Will GMOs soon be as synonymous with Europe as vineyards? Source: Andrei Stroe/ Wikimedia Commons.

Europe has long taken a precautionary approach when dealing with biotech crops. Twenty-eight of the 64 countries globally that require labels for food products containing ingredients produced from genetically modified organisms reside in the European Union. And, while the import and cultivation of biotech crops is only banned outright in one European nation, only five European Union members -- the Czech Republic, Portugal, Romania, Slovakia, and Spain -- grow biotech crops at all (and not much). Their combined production amounts to less than one-thousandth of the world's total agricultural output.

Now, nearly 20 years after biotech crops debuted commercially, all of that may be about to change. A new policy being considered by the European Union will aim to give individual member nations more autonomy over the crops they cultivate, and clean up fragmented policies around the continent. That could be big news for plant-trait developers and biotech-seed producers such as Monsanto Company (NYSE:MON), Syngenta (NYSE:SYT) and The Dow Chemical Company (NYSE:DOW). Not only would they be able to sell engineered seeds directly to European farmers, but American farmers could gain an important market for exports. A policy shift could have major global economic advantages -- investors included! -- by the end of the decade.

The importance of European agriculture
China, South America, and the United States -- home to some of the world's best farmland -- have gladly taken the plunge with biotech crops, and have reaped significant rewards. Meanwhile, other leading breadbaskets such as Africa, the European Union, and Russia have largely refrained from cultivating biotech crops due to extreme caution, propaganda, and/or poor science. There would be profound consequences if any one of these leading agricultural regions pivoted, however, especially Europe. Consider the importance of European farmland for major world crops compared to other major regions:

No, Europe won't suddenly decide to plant large swaths of corn and soybeans if new policy is introduced, but we may see new traits and engineered seeds for the continent's staple crops, wheat and sugar beets. That could create a massive potential boon for Monsanto, Syngenta, and The Dow Chemical Company shareholders -- all of which actually have robust operations in Europe at the moment.


Monsanto Company 2013 Sales

Syngenta 2013 Sales

North America

$9.13 billion

$3.85 billion

Europe, Africa, Middle East

$2.04 billion

$4.22 billion

South America

$2.67 billion

$3.99 billion


$806 million

$1.93 billion



Total Sales

$14.9 billion

$13.99 billion*

*Excludes Lawn and Garden segment. Source: Monsanto Company, Syngenta.

Remember, each company can be broken down into two business segments: (1) seeds and traits, and (2) crop protection. Products and services offered to customers around the world include genetic traits, engineered seeds, "organic" seeds, agricultural oils, fungicides, insecticides, herbicides, and more. The growth I'm focusing on in this article would be derived from the ability to sell large quantities of traits and engineered seeds to the European market, although crop protection products would also come along for the ride.

By the numbers
How would it work? I envision growth in two parts. First, all three companies could capture continued growth for traits and seeds traditionally associated with American agriculture, such as corn and soybeans. Consider the breakdown of Monsanto Company's sales in the most recent fiscal year:


2013 Sales

% of Total Segment Sales

Corn Traits & Seeds

$6.6 billion


Soybean Traits & Seeds

$1.6 billion


Cotton Traits & Seeds

$700 million


Other Seeds & Traits

$575 million


Vegetable seeds

$821 million




Total Seed and Genomics Segment Sales

$10.34 billion


Source: SEC filings, Monsanto Company.

Syngenta boasts smaller sales in seeds and traits -- making most of its revenue from crop protection products -- but is an industry force nonetheless:


2013 Sales

% of Total Segment Sales

Corn and Soybean

$1.7 billion


Diverse Field Crops

$842 million



$708 million




Total Seed Segment Sales

$3.20 billion


Source: Syngenta (link opens PDF).

The Dow Chemical Company doesn't breakdown its agricultural business, Dow AgroSciences, but it has grown by at least 10% in each of the last three years, and sported total revenue of $7.14 billion in 2013. Since roughly 25% of the company's revenue was derived seeds, traits, and oils, let's use $1.7 billion for comparison to the companies above. Of course, it's important to stress that not all sales above are from engineered seeds; but you can see that the American agriculture market dominates -- and roughly dictates -- Monsanto Company's portfolio, and heavily influences those of its peers.

The second wave of growth would come from new traits altogether, tailored to the European market. Take wheat as the perfect example. While enhanced wheat varieties have failed to gain commercial traction in the United States -- North and South America account for just 17.5% of global wheat production -- in part due to import restrictions in Europe, the 28-member union, which accounts for one-third of global production, could turn the tide. New policy could open the door for genomic trait and seed companies to the massive global cereal market, which has been untouched by biotechnology. Most cereal production resides in Asia and Europe, but American farmers would gain an important and new market for exports. It would be a win-win for global agriculture.

Foolish bottom line
It's still amazing to think that the massive successes of the seed and trait segments at Monsanto Company, Syngenta, and The Dow Chemical Company have mostly come after the commercial use of biotech crops in 1996 -- starting from scratch with less defined tools and policies. The game is much different today.

Growth in Europe, whether from established or novel biotech products, could be expedited by leveraging relationships with existing customers -- assuming, of course, European farmers are interested. Acquisitions could be made to gain access to specific regions and markets, if necessary. It may sound a bit optimistic today, but it really isn't unrealistic to believe Europe could single-handedly change the world's attitude toward the marriage of biotechnology and agriculture. Savvy investors looking to global trading and market trends could stand to benefit.