Please ensure Javascript is enabled for purposes of website accessibility

The Biggest Threat to Monsanto

By Jacob Roche – Updated Apr 6, 2017 at 6:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

New pest-resistant-resistant pests may loosen Monsanto's chokehold on the seed market.

There's a fly in the ointment at Monsanto (NYSE: MON). Or, rather, a rootworm in the corn field. Western corn rootworms have been found in four pest-resistant fields in Iowa, and while you might think it's normal for some bugs to make it past even Monsanto's vaunted pest-resistant genetically modified corn, the corn in question was designed to resist this specific pest. If the bug is developing its own resistance to the corn, that could open a whole can of worms for Monsanto.

The world of genetically modified crops is fiercely competitive, with Monsanto, DuPont (NYSE: DD), and Syngenta AG (NYSE: SYT) controlling about 47% of the global proprietary seed market. While Monsanto is by far the largest, farmers are under pressure to keep corn yields high, and they may switch to competitors if Monsanto's product doesn't work as intended. Aaron Gassman, the scientist who discovered the affected fields, tested some of the rootworms there and found that they were still highly vulnerable to corn grown from competitors' seeds, indicating that they had only developed a resistance to the specific gene in Monsanto corn.

This isn't surprising, given that Monsanto's gene is found in roughly one-third of all corn grown in the U.S., and that the high price of corn has led farmers to stop rotating crops each year. Farmers might be able to continue growing corn each year if they instead rotated pest-management strategies, giving pests less time to build a resistance. This would be bad news for Monsanto, but good news for its smaller rivals, as well as insecticide companies like Dow Chemical (NYSE: DOW) and Scotts Miracle-Gro (NYSE: SMG).

Monsanto has already stated that its seeds work as intended on 99% of the acres using them, and Gassman has also said that it's too early to tell whether this is just an isolated issue, or if it will be more widespread, like Roundup-resistant "superweeds." To stay updated on any developments, add these companies to your My Watchlist.

Fool contributor Jacob Roche holds no position in any of the stocks mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. Motley Fool newsletter services have recommended buying shares of Syngenta. Motley Fool newsletter serviceshave recommended creating a synthetic long position in Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Monsanto Company Stock Quote
Monsanto Company
MON
E. I. du Pont de Nemours and Company Stock Quote
E. I. du Pont de Nemours and Company
DD
DuPont de Nemours, Inc. Stock Quote
DuPont de Nemours, Inc.
DOW
The Scotts Miracle-Gro Company Stock Quote
The Scotts Miracle-Gro Company
SMG
$49.95 (-1.71%) $0.87

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.