Growers will face sticker shock this fall when checking some seed prices, particularly those of Roundup Ready (RR) soybeans. Monsanto recently announced it is increasing the price of RR soybeans in its Asgrow and Dekalb brands by $4 to $5/acre and RR corn about $2/acre.
While licensing agreements are confidential, industry experts assume a similar price increase is online for Monsanto’s seed partners, the regional companies contracting with Monsanto for its trait technology. This means that a substantial portion of the U.S. seed market for RR soybeans and corn will be priced higher.
When asked about the price increase, John Raines, Monsanto’s director of U.S. marketing, states, “We’ve taken the RR soybean royalty up, and we’ve strengthened Roundup WeatherMax through Roundup Rewards and lowered the list price of Roundup OriginalMax. So the total cost of buying RR soybean seed and Roundup OriginalMax in 2005 sould be similar to the cost of buying both this year. In addition, growers who purchased generic glyphosate products in the past because of price will find Roundup OriginalMax more competitively priced today.”
Monsanto is increasing its Roundup Rewards elements for both Roundup WeatherMax and Roundup OriginalMax. For example, crop loss and replant provisions in RR soybeans are now available for Roundup OriginalMax.
“We knew when we introduced RR soybeans that we would face competition with Roundup herbicide, starting basically in 2000 when Roundup went off patent,” Raines says. He points out that the cost of conventional soybean seed and herbicides in 1996 was $45 to $50/acre. Last year, he says, the price of RR soybeans and the average price of Roundup combined was $38/acre.
“The cost of the RR soybean weed control system has been flat to down since its introduction in 1996,” Raines says. “As value has shifted away from the herbicide, we have shifted more of that value over to the trait. We are a company that invests in research and development to bring farmers new technology for their operations. Our products have to provide farmers more value than they cost and we have to earn a return on the investment that we sell into the marketplace.”
Monsanto’s research and development investment is $500 million a year, according to Kim Magin Sutter, Monsanto’s director of global industry affairs. This large budget allows the company to continue work on new traits and technology that benefit growers and consumers.
Raines believes growers will continue to use the RR soybean weed control system. “In feedback from growers and dealers, many customers prefer to spray a Roundup brand herbicide that has the safety, convenience and consistency that they’ve come to appreciate in a brand that is at a much lower price,” he says.