Biotech companies race for drought-tolerant crops

By Carey Gillam

JOHNSTON, Iowa (Reuters)- Outside the headquarters of Pioneer Hi-Bred International Inc, the pavement is iced over and workers arriving for the day are bundled up against the cold.

But inside a laboratory, a warm, man-made drought is in force, curling the leaves of rows of fledgling corn plants as million-dollar machines and scientists in white coats monitor their distress.

This work is part of a global race pitting Pioneer, Monsanto Co and other biotech companies against each other in a race to develop new strains of corn and other crops that can thrive when water is in short supply.

"Equipping plants to be able to maintain productivity in the driest years is of critical importance," said Bill Niebur, global vice president for research and development at Pioneer, a division of DuPont. "Drought is a global problem and we recognize the threat that comes with climate change. We've got our top talent in our organization working on this."

This line of research has been underway for years, but it has taken on added urgency as scientists predict a trend of worsening drought and hotter temperatures around the globe.

Water shortages are already costing billions of dollars a year in crop shortfalls around the world, and are likely to grow more costly, according to academic and government forecasters.

Two years ago, drought ate into corn production in France and Spain so severely that analysts pegged it as the worst in fifty years.

U.S. corn production was down 5 percent because of drought in 2006.

In Australia, where drought has persistent since 2002, some wheat farmers last year reported failing to harvest a crop for the first time in 40 years.

And in Argentina, which grows about 22 million tonnes of corn a year, drought has delayed planting of the current crop.

Last December, Jacques Diouf, the head of the U.N. Food and Agriculture Organization, warned that people were already starting to go hungry in poor countries because hotter weather was shrinking the food supply and pushing up prices.

MARKET OPPORTUNITY

Biotechnology companies are using both conventional breeding and genetic engineering to mold climate change into a market opportunity.

Monsanto, the world leader in genetically engineered crops, is doing field trials in dry parts of Kansas, Nebraska and South Dakota. Switzerland's Syngenta AG has a variety of research sites across the United States.

Corn is the first focus for all the companies because not only is it a key raw material for a multitude of processed foods, but also it is a major animal feed and it is in growing demand to make ethanol for use in alternative fuels.

The world grows nearly 800 million tonnes of corn a year, with about 40 percent of the world's suppy grown in the United States and 19 percent in China.

St. Louis-based Monsanto, which spends about 10 percent of its annual sales on research and development, or about $2 million a day, sees drought-tolerance as a key area, spokeswoman Sara Duncan said.

"Water is one of the biggest limiting factors in agriculture," Duncan said. "In the future, climate change does mean there are going to be more droughts."

OVERCOMING OPPOSITION

The biotech companies acknowledge that opposition to genetically modified crops remains strong in some countries, especially in Europe, where opponents have long dubbed such crops "Frankenfoods."

But the success of genetic modification that has turned out corn that resists pests and is immune to weedkiller, along with similar modifications in soybeans and other crops, has helped wear down opposition in recent years.

Last year more than 73 percent of U.S. corn acres were planted with biotech varieties, according to U.S. Department of Agriculture. In 2006, biotech crop acreage globally reached 252 million acres in 22 countries, according to the International Service for the Acquisition of Agri-biotech Applications

(ISAAA).

And given global climate concerns and the needs of a hungry populace, biotech companies believe a drought-tolerant corn could further help win over opponents.

"This is a more consumer-friendly trait than some of the others that have come out," said DuPont spokesman Pat Arthur.

Still, opponents of biotech crops predict a range of environmental hazards, potential human health problems and further concentration of the food system in the hands of large corporations that repeatedly hike the price of patent-protected seeds and gobble up competition from smaller seed companies.

Joe Mendelson, legal director of the Center for Food Safety in Washington, said non-biotech varieties that naturally adapt to their localities will be the ones that best tolerate changes in regional climate. Tinkering with nature is "folly," he said.

"GMO products will only be 'consumer-friendly' based upon public relations spin and not in reality," said Mendelson.

Some farmers, who have seen both the costs and the benefits of biotech crops since they first hit the market in the mid-1990s, have mixed feelings about a drought-tolerant corn.

Nebraska corn and soybean farmer Mike Alberts said he would welcome a more drought-hardy corn, but he fears the seeds will come at a high cost and loaded with extra genetic traits that he doesn't want to pay for, as biotech companies increasingly stack a mix of genetic traits in their seeds.

"Water usage is getting so expensive. That is a major issue," said Alberts. "But a bag of seed is so expensive now I wonder what they will charge us for that technology."

Currently, U.S. farmers expect to pay about $245 for a bag of Monsanto's "triple-stacked" biotech corn seed, which protects against pests and is immune to weedkiller. A bag of conventional corn seed goes for around $100.

PRICEY RESEARCH

The research is costly. This month, DuPont is introducing a $1.5 million robotic system that will automatically water, weigh, measure and document plant progress under varying greenhouse conditions in Johnston, Iowa. The money is part of the $600 million the company spends annually on agriculture and nutrition, which includes drought work as a top priority.

The company hopes to have its first transgenic drought-tolerant corn seed on the market as early as 2012.

Monsanto, which is also testing in the semi-arid area around Davis, California, plans to have its first drought-tolerant corn hit the market sometime after 2010.

Syngenta, which has its U.S. base in Greensboro, North Carolina, is pursuing what it calls "water optimized" corn technology that would allow corn to be planted on soils that currently won't support corn fields at all. The company aims to have something commercialized by 2011, said spokeswoman Anne Burt.

All the companies say they are using multi-pronged approaches that involve both conventional as well as biotech breeding, including transferring genes from microbes or from other plants, such as Arabidopsis, a small plant related to cabbage and mustard.

The idea is to grow plants with stronger, longer roots that can extract more water from the soil, develop plants that more effectively conserve water in the above-ground stalk and leaves, and also to change the way the plant develops so that water can be directed more toward grain development than leaf development, for instance.

The companies are also aligning with rivals to accelerate the pace of research. Earlier this year Monsanto announced a $1.5 billion deal with chemical concern BASF to develop high-yielding crops that are more tolerant to adverse environmental conditions such as drought.

And in October, DuPont announced a deal with Israel-based Evogene Ltd. giving DuPont's Pioneer unit exclusive rights to several genes seen improving drought-tolerance in corn and soybeans.

The company is seeking additional partnerships on drought-tolerance and expects a "constant flow of these coming out in the future," according to Pioneer's Niebur.

"This is where we compete," he said. "This is our future."

(Reporting by Carey Gillam; Editing by Eddie Evans)