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Monsanto counts its cash

Seed-and-chemical giant sees its profit triple

Posted by Tom Philpott at 10:47 AM on 04 Jan 2008

In a gold rush, the firms that supply the gold diggers with tools -- not the gold diggers themselves -- make the highest and steadiest profits. That's a platitude, but it's also usually true. And it's now playing out in the boom in corn-based ethanol.

Don't waste much time envying corn farmers. Sure, they've seen the price of their product double over the past year and a half or so. But they've also seen their costs inch up. Fertilizer, land rents (much of the farmland in the midwest is rented), pesticides, and seeds -- all have risen since the corn rally. Before long, much-heralded "record farm income" in the corn belt will likely evaporate under those pressures.

As for ethanol producers -- the ones buying up all that corn and spinning it into auto fuel -- even they've seen their profits drop, despite heavy government support. They flooded the market with so much ethanol, so fast, that they overwhelmed it, leading to a glut. Helpfully, though, the federal government solved that problem, for a few years at least, with the 2007 Energy Act and its lofty ethanol mandate.

Corn farmers and even ethanol producers are pikers compared to the input suppliers -- the firms that peddle the special seeds and chemicals required for industrial-scale agriculture. And the granddaddy of all those firms, the genetically modified seed and herbicide giant Monsanto, just delivered what's known on Wall Street as a "blowout" quarterly profit report.

In the three-month period that ended Nov. 30, Monsanto reeled in profit of $256 million. That's nearly three times the amount it made in the same period of a year earlier, and well more than Wall Street analysts had expected. Monsanto shares, which more than doubled in value over the course of 2007, leapt more than 9 percent in Thursday afternoon trading on the news.

How did Monsanto pull off this neat trick? By selling boatloads of herbicide and genetically modified corn, Reuters reports:

Sales of corn seed and traits during the quarter jumped to $467 million from $360 million a year ago, while sales of its Roundup and other glyphosate-based herbicides climbed to $1.0 billion from $649 million.

The company told Wall Street to expect more of the same in 2008, boosting earnings expectations significantly.

South America -- particularly corn-happy Argentina and soy-mad Brazil -- has been a main driver of Monsanto's profitability, sucking in mass quantities of the company's flagship herbicide RoundUp, to complement RoundUp-Ready corn and soy, AP reports.

The company expects to bring in a cool billion in gross profit from RoundUp alone in 2008, according to AP.

I just heard that

the price of fertilizer has doubled thanks to rising oil prices and a weak dollar. Apparently, we no longer make much fertilizer here. We are now fertilizer dependent as well as oil dependent.

In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
Phosphate

 
Over 50 million acres of good farmland will be used to grow corn to fuel the inefficient American motor vehicle.

Draglines will scoop up Florida for the Midwest corn growers.

Corn is a heavy feeder of phosphate. Midwest Corn depends on Florida phosphate. Florida is the largest producer of phosphate rock mined in the United States.

We have witnessed radiation contamination, polluted rivers and destroyed wetlands as well as mercury, sulfuric acid and flouride air pollution in Florida since the early mining years. Expect this to
double.

Phosphate production will have to double in Florida to meet the fertilizer requirements of expanded Midwest corn acreage for ethanol production.

Phosphate mining currently disturbs 5,000 - 6,000 acres of land annually in north and central Florida.

Mosaic Phosphate Co., (200,000 acres)  sends 75% of
their phosphate to the cornbelt in the Midwest. Mosaic plans to develop two new mines and extend existing mines in south-central Florida to continue meeting the demand for phosphate.

Potash Corporation of Saskatchewan Inc. (PCS) is draglining over 100,000 acres of wetlands along the Suwannee River near White Springs.

Geologic experts are warning that phosphate deposits will be depleted in Florida within 20 years.

The US will become dependent on costly finite supplies of phosphate from Morocco in competition with China and the rest of the world.

America will become more energy dependent as we exhaust our local natural resources with the Energy Bill.

December McSherry

Recycle fertilizer

Every possible waste stream source of organic fertilizer must be utilized.  With biogas digestion.

Clean energy, prevention of pollution (manure, sewage, landfill run off and methane release), and water recycling are the byproduct benefits.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

Nitrogen and Phosphate

Nitrogen:

A group in Minnesota is working on using wind power for synthesizing nitrogen fertilizer. I don't know whether it is ammonium, nitrite, or nitrate. I posted a link to the article elsewhere on the Grist site, but don't have time to look for it right now.

Anyway... the beauty of the system is that the fertilizer would be produced locally by co-ops, would not generate greenhouse gases (fertilizer production is a BIG contributor to greenhouse gas emissions), and you would not have to transport the fertilizer long distances. Please use google to find out more or send me an email and I find the info for you.

Hey! I resisted pushing the use of GMOs for solving this problem!

Phosphate:

There is an enormous amount of phosphorous locked up in the soil. Plants cannot use it, so farmers apply inorganic phosphate mined out of the Earth and environmentally harmful.

This is another of my favorite uses for GMOs -- again, posted elsewhere in the Grist website. We have already engineered plants to secrete a small amount of an enzyme from their roots, which releases phosphorous from the soil immediately around the roots of plants so they can use it. No need for broad application of inorganic phosphate and no need for mining it and transporting it to the fields. Furthermore, it virtually eliminates phosphate in the run-off from the fields. The phosphate is released from the soil only around roots that can immediately absorb it. Sadly, environmentalist seem to prefer the mining and broad application of inorganic phosphate and all the hazards that accompany it, rather than a simple and very well defined GMO.

Peace.

Kit and Tom et al

Thanks for the info on phosphorus mining in Florida. The environmental costs of industrial "homegrown" energy and food are not trivial. You describe sacrificial landscapes that support bigger sacrificial landscapes.  We are living on stacks of sacrificial landscapes connected by profit and codependency, but all adding up to eventual collapse.  Stacked genes or stacked landscapes create big profit but bring big fall once you erode the foundation of genetic and landscape diversity.  The pyramid is turned upside down and technology can no longer substitute for eroded ecological services without continued and growing additions from sacrificial energy or material landscapes.

Peak phosphorus is another of the "peaks" that add credence to the concept of limits -- to not only growth but also to sustainable production of current levels.  

I have posted previously on the shortages and skyrocketing cost of anhydrous ammonia, the main fertilizer used for field corn production.  Limited supplies of natural gas, the base ingredient for most nitrogen fertilizers, and reduced manufacturing capacity in the US have resulted in our importing 80% of this key input.  

At the same time, the corn industry is telling us that we can almost double our average corn yields within ten years to almost 300 bu/acre.  This would entail fertilization rates at least 1.5 times current levels!

Achieving energy independence via "home grown" corn is one of many big lies propagated by industry, Washington lobbyists and their bought and bridled congressmen. (Can an Obama really speak truth to these lies?)

And WIid, we are not selling or defending any of this stuff.  Just describing the world as it really works.  Soils differ greatly in their native phosphorus levels.  Your concept might work in very low yield environments to assist subsistence farmers but would likely be very inadequate in high yield, industrial agricultural environments.  The traits you describe typically involve complex interactions of multiple genes which are very long shots to companies like Monsanto that are geared to achieve high profits from the stacking of single gene traits.    

Technology might not be the ultimate solution...

...but it can provide some assistance.

justlou wrote...

"...we are not selling or defending any of this stuff. Just describing the world as it really works."

I'm not sure who you are referring to as "we". Grist? All the Grist users? Environmentalists? Environmentalists opposing corporations? Environmentalists opposing GMOs? For sake of discussion, I'll interpret "we" as "environmentalists". Please forgive me if I'm wrong and the rest of this post is not a suitable response.

Pretty much everyone posting stories and comments here is selling, defending, rejecting, et cetera. We are not simply describing the world as it really works. I doubt there is a single person on the planet who can describe the world as it really works. It is all filtered by what we know, what we've read, what we've experienced, how we believe the world should work, indoctrination, et cetera. There is nothing wrong with this.

I think the whole point of a website like this is to ensure people with different views come together and not only describe the world as they believe it works, but also compare notes, question whether our views are accurate, and try to come up with some workable solutions -- considering ALL options -- to the problems human beings and other creatures are encountering in the 21st century.

So... environmentalists, when discussing GMOs,are not just describing the world as it really works but usually condemn corporations and GMOs as a single entity. There is little interest in looking at examples of GMOs not owned by corporations and/or not increasing the use of chemicals. There is little interest in reforming the situation so more people benefit from GMOs. There is little interest in examining and offering constructive criticism regarding how we might benefit from GMOs and avoid the problems.  It is always... corporations, bad! GMOs, bad!

This is not the reality of the world. Monsanto has created problems, lied, tried to sit on useful technology, et cetera. But that does not mean all corporations and all GMOs are bad.

justlou also wrote...

"The traits you describe typically involve complex interactions of multiple genes which are very long shots to companies like Monsanto that are geared to achieve high profits from the stacking of single gene traits."

Regarding "the traits", not necessarily. The gene for the enzyme I mentioned is easily put into plants -- you could put it into multiple varieties to avoid monocultures -- and has been shown to work in field trials. Sure, it isn't going to help all crops growing in all environments, but it would REDUCE the need for mining and applying inorganic phosphorous. Wouldn't that be good? Or is it all or nothing? If we can't save all of a natural habitat we are not going to bother saving a small part of it?

I believe a lot of problems will be solved more quickly by combining several different approaches. I also believe GMOs are one approach. I've repeatedly tried to say GMOs are not always a good idea. I realize there are bad GMOs. But I do not understand the notion of rejecting them when there is a clear advantage and little risk, especially if they reduce the need for chemicals, reduce harm to the environment, and lower costs.

Regarding "companies like Monsanto", true. But it is not a good reason to avoid GMOs. It is a reason to find ways to prevent corporations from owning genes. Much of the work could be done by public institutions and released for general use by breeders and growers. Not easy, but people have and are trying to do this.

Corn

Monocrop for a monoculture.

Addendum to Karen's comment

Thanks for another info packed comment, Karen. About Mosaic, you wrote that:
Mosaic Phosphate Co., (200,000 acres)  sends 75% of their phosphate to the cornbelt in the Midwest. Mosaic plans to develop two new mines and extend existing mines in south-central Florida to continue meeting the demand for phosphate.

Note that Cargill owns two-thirds of Mosaic. So Cargill will sell you the fertilizer to make your Monsanto corn grow, and then buy that corn from you to make ethanol (top five producer), beef (2nd-biggest packer, 4th-biggest finisher), pork (3rd biggest packer, and also a major feedlot CAFO operator), and turkeys (3rd biggest packer). For good measure, Cargill is the nation's second livestock-feed maker. Source (PDF)

Victual Reality
florida & Monsanto

Am here in Central Florida and have just seen a disturbing article in the lakeland ledger about the disappearing scrub jay - now it's the wetlands (again/still) - Floridians be warned.  
 

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