Kai Ryssdal: Hugh Grant, welcome to the program.
Hugh Grant: Thank you. It's good to be here.
Ryssdal: This is, it seems to me, to be in the agricultural seed
business what with food prices and commodity prices. How lucky did you
get or how much good planning did you do?
Grant: Well I don't think it's luck. I think there's an urgency. We've
never seen demand curves like we have right now. I think you probably go
back to the Far East when America was feeding a war torn Europe is the
last time you saw this kind of demand curve.
So this time around a big piece is China and India and it's new people
arriving on the planet and there's dietary shifts. So I don't think it's
luck. I think actually for our kids, we're in on a whole new phase. For
the next generation, this is changing incredibly fast as demand shifts.
So it's a good time to be in agriculture.
Ryssdal: What kind of pressure does that put on you? That speed of
change.
Grant: Considerable pressure, but we're in a business where every spring
you plant seeds and every summer you harvest them so you're living
inside a kind of periodicity. I think the pressures that puts you on is
you better get it right so as you're looking at escalating demand making
sure you're planting the right stuff at the right time becomes
important, but that's a great challenge.
Ryssdal: There's a satisfaction I imagine in essentially helping to feed
the world. But it's not to all altruism. You guys make a lot of money
doing it.
Grant: Yeah, we do and I've always believed that if you can do well in
business and do good that's about as good as it gets. So I don't see
this as altruism, but the thing that I'm, as I've traveled and lived
around the world, a big piece of the satisfaction that I get is the
seeds that we produce are scale neutral.
The work, if you're on acre and a half farm in southern India or you're
a 5,000 acre farm in central Illinois, they work just the same. So it's
not altruism. It's a good business, but it's a business that works
regardless of the sign of the farm.
Ryssdal: There's a great quote actually from you that I read getting
ready for our chat. You said, This isn't a feel good thing. Satisfying
the demand curve is a great business opportunity."
Grant: That's absolutely true.
Ryssdal: What's your biggest crisis then? What's your biggest problem?
Grant: I wouldn't say crisis or problem. I think a piece of the work
that I continue to do is looking at a lot of the misunderstanding around
what we do and the promise that this technology brings.
So I wouldn't put it in the crisis category, but I think there's a lot
of education around what is agriculture, how do you grow crops, how do
you improve productivity on a farmer's acre. That I think's a big piece
of my job.
Ryssdal: Part of the plan that you guys announced a number of months ago
to double crop yields in the next 20 or 25 years, has to do with
genetically modified crops. Isn't there a little bit of opportunism in
taking advantage of the world food crisis to build your business that
way?
Grant: No, no, no. I don't think so. I think there's a crying need for
this. So, it's pure coincidence. Same week, same couple of weeks you get
Ban Ki Moon talking about the need to increase yields. We think by 2030
there's a possibility of doubling yields and perhaps more importantly,
doubling yields with a third less stuff.
So doubling yields and consuming a third less resources and if you fast
forward over the next 20 years, we think the only way you can double
yields is by improving the use of water and improving the use of
fertilizer.
The only way you can improve the use of water and fertilizer so that a
plant literally sips instead of gulps, the only way you can get that
done is with the application of some of these new technologies. That's
what's going to unlock the potential.
Ryssdal: Do you understand though the hesitation and skittishness some
people might have and some countries have about using technology and
agriculture in the same breath?
Grant: Yeah, I do and I've lived in a lot of different parts of the
world that I understand the skittishness. There's a piece of this you
say well, let's wait. We'll let the next generation figure it out. Our
kids will tackle this one.
I think what we've seen in the last - it's not even a year. What we've
seen in the last six to ten months is an urgency or the start of the
drum beats that say we are going to have to figure this out.
And it's not even about more mouths to feed. It's that, plus a whole lot
of people eating differently. If you look at the dietary shifts in
places like China. People eating bread for the first time. Tasting their
first croissant. Eating pasta instead of rice noodles. The torque, the
change that that applies to what we need to produce is huge.
Ryssdal: But the seeds that you produce here and sell worldwide don't go
into things like wheat and rice and tomatoes. They go into corn and
soybeans and things generally that go to benefit animal feed and thus,
the meat-eating populations of the world, the developed countries as
opposed to some places that really are suffering drought and
agricultural problems.
Grant: Yeah, but I think that's too simplistic. If you look at take a
little farmer in fact, southern India. I was in southern India back end
of last year driving down a dusty road. There's a farmer at the end of
his field. He's plowing the field with two oxen and a wooden plow. So
biblical scene. He's using a cell phone.
So you've got a guy that's using technology that's been around for a
couple thousand years and a cell phone. I think when you look at the
application of our drought technologies, technologies that allow crops
to grow with less water, they're going to be used in small-holder
agriculture. They're going to be used in small-holder agriculture in
India and I'm hoping that they'll be used in Africa hopefully within a
few years of launching them here.
So there's the capacity of moving these on other crops over time.
Ryssdal: What do you say though to agriculture ministers of some
countries in Europe who have expressed real doubts about GM crops and
technology and agriculture? What do you say to people in the developing
world who say you're not really helping us. You're helping the modern
world? What do you say to them when they give you these examples of how
you're not helping them?
Grant: Well, again, in fact the same trip meeting 150 small-holder
cotton growers in a big tent in the middle of a field with the wind
blowing and the sides bellowing in and out and these are growers that
through the Internet so they're an acre and a half. Smaller than most
people's backyards in this country and they're saying when will drought
technology come to India.
So I think there's a sentiment and this is arrogance. I think you can
afford to take these stances when you are standing at the top of the
pile, but for small-holder agriculture, these are technologies that
change people's lives.
So my experience has been when farmers get a chance to try these, when
they get the choice or the ability to try them then things change.
Things change very quickly. And even in Europe we get five or six
countries now in their third year of planting and harvest. So I'm
getting good feedback from farmers in Europe who are actually trying
this stuff.
Ryssdal: Those gains in Europe didn't come though without a lot of
lobbying and politicking. I imagine you spent a lot of time over there.
Grant: I personally did start 12 years ago. My realization of this is
Europe needs to come to their own conclusions, but I think what you see
is you see a Europe today that's continuing to import of a lot of
American soybeans and a lot of American corn and they're looking for the
best possible prices they can access and the best possible quality.
So I think the world is changing and I'm a lot more optimistic about the
use of these seeds and these technologies than I was 12 years and a
billion acres ago. So time's moved on.
Ryssdal: Why are you more optimistic know?
Grant: Because I think farmers are seeing the benefits to the
technology. They're beginning to see what this can deliver. So, I'll
give you an example.
A few days ago the estimate here this year is 155 bushels of corn per
acre, which probably doesn't mean much to you, but it's the second
biggest harvest the country's ever seen and one of the wettest springs
that we've ever seen. Just lousy weather this year.
A couple of years back, the third biggest harvest the country's ever
seen and one of the driest summers that we've ever had. The reason that
we're setting those records is farmers are using better seed, they're
using better technology and I anticipate that we're going to see farmers
around the world increasingly reaching for those technologies so that
they can enjoy those benefits the same as they are here.
Ryssdal: Where's the growth for this company?
Grant: The near term growth we think that we get the opportunity
doubling the company or doubling the gross profit of the company and a
big piece of that comes through corn and improving the performance in
corn, as soybeans and driving yields in soybeans.
We'll launch a product next spring that will lift yields by seven to 11
percent. Normally yields go up by about three-quarters of a percent a
year so we're literally delivering ten years of improvement in one year.
[This is Roundup Ready (soya) 2. If it works, it will help to recover
the yield lag experienced to date with RR1 which has been outperformed
by the better conventional varieties. It will also have been achieved by
conventional breeding (with Marker Assisted Selection), not GM. So you
could do the same thing in a non-GM crop. In fact, Pioneer, Dupont's
seed subsidiary, are claiming to have done exactly that - ed. GMW]
Corn and soy or cotton business and then veggies and the growth comes
from those four platforms. It comes not just from the U.S., but it comes
from worldwide as farmers look for these opportunities and look for the
improved yields in their own backyards.
Ryssdal: Does your size and position in the market make it difficult for
farmers, big or small, to not use your products and your technology?
Grant: I don't think so. Our business model is one where we're selling
the technology directly through our brands, but we also license. So in
the U.S. we licensed to 200 and something -- 220 mom and pop corn
companies around the country.
So the key thing for a farmer is he's really looking for the choice on a
seed that works in his farm and that's a kitchen table decision and he
makes that decision every spring and he's literally making that seed
decision based on not just what works in his farm, but as I've talked to
farmers and I was on a farm on Monday, they're making that seed decision
based on what works in that field on that farm.
So, I don't think it does. I think actually it's the opposite. The
weight of the choice he has on the performance of that seed, the better
the yield he gets.
Ryssdal: You've been criticized though for using your market position to
in essence either force farmers to use your seeds or conversely not
letting them opt out making it very difficult in the marketplace for
them not to use Monsanto products.
Grant: I think it's a misunderstanding. So, farmers choose their seeds
every year, every spring they choose their seeds. So in this country
they'll choose five or seven different varieties of hybrid corn and
they'll run those five to seven hybrids across the farm. Every year they
drop out a couple and they bring in a new couple.
It's like choosing race horses. They're always looking for that winner.
You can't force the farmer into doing anything and the only way that you
win in this business and it's real simple is to have the best performing
seed at that kitchen table in the spring.
We've done well in the last few years, not just in the biotech, but the
other side of this. Just simple seed and we've won because our seed
works better.
Ryssdal: You guys make and sell a lot of corn seed and you do really
well doing it. I'm curious as to your take on ethanol and the food
versus fuel debate.
Grant: I think it's unfortunate that it's become a food versus fuel
'cause last time I checked, we got food crisis, but we got an energy
crunch as well. Energy isn't looking too peachy.
So when you set it up as a win/lose, I think it's a bad start. So it's a
bad start.
Ryssdal: So set it up the way you like then.
Grant: So the way the conversation has been set up is food versus fuel.
I think we should be striving for a position where it's food and fuel
and feed and the only way you get to a position where it's food and fuel
and feed is by driving performance.
Ryssdal: Let's see. Food, fuel, feed, Monsanto makes a lot of money.
Grant: We sell a lot of seed. But here's the reality. Bio-fuel's in its
infancy. So if you're in Europe you're making diesel out of canola. If
you're in Brazil you're making ethanol out of sugar cane. So far in the
U.S. the industry's been making ethanol out of corn.
My guess is we meet here in five to ten years time, we'll be looking at
the waste streams in these products. So the leafs and stems and turning
them into ethanol, but you have to make a start. My fear is - and we're
not in the ethanol business. We're in the seed business, but my fear is
if we stop ethanol today we lose an opportunity and we need all the help
we can get, whether it's solar, wind, bio-fuels or regular gasoline. We
need all of these.
Ryssdal: Do you buy the argument then that ethanol production is leading
to or helping cause higher food prices?
Grant: Not at all; not at all. I think the biggest - if we closed our
eyes, stamped our feet and said ethanol was a mistake; let's make it go
away tomorrow morning, we've still got squeezing availability of food
because the biggest draw in this is what's happening in other parts of
the world.
If you look at the demand curves in China and India, if you look at the
dietary shifts and people tasting croissants, eating beef for the first
time in their lives, this dwarfs the impact of ethanol and it's why I
think we're setting up the wrong discussion at the moment.
The conversation should be how do we double the output and how do we
improve productivity over the next 15 or 20 years. That's where the
urgency is.
Ryssdal: How are you going to do that? What's this company going to do
over the next 15 to 20 years to double crop yields?
Grant: There's two broad areas. One is just improving breeding. So we've
literally built the street maps. So if you arrive in a new town and
you're looking for the best hamburger or the best French restaurant,
then you use one of these Map Quests or street maps - we've built a
street map for corn breeders so they can literally work out what makes
the strongest stems, what yields the best corn. So giving them a street
map helps. So that's one side of the house.
And the other side is our biotechnology. As you look to the next - by
2012 our goal is to have launched our first family of corn that can grow
with less water. In America today agriculture drinks about 70 percent of
the water. If you go to Africa, it's 95 percent.
So when you think about the next 15 or 20 years, the only way you can
really double yields is be more effective on how we use water. I think
the food squeeze that we're seeing today will be dwarfed by the squeeze
on water.
So for us it's about improving water utilization and then longer term
improving fertilizer use.
Ryssdal: Last time you guys announced profits, you announced some price
increases as well. How come given that the food crisis is so serious in
this country and in the rest of the world?
Grant: Our pricing approach has always been - so we're on a business
that's generational. We're selling to farmers and we'd love to sell to
their sons and daughters as well. So the deal that we have with our
customers is as we create value, we share that value somewhere between
two-thirds and 50/50.
So as we're creating new bushels and new yield and putting that
increased productivity on a farm, we share the upside with the grower.
That's why we've done so well because our seeds work better and yield
more. They produce more bushels on farm.
The nice thing about that model is whether you're in 5,000 acres in the
Midwest or you're in a couple of acres in India or in Southeast Asia,
farmers look at the harvest and they look at what they bring home at the
end of the day. If you can deliver a technology that changes that curve,
then you stand an even chance of winning.
Ryssdal: Why do you suppose people are so afraid of the technology that
you sell?
Grant: I think with new technologies there's always a fear of the
unknown. I think despite the fact that we've been selling these seeds
since 1996 so we're now in our 12th year. I think agriculture as a whole
is still largely unknown. People think food arrives on the supermarket
shelf.
So there's a piece of this is just basic education. I'll give you a for
instance.
Ryssdal: Go ahead.
Grant: I'll give you for instance. Cotton, the shirts that we are
wearing. Eight years ago cotton was sprayed eight to ten times. So you
remember the old Hitchcock movie, North by Northwest and the crop
duster? So the crop was sprayed eight to ten times to keep the
caterpillars off. Today the crop's sprayed twice because there's a
technology in the leaf that when the caterpillars eat the leafs, they
die, but six sprays and hundreds of thousands of pounds of pesticides
have gone away.
I think that there's some apprehension because that story really isn't
told or understood.
Ryssdal: OK, but you guys have been selling these seeds for 12 years
now; plus or minus.
Grant: Yep.
Ryssdal: Agriculture has been around for a millennia.
Grant: That's absolutely true.
Ryssdal: I guess the question is 12 years is a really short period of
time to understand what some of this technology might eventually lead to
and that's where the complaints and the problems come in. I guess we
don't know what we don't know yet.
Grant: Yeah, but if you took that approach you'd never do anything. If
you and I were sitting here today and said so, what we going to do about
the continued demand for food and how do we work to improve the closing
stocks of grain.
A piece of that is we need to improve productivity on an acre. There's
no new acres around the world. We're farming what we pretty much have.
There's no new water around the world. We're farming with the water that
we have.
So I think this rather than the what if, I think we need to - and this
isn't just Monsanto. This is how we work together. It's the what is and
the what is is that 12 years, a billion plus acres of these crops been
planted around the world and absolutely no problems.
When you look at that relative to the yield improvements we've seen and
a miserable wet spring that we had this year. These are technologies
that will make a difference on satisfying escalating demands.
Ryssdal: Monsanto recently announced that it's going to put up for sale
its technology that goes into letting cows produce more milk.
Recombinant bovine growth hormone is the common parlance. Why are you
getting out of that business?
Grant: You're right. We've announced that we're selling that business.
Milk isn't going to be a part of our future so I think if we met here in
five or ten years time our goal is how we double crop yields
specifically and corn, soy, cotton and vegetables. I don't think milk's
going to be - milk wouldn't be a big part of that.
So we've been slowly exiting a number of these businesses and this just
goes back to focus and resourcing against that focus.
Ryssdal: Before you decided to get rid of it though, you actually worked
pretty hard to change the labeling and to not let consumers see those
labels that say, 'This milk comes from bovine growth hormone free cows.'
Why that effort then if you want consumers to have the choice?
Grant: No, the labeling issue on milk for me is - I'll tell you how I
see it because label laws are different around the world, but when you
look at the U.S., the ethos is this. If the milk looks the same, if the
milk tastes the same, if chemically the milk is identical and
nutritionally it's the same, then milk is milk. It's that simple.
When you start labeling or implying that there's differences in that
milk, I think you lead to confusing the consumer.
Ryssdal: But doesn't that go back to the genetically modified crops
thing where if it looks like corn and tastes like corn and smells like
corn and cooks like corn, then it's corn, except the innards, the guts
have been messed around with. That gives people pause.
Grant: I think we'll look back on this in the next five to ten years
with a wry smile when you think of the debate that has gone on around
biotechnology. There's 40,000 genes in the corn plant. They all come
together. It's the birds and the bees. They all come together. They do
their square dancing and they separate and new corn is begat. It's a
sexual function.
These are technologies that add one more gene and that allows that crop
for the first time to fight off bugs and weeds. When you go and meet
farmers and you talk about the relief on being able to fight bugs and
weeds in the spring time that debilitate yield and the ability of that
crop to fight off its attacks on its own, that's a breakthrough.
That's why farmers are buying these over the pesticides that they've
been using since the Second World War. That's the reason for the change
in agriculture.
Ryssdal: Some pesticides that you make. You make a Round-Up resistant
corn and then you also make Round-Up so that the farmer can spray the
Round-Up on the corn. Not hurt the corn, but kill the weeds. That's a
pretty good business model.
Grant: No, that's right. We compete pretty aggressively in that segment
where a whole bunch of people that produce that in China and other parts
of the world, but that's correct.
Ryssdal: What do you see happening over the next five, eight, ten years
that's going to make it hard for you to do business?
Grant: Hard? I think all business is hard. I think for us we meet as a
team every Monday morning. We kick the tires and it's not very
glamorous, but we meet every Monday morning. We kick the tires in the
business and we are focused on how can we improve and where's it raining
and where's it dry and how is planting progressing.
So I don't think it's been making it hard. I think the key for us is
maintaining operational focus, maintaining the absolute focus on that
customer and making sure that at that kitchen table in the spring when
he looks at the choices in those seed catalogues, that our performance
is absolutely understood. As long as we perform, we stand a chance of
being in that first pick.
Ryssdal: Let me ask you about your customers for a second. Who are you
thinking about when you're going about your daily work? Are you thinking
about the farmers and the agri-businesses or do you think about the
people going to the supermarket picking up the produce?
Grant: Yeah, both. So, I think in the earlier days of the company we
were focusing on farmers. As you look towards some of the new products
that are coming - see we launched a product a couple of years ago called
Vistive. It's a zero trans-fat soybean. So trans-fats are the things
when you get margarine and it's hydrogenated, there's fats in there that
are bad for your heart.
We produced a soybean that has zero trans-fats. So now you've got a
healthy oil in a soybean. It isn't biotech. It's done through breeding.
That's a focus on the consumer.
But the reality of how food is produced is it starts with seed in the
ground and it ends up on a supermarket shelf. So as we think about those
products, we're thinking more and more, we're thinking through the
channel.
Ryssdal: Do you worry at all about the rise of organic foods and people
being more interested in more natural produce and product?
Grant: No, no, I don't. I think if you walk through any supermarket
there's a portion of that shelf is going to be organic and that's just
fine and there's a big piece of that shelf is driven by quality and
affordability. A lot of the organic material is still pretty expensive.
So, as we think about it, we're looking at how you satisfy demand curves
and how those curves are evolving. In my book we're going to continue to
see a ramp in those curves. So, whether that's an Indian supermarket
shelf or a shelf here in St. Louis, there's a piece of this I think is
going to continue to be driven by production agriculture.
Ryssdal: Is this a recession proof company? I mean, people gotta eat.
Grant: I don't think any company's recession proof. I think that's a
recipe for disaster. I think that we probably tread through recessions
better than some companies though because food is pretty basic.
The way I look at it, we need to be able to drive efficiency. So,
farmers are business-to-business. They buy inputs, they convert them
into commodities that are globally traded.
So if you don't help him on his farm or in the rest of the world
actually, her farm, if you don't help them with that productivity fight,
then you're irrelevant.
So I don't think recession proof, but I think we need to deliver
efficiency.
Ryssdal: Do you ever buy organic food yourself?
Grant: Yeah, I do. Yeah.
Ryssdal: Here we go. Hugh Grant is the chairman and CEO of Monsanto. Mr.
Grant, thanks a lot for your time.
Grant: Thanks for joining us.
Ryssdal: One more time. Mr. Grant, thanks a lot for your time.
Hugh Grant: Thank you for coming here today.
Ryssdal: Hugh Grant is the chairman and CEO of Monsanto.
http://greenbio.checkbiotech.org/news/2008-08-21/Hybrid_cotton_seed_helps_production_boom/
http://greenbio.checkbiotech.org/news/2008-08-21/Why_we_need_GM_trees/
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