The Wall Street Journal-20080130-Business World- Future Farmer
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Business World: Future Farmer
Full Text (863 words)History records that previous commodity booms were not followed by mass starvation, resource wars and the end of civilization. John Atkin is out to make sure it doesn't happen again.
An agricultural zoologist by training, he serves as chief operating officer for crop protection at Switzerland's Syngenta, a competitor to the U.S. giant Monsanto in the controversial business of agricultural technology.
Of the recent surge in prices for all manner of foodstuffs, he says don't blame biofuels. Coffee and frozen orange juice are up, and they don't go into your gas tank or compete for land with ethanol-related crops. Iron ore, copper and most nonfarm commodities are up too. And whatever the errors of Alan Greenspan and Ben Bernanke, the biggest factor may be a simple failure of optimism about the global economy. Every CEO's mental map now includes India and China, yet somehow the whole spectrum of natural resources producers failed to invest sufficiently to meet the demand of several hundred million new consumers.
Mr. Atkin cites a United Nations forecast that, by 2030, food production will have to have increase 50%, partly to feed a bigger world population and partly to supply the richer, more varied diets demanded by the newly affluent of the developing world.
"Agriculture can respond to this," he says. "Absolutely it can respond to this."
He also says: "Organic farming is not the solution." Technology is.
Only Brazil offers sizable acreage of uncultivated lands, in its scrubby central and western provinces. Transportation costs were once prohibitive, but with high crop prices, enterprising farmers are bringing virgin lands under the tractor. Who's financing these sodbusters? "We're financing them," says Mr. Atkin, slightly astonished by his own answer. Seed and agrochemical suppliers have been letting their receivables go unpaid 200 or 300 days, serving effectively as banks.
Also making a contribution will be Russia and Ukraine, where modern techniques will dramatically improve productivity. But the heaviest lifting will be done by technology. Syngenta, based in Basel, is carving out a different approach than Monsanto, involving chemistry as much as gene technology, and working particularly closely with farmers to adapt its formulas to local conditions.
Take its forthcoming Invinsa, marketed in a joint venture with developer Rohm and Haas. It's a spray that inhibits a plant's normal reaction to modest drought conditions. Plants overreact to dry weather -- they stop growing and turn yellow as a defensive measure, thanks to the natural plant hormone ethylene. By blocking ethylene, Invinsa allows plants to remain robust and ready to respond when moisture returns. (The same stuff keeps supermarket apples bright and crunchy.)
On biofuels, Mr. Atkin doesn't doubt that cellulosic ethanol, made from agricultural waste and weeds, will one day make a cost-effective and climate-friendly contribution to transportation fuels. In the meantime, however, Washington is keen to shovel protectionism and subsidies at corn ethanol, which is neither cost-effective nor climate friendly, so Syngenta is working up a genetically modified corn that already contains a key enzyme additive, cutting a step from the ethanol manufacturing process.
But a headache looms: The company may have to endure the costly rigmarole of registering the trait in the world's major markets, given the risk of trace amounts of the genetically modified corn finding their way into crop shipments for human consumption. Haunting the industry is 2000's "StarLink" debacle. Tiny amounts of a corn approved only for animal feed and ethanol turned up in tacos, corndogs and other packaged foods, leading to costly recalls. Subsequent testing confirmed what experts knew all along -- that the corn posed virtually zero risk to human beings.
Mr. Atkin admits to "frustration" (a word that pops out several times) with respect to his fellow Europeans' finicky attitude toward gene technology, the U.S.'s steep tariffs on ethanol imports, and the rich world's general disregard for the "minor miracle" of cheap, abundant, healthy food.
"Freer trade and an open door to technology" -- that's what's industry needs from government to meet the world's food demand. Alas, he sees France moving in the wrong direction, even under the supposedly modern Nicolas Sarkozy, with a ban on testing of genetically modified plants. The U.S., he adds, is the "gold standard" in welcoming innovation and evaluating products strictly on the basis of science. We could do better, however, on trade. One of Syngenta's promising products is a hardy sugar beet that could turn countries like India into exporters of motor fuel.
Syngenta was born in 1999, ironically, from the unwanted agrochemical divisions of drug makers AstraZeneca and Novartis. Markets were flat or shrinking at the time for crop protection products. Gerber, Heinz, Frito-Lay and others were swearing off genetically modified ingredients. But the world has woken up in the past 12 months. Now if Syngenta could just get its prices up. In ordinary times, Mr. Atkin says, two-thirds of the payoff from new technology ends up in the pockets of farmers. In the current boom, that ratio has only shifted further in the farmer's favor. Your customers getting rich is not the worst problem to have. Bottom line: It's a good time to be an ag-science company, and even a better time to be a farmer.
