Agri-biotechnology Briefing

Bayer to Buy Monsanto in $66 Billion All-cash Deal

Bayer has offered to acquire Monsanto in an all cash $66 billion deal which represents a 44 percent premium to Monsanto shareholders, Bayer announced in a press release.  The merger brings Monsanto’s leadership in seeds, traits and digital farming (using data analytics to apply precise quantities of nutrients and sprays with satellite guidance of farm machinery) with Bayer’s crop protection chemicals business. Annual savings of $1.5 billion are expected from the third year onwards. The combined entity will have an annual R&D budget of about $3 billion.  The entire budget of the Indian Council of Agricultural Research is less than $1 billion. Regulatory approval for the merger across 30 countries will take about a year.  The headquarters of the seeds and traits business will be in St Louis, Missouri, which is that of Monsanto, the crop protection business will be run out of Germany and Ireland, while the digital agriculture business will operate from San Francisco.  Monsanto is the leader in seeds and traits. Bayer is No 2 after Syngenta in crop protection chemicals.  With Monsanto’s weed-killer Roundup (glyphosate) added to the portfolio, the new company will be the No 1 in this space.  The two companies have annual sales of $28 billion. The acquisition will be funded $19 billion in bonds and equity. The rest will be through bridge financing from banks. Regulators will have to approve the merger.  If not, Bayer will pay Monsanto $2 billion.

Activists opposed to genetic engineering will have to re-orient their communication strategy. The initial shots have been fired. (See next story on this page).

(Top photo of Werner Baumann, CEO of Bayer (left) with Hugh Grant, Chairman and CEO of Monsanto.   Bayer photo).

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I Do Not Understand Bt Cotton technology; I Know It Works

Y Kallanagouda Patil, 46, of Uppinbetegeri village in Dharwad taluk  owns 52 acres jointly with his three brothers. He holds a diploma in agriculture from a school in Raichur. Patil grows cotton on ten acres, apart from sugarcane, potato, Bengal gram, jowar, tur,moong and vegetables. He uses groundwater to irrigate his fields. The water is drawn from a depth of 280 feet. Electricity is free so he flood irrigates the fields, except the one under banana  where he uses drip irrigation. He does not micro-irrigate cotton because it is closely planted and has to make way for another crop after eight months. This farmer has his cost all worked out. Making quick mental calculations, he estimates the cost of cotton crop at Rs 22,500 an acre and the realization from 17 quintals an acre at Rs 68,000. He had planted Bayer seed. ‘I do not understand technology, he says, all I know is if I use Bt seed there will be no

Pests Snack on Chilly But Not Cotton

F Basavaraj Rudagi, 48, did not grow cotton before 2008. This farmer from Saundhi village in Dharwad district’s Kundogol taluk made a partial switch to Bt cotton as chilly was susceptible to pest attack and yield was declining. From five acres in 2009, Rudagi had fifteen of a forty acre joint farm under cotton this year, when smartindianagriculture  caught up with him in February. He tried out Bayer in a change from Mahyco and Raasi seed. Rudagi says he got 11.5 quintals (100 kg) an acre from his rain-fed crop and at Rs 4,050 a quintal, his realization was a little over Rs 46,000. The cost, he says, is Rs 26,000 an acre, excluding rental earnings had he leased out the land. This does not mesh with the profit he claims he makes, but then he admits to not keeping crop-wise accounts. Rudagi also grows peanuts, coriander, gram, safflower and jowar. There is safety in diversity. And yes he plants pigeon pea or tur around the cotton crop for bollworms to feed on so they are not forced by the survival instinct to develop resistance to Bt protein.  In this sense he is quite a cut apart. Low cotton prices are worrying but what is the alternative?