Last November, Monsanto said its gross profits might double by 2012. In an earnings-guidance update from the company on Tuesday, chief executive Hugh Grant said Monsanto is on track to do at least that well, and maybe better. "As we move closer to the Northern Hemisphere planting season, we've not only gained confidence in our 2008 opportunity, but also in our strategic path to 2012,'' Grant said in a statement.
Rising grain prices, along with surging demand in places like China, are allowing the company to raise prices pretty much across the board. Its Roundup brand of weed-killer products has taken off to an eye-popping degree. The company forecasts that Roundup sales will hit $1.7 billion to $1.8 billion this year. Last year, sales were $854 million.
There is more to higher grain prices than just more money in the pockets of farmers and less in the pockets of food processors and consumers. Higher prices also mean that farmers are able to afford expensive, genetically modified seeds. And that can only be good for Monsanto, the world's largest seed producer.
The company doesn't mention it, but though economics are surely on its side, a big underlying reason for its success is the growing scientific consensus that genetically modified seeds may not be as hazardous to the environment or to human health as had been widely feared. When corn prices were low, it was easy for farmers to eschew pricier GM crops, especially when it was less clear whether they would pose a danger. And with corn prices rising, it's just as easy for them to plant the seeds with enthusiasm. Unless researchers come up with some new reasons to fear GM corn, it is here to stay. The prospects for Monsanto -- by far the largest producer of the seeds -- could not be better.
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