybean varieties. Corteva
estimates 120 seed companies, including Syngenta, have licensed
Enlist genes. Corteva could benefit from farmers needing to spray
those crops with Corteva's related weedkiller. Syngenta also
licenses Bayer's Xtend genes.
That means persuading local farm suppliers like Nathaniel Muzzy,
a Thief River Falls, Minn., seed and pesticide dealer who last year
began offering Corteva's Enlist products alongside Bayer's Xtend
line. He said Roundup-resistant kochia and ragweed arrived in
northern Minnesota around four years ago.
Bayer's XtendiMax works, he said, but farmers worry about
damaging neighboring fields, and local sales have been slow.
Farmers, he said, have been desperate for a solution.
When Corteva announced on Jan. 17, 2019, its planned launch of
Enlist-tolerant soybeans, Mr. Muzzy said farmers began asking him
about the products. He quickly switched about 40% of his
soybean-seed orders to Corteva's products and soon sold out.
"People don't want to spray and go to bed," he said, "and hope it
doesn't move and two weeks later, their neighbor's crop is
fried."
Bayer over the past two years has hosted XtendiMax training
sessions for farmers and crop sprayers across the Midwest to reduce
damaged fields and mitigate complaints. It said it has given away
over one million specialized nozzles that can produce herbicide
droplets that better stick to plants.
Last year, the 19 biggest soybean-producing states recorded
1,544 dicamba-damage complaints, versus 1,604 in 2018, according to
state agriculture officials. In 2016, the number was 257. Bayer is
developing a new XtendiMax version it says will better remain where
sprayed.
Defensive planting
Terry Fuller, who sells Bayer and Corteva products in Poplar
Grove, Ark., said farmers are interested in Corteva's spray. But,
he said, dicamba's proven weedkilling ability means many Arkansas
farmers will keep planting Bayer's XtendiMax-tolerant soybeans.
Some, he said, will plant them to ensure their crops aren't damaged
by an XtendiMax-using neighbor.
"I had a friend tell me," he said, " 'You either plant Xtend or
hate your neighbor.' "
Corteva is also a big customer of its big rival -- and would
like to change that. DuPont, Corteva's predecessor, in the
mid-2000s developed soybeans to resist Roundup and another
herbicide as a solution to Roundup-tolerant weeds. Monsanto sued
DuPont in 2009, saying DuPont's seeds illegally incorporated
Monsanto-patented genes. DuPont filed a countersuit accusing
Monsanto of unfair business practices.
They called a truce in 2013 after Monsanto prevailed in court.
DuPont agreed to a 10-year, $1.75 billion licensing deal to use
Monsanto-developed crop genes. That deal made Corteva a major
licenser of Bayer's XtendiMax-resistant soybean genes. About 65% of
Corteva's Pioneer soybean seeds use XtendiMax-tolerant genes,
Corteva officials said.
By early 2020, Corteva's Mr. Collins said, Corteva will know how
fast it can increase sales of its Enlist herbicide and seeds -- and
when it might scale back business with Bayer. "We write some big
royalty checks, " he said, "and would love to back ourselves out of
those as fast as we can."
One August afternoon, Corteva salesman Casey Mattke courted
farmers and agricultural retailers in a field near Whitewater, Wis.
In muddy boots, he led them past soybeans sprayed the previous week
with Enlist and then past rows of green pumpkin vines -- sensitive
to herbicides -- undamaged nearby. It is a presentation he and
colleagues gave over the summer at demonstration fields across the
Midwest.
Mr. Mattke pointed to a field across the road. "What if this was
an Xtend field?" he asked. Between the afternoon's moderate wind
and the government-mandated buffer to protect neighboring fields,
he said, spraying the Bayer product would be prohibited.
With Corteva's weedkiller, he said, "you could spray today."
Write to Jacob Bunge at jacob.bunge@wsj.com
(END) Dow Jones Newswires
January 07, 2020 02:47 ET (07:47 GMT)
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