Monsanto announces simpler biotech pricing

Monsanto Company has announced plans to simplify the pricing for corn and soybean traits produced through biotechnology. Starting with the 2002 season, Monsanto will eliminate the technology fee paid to Monsanto by growers who plant YieldGard insect-protected corn, Roundup Ready corn and Roundup Ready soybeans and replace it with a royalty paid by seed companies licensed to market those products. Thus, growers will make a single payment to the seed company for technology and seed, rather than one payment to the seed company and a separate payment to Monsanto for the right to use Monsanto's patented technology.

“This change is in line with grower requests to move away from our previous technology fee structure and seed company requests to offer a more simplified pricing structure for their customers,” said Jim Zimmer, U.S. director of technology for Monsanto Company.

The new royalty pricing structure will allow seed companies to price herbicide-resistance and insect-tolerance technology, just as they already set the price of their seed. Each seed company will set the price for corn and soybean technology in their branded seed, based on the value their products bring to the marketplace.

The new royalty pricing structure will affect only Monsanto's YieldGard corn, Roundup Ready soybeans and Roundup Ready corn technologies. Growers who plant Monsanto's cotton and canola technologies will see no change in their current pricing structure at this time.

“We listened to grower and seed company requests to simplify the pricing structure for corn and soybean technologies,” said Zimmer. “Not only will the new royalty structure simplify pricing, it also will allow seed companies to set the value for the technology and germplasm they deliver to the grower while enabling Monsanto to continue its commitment to bringing new technologies to market and value to growers.”

The introduction of a royalty will eliminate the need for a technology fee for growers and will make the purchase of seed with Monsanto's traits simpler because seed retailers and/or seed companies will set a single price for the combination of seed genetics and traits.

For the 2002 season, each seed company will set the price for their brands of Roundup Ready corn, YieldGard corn, and Roundup Ready soybean seed, based on the value their branded products bring to the marketplace. As a result, growers may or may not see a price change in the corn and soybean systems based on several factors, including: year-to-year market dynamics, varietal differences, seed brand differences, seed size, seeding rate in soybeans and, for Roundup Ready crops, the price of Roundup and time of purchase.

Like the technology fee, the income from Monsanto's royalty will allow the company to continue to invest in new technologies, including biotech, new variety and hybrid development, and genomics research. These investments will, in turn, deliver additional benefits to customers and their operations in the years to come.

“In 2000 alone, we invested approximately $588 million in R&D for new and improved products,” Zimmer said.

Monsanto remains committed to providing growers with profitable and efficient systems for their operations. “Our corn and soybean technologies continue to offer growers numerous advantages over their conventional counterparts, and we remain committed to delivering technologies to growers that are not only more profitable, but also more effective for their operations,” Zimmer said.

Monsanto's Roundup Ready soybean system is estimated to have eliminated approximately 19 million-acre treatments of herbicides during the 2000 crop year, according to a recent USDA's economic research service report. In addition, a study recently published by the National Center for Food and Agricultural Policy (NCFAP) indicated that the introduction of Roundup Ready soybeans has saved American growers hundreds of millions of dollars since 1996. In 1998 alone, the NCFAP report noted, Roundup Ready soybeans saved U.S. soybean growers more than $220 million.

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