Monsanto is a company whose name is not without controversy in sustainability circles. Nevertheless, the sustainability efforts of Monsanto are one of our favorite late-night debates here at TriplePundit HQ. We may disagree on some fronts, but there is no denying that feeding the residents of our increasingly populated planet will be a big challenge, especially in a warming, water-constrained world. As one of the biggest players in agriculture, Monsanto deserves a seat at the sustainability table to share their perspective.
Novozymes, on the other hand, is a company with the deepest of sustainability credentials – the company even uses integrated reporting to ensure that sustainability performance and financial performance are judged simultaneously; the company even ties sustainability performance to financial compensation. Will this new partnership improve Monsanto’s sustainability credentials? What about the effect on Novozymes’? Let’s take a look.
Monsanto – the big ag masters – have teamed up with Novozymes – the enzyme manufacturers – to create a long-term strategic alliance to “transform research and commercialization of sustainable microbial products.” In layman’s terms, Novozymes will be bringing their deep enzyme and microbe research and development expertise together with Monsanto’s core competence in product development and field testing. The solutions developed by the partners won’t focus on seeds, rather, they’ll be geared toward microbes which aid seed and plant growth.
For those concerned about genetic modification, none of the microbes that will be offered for use via this partnership will be GMOs. Novozymes does use GMO microbes in the production of their enzymes, but, unlike Monsanto, does not release any GMOs outside of a strictly controlled laboratory environment. In addition to producing the enzymes that have given Novozymes their name, microbes can be used directly to protect crops from pests and diseases and enhance plant productivity and fertility. Here are the details of the partnership:
- Monsanto and Novozymes will maintain independent and complementary internal and external discovery research programs to identify microbial targets with the potential to help farmers.
- Novozymes will be responsible for production and supply of the microbial solutions to Monsanto, building on its expertise within fermentation. Monsanto will serve as the lead for field testing, registration and commercialization of all alliance products.
- The companies will co-manage the alliance and co-fund research and development efforts.
- Monsanto will pay Novozymes an aggregate upfront payment of $300 million net in recognition of Novozymes’ ongoing business and microbial capabilities, and for Novozymes to supply alliance products.
- Marketing responsibility for Novozymes’ current product portfolio in agricultural biologicals will be transferred to Monsanto along with much of the Novozymes commercial organization currently responsible for that work. The two companies will work to ensure that existing customer relationships and know-how are maintained and further built on for short- and long-term success.
- Both companies will benefit from profits on commercialized products resulting from this alliance and those products brought into the alliance by the parties. Through the alliance, the companies will also test and sell commercial microbial products purchased from other suppliers to bring additional value to farmers.
In short, Monsanto gets access to Novozymes’ products and research, and Novozymes gets a nice paycheck, as well as support bringing new products to market. The financial benefits of a partnership are clear, but what about the sustainability benefits?
Monsanto tells us “With faster development cycles compared to other agricultural innovations, as well as broad geographic and crop applicability, microbial solutions offer tremendous potential to deliver sustainable, cost-effective solutions that can increase yield using less input.”
Those key inputs, of course, are water, pesticides, and fertilizers. A product partnership with Novozymes might make big ag more sustainable by reducing the need for potentially harmful inputs and reducing water usage. If this is indeed part of the plan, then it may show an evolution on the part of Monsanto towards becoming more of an agricultural services provider rather than a seller of seeds and pesticides. Last month’s acquisition of Climate Corp also suggests this evolution.
Some might argue that big ag is innately unsustainable due to the long term unsustainability of mon0-crops, the land and waterway damage from field run-off, and the harm the industry brings to small scale farmers. If the entire industry is unsustainable, this partnership would be akin to rearranging the deck chairs on the Titanic.
However, big ag is here to stay whether we like it or not, and solutions to reduce water and pesticide use in an unsustainable industry are good news for the short term.
Here’s hoping that some of that deep core of sustainability that Novozymes brings to the table will rub off on their new partner.