Factory-Farming Friendliness Bugs Me

Whatever happened to industries where companies hated their rivals? All this technology-swapping among agriculture giants just doesn't seem right.

Last month, Syngenta (NYSE: SYT  ) and Monsanto (NYSE: MON  ) announced that they'll swap licenses to their seed traits. Monsanto also has a deal with BASF to discover new traits. Now Syngenta and DuPont (NYSE: DD  ) are developing chemicals together. Next thing you know, we'll have Mosaic and Potash swapping secrets about the best way to make fertilizers.

Tuesday, Syngenta and DuPont said that they'll share the costs to develop DuPont's insecticide Cyazypyr. DuPont will also get a license to mix the active ingredient in Syngenta’s weed killer, Callisto, with its own herbicides to create a super weed eradicator. Maybe the partnership shouldn't come as a big surprise, since the duo already had a deal to mix another one of DuPont's insect killers, Rynaxypyr, in with Syngenta's insecticides.

The companies didn't say, but presumably there's royalties headed in both directions on sales of product that contain chemicals that the other company developed. The agricultural chemical business isn't small potatoes, either. The worldwide insecticide market is estimated to be around $8 billion. On the herbicide side, Monsanto managed to sell more $1.1 billion worth all by itself in its most recent quarter.

The real beneficiaries of these technology swaps are farmers, who get more efficient chemicals and seeds. As long as that causes sales to rise high enough to justify the royalty payments, I guess investors can't be too upset about the friendliness that the agricultural companies are currently showing one another.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.


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