Monsanto's Innovative Business Model Could Double Gross Profit by 2012

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Researched by Industrial Info Resources (Sugar Land, Texas)--Monsanto Company (NYSE:MON) (St. Louis, Missouri), a leading agricultural-products provider, is set to double the gross profit of its business by 2012, said Carl Casale, Vice President for Strategy & Operations. He said the company's innovative business model and its current portfolio have positioned Monsanto to extend its competitive lead. "Because we're a company based upon innovation and priced to that innovation -- not to scarcity -- it's a fundamentally different business model than what many experience in the ag base," Casale said. "Our business model is not particularly complex. We believe we're in a world that's going to demand more stuff -- more food, more fiber -- driven by population growth and driven by increasing incomes and emerging markets. This isn't a blip. This is definitely a long-term trend that we are going to see occur."

Monsanto has set a goal by 2030 to double the yields of its core crops of corn, cotton and soy, he said. "While there's no doubt that that's going to be challenging, we definitely think that will be possible," Casale said. "And we believe that we have the toolkit in order to be able to deliver that." He said that a key part of achieving that goal will be to improve seed breeding, increase inherent yield potential at its plants and possibly introduce biotechnology to create yields. Monsanto's Seeds and Genomics platform is expected to be a major contributor toward the growth of its business, Casale said. He said the division is expected to more than double its contribution.

Monsanto plans to build its footprint across the world, and as options for biotechnology become available, he said, they have the potential to be layered on top of the company's existing footprint to accelerate the integration of new technology into the marketplace.

Industrial Info is tracking 26 active projects worth $649 million that Monsanto is involved in. The projects range from $1 million maintenance turnarounds to $100 million grassroot processing plants. Monsanto is currently in the planning phase of a grassroot corn seed processing plant in Independence, Iowa, that will be able to process 1,200 bags per hour of corn seed. Industrial Info first reported on this project in May 2008. Construction could begin in March 2009 with completion slated for October 2010.

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